AmerGen, the joint venture between British Energy and PECO Energy, has announced its intention to buy the Clinton BWR power station from Illinois Power. In an interim agreement, AmerGen has exclusive negotiating rights until 15 June. Completion of the acquisition should take place towards the end of 1999 when British Energy and PECO will both pay $10 million for the purchase.
During the interim, PECO has agreed to assume Clinton’s operating and capital costs of around $18 million a month, with British Energy sharing the costs. The plant is currently off-line, but should it generate electricity again before completion, AmerGen will receive the income. Illinios Power has agreed to buy at least 75% of the plant’s output until December 2004, to transfer the decommissioning fund of around $95 million to AmerGen and to make six annual payments of $30 million into the fund.
“I am confident that British Energy, working with our US partners, can play a significant role in the developing competitive electricity market in North America,” said Robin Jeffrey, British Energy’s executive director in North America.
The Illinois Power board decided to leave nuclear energy and concentrate on fossil fuels last December in order to mitigate financial risk. Clinton is the only NPP owned by Illinois.
“We have learnt that the expertise and specialist skills needed to manage a nuclear station are far greater than is required for fossil generation and we recognise that we would not be competitive in the deregulated market with only one unit,” said Shirley Swarthout, of Illinois Power.
A further reason for the sale is the uncertainty surrounding the decommissioning costs. In order to ensure a rapid sale and thus liberate Illinios from the operating and capital costs, the board decided to draw down the book value of the plant to zero at the end of 1998. This cost the company $1.35 billion, resulting in a $19.38 loss per share last year. However the company’s future stock value now looks assured.
Clinton is the third nuclear acquisition AmerGen has announced in the last six months, following the purchases of Three Mile Island Unit 1 and Vermont Yankee.
