ALLENTOWN, Pa.--In a $107 million transaction, PP&L, Inc., a subsidiary of PP&L Resources, Inc. (NYSE: PPL) Monday (11/1) completed the sale of its Sunbury power plant and the assets of a related coal-processing facility.
John R. Biggar, PP&L Resources senior vice president and chief financial officer, said the sale translates into a one-time positive earnings impact of 27 cents per share for PP&L Resources in the fourth quarter. This one-time earnings benefit was not included in the company's April 1999 earnings forecast of $2.15 per share.
PP&L, Inc. sold the plant and associated assets to WPS Power Development, Inc. (WPS-PDI), a subsidiary of WPS Resources Corporation of Green Bay, Wis. (NYSE: WPS). WPS-PDI develops and owns non-regulated electric generation facilities and provides services to the electric power generation industry in Wisconsin, Maine, Alabama, Arkansas, Oregon and Canada.
"The Sunbury sale is part of our commitment to providing the best value to our shareholders and customers through constant evaluation and strategic management of all PP&L assets," said Robert G. Byram, PP&L, Inc.'s senior vice president-generation and chief nuclear officer.
"Our employees at Sunbury have done an outstanding job operating this plant. I have nothing but the highest praise for the skilled, hard-working and dedicated employees at Sunbury," Byram said. "We look forward to assisting WPS-PDI to ensure a smooth transition as they assume operation."
The Sunbury plant is expected to continue normal operation under its new owners. Under terms of a three-year agreement, WPS-PDI will sell a portion of the plant's output to PP&L, Inc., and trade the remainder on the wholesale energy market.
PP&L will provide operational staffing to WPS-PDI for a short period after closing.
"We're pleased to become part of the Pennsylvania-New Jersey-Maryland (PJM) energy market," said Jerry Mroczkowski, WPS power development vice president. "The PJM area is on the leading edge of competitive electricity generation and marketing and our expertise is in operating power plants. We believe that makes us a perfect fit in the PJM market.
"We look forward to working with the local community and continuing the reliable and effective operation of the plant."
None of the plant's regular, full-time employees lost a job in the transaction. As a provision of the sale, Sunbury workers could opt to accept employment from the new owners or stay with PP&L, Inc. The bargaining unit employees who chose to accept employment with WPS-PDI will continue to be represented by IBEW Local 1600. Under provisions of the sale, WPS-PDI will assume applicable provisions in the existing collective bargaining agreement between PP&L and the union through the life of the current contract.
Last August, PP&L announced it would seek a buyer for the Sunbury plant and close its Holtwood coal-fired power plant in Lancaster County, Pa. Operations at the 73-megawatt Holtwood unit ceased in May. A 110-megawatt hydroelectric plant at the Holtwood site continues to operate.
The actions represent part of PP&L Resources, Inc.'s strategy to diversify its generation portfolio and to devote resources to facilities that will enhance its ability to compete in the deregulated energy marketplace.
The Sunbury plant, located on 216 acres in Shamokin Dam, Pa., is a four-unit coal-fired generating station with a demonstrated winter capacity of 389 megawatts. Also included in the sale are two oil-fired turbine generators with a peak reserve capacity of 42 megawatts. The coal-fired plant began operation in 1949.
PP&L, Inc. also sold the principal assets of Lady Jane Collieries, a bituminous coal processing facility providing much of the unit-train fuel to the plant, which is located near Penfield, Pa.
PP&L, Inc.'s anthracite silt reserves at Forrestville and Buck Run in Schuylkill County, Pa. were sold with the other Lady Jane assets.
The Wall Street firm of J. P. Morgan & Co. acted as exclusive financial advisor to PP&L, Inc. on the sale.