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1997-12-29 18:54:51


Electric Utilities Begin Selling Off Assets. Why?



This report is from Rick Coewles, who has an excellent site on Y2K and Electrical Utilities. He notes that some very large power-generation assets are being offered for sale. "Why now?" he asks. He thinks y2k could have something to do with it.

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ITEM: Dec. 11, 1997 -- Boston Edison Co. and Sithe Energies Inc. announced separately that Sithe had won the bidding to purchase Boston Edison's gas- and oil-fired generating assets.

ITEM: Dec. 11, 1997 -- Orange and Rockland Electric's (NY) board of directors is today submitting to the Public Service Commission Staff and other interested parties the company's Preliminary Divestiture Plan for the sale of its generating assets.

ITEM: Dec. 10, 1997 -- The board of directors of Montana Power Co. voted yesterday to offer for sale all of the company's generation assets--12 hydroelectric facilities, one storage reservoir, four coal-fired power plants, a leased interest in another coal-fired plant, and its contracts for power purchased from independent producers.

ITEM: Nov. 25, 1997 -- San Diego Gas & Electric (SDG&E), the principal subsidiary of Enova Corporation, today announced plans to auction its fossil power plants -- the South Bay plant in Chula Vista, Calif., and the Encina plant in Carlsbad, Calif., along with its combustion turbines -- as well as its 20-percent interest in the San Onofre Nuclear Generating Station (SONGS) and its portfolio of long-term power contracts.

There's an interesting and disturbing trend developing in the electric industry. As the deregulation process moves along, more and more electric companies are considering the sale of their power generating assets to the highest bidder. Why? . . .

. . . Here's what I'm having a hard time coping with: In the case of San Diego Gas and Electric, approximately 2000 megawatts of generating capacity is being auctioned. Even if the plants were sold today, the transfer of these assets will take some time to complete. And I'll be willing to bet my next electric bill that SDG&E hasn't done a single thing to address Y2K compliance at these plants. So what will the new owners be buying? A non-Y2K compliant can of worms.


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