Pam Kasey has done an excellent summary of the issues surrounding the price of the Harrison Power Station that FirstEnergy wants to dump on WV rate payers.
There is one thing that Kasey missed about FE’s claim that the Harrison plant is worth $1.68 billion. Kasey quotes FE’s appraiser as saying “there simply aren’t enough transactions with enough publicly available information to be meaningful.”
Well, there was one transaction just 3 months ago:
Exelon (NYSE: EXC) has reached an agreement to sell its three Maryland coal-fired power plants to Raven Power Holdings LLC (“Raven Power”), a new portfolio company of Riverstone Holdings LLC, fulfilling its commitment to divest the plants as part of its merger with Constellation. Under the agreement, Raven Power will maintain jobs with comparable pay and benefits for employees at the plants.
The three plants, known collectively as Maryland Clean Coal, include:
- Brandon Shores, Pasadena, Md.: 1,273 MW of installed capacity, two units (coal)
- C.P. Crane, Middle River, Md.: 399 MW installed capacity, three units (coal and oil)
- H.A. Wagner, Pasadena, Md.: 976 MW installed capacity, five units (coal, natural gas and oil)
Raven Power will pay approximately $400 million for the plants and related assets, subject to several closing adjustments. In addition, the sale will generate approximately $205 million in cash tax benefits, with the majority of that amount realized in 2012 and 2013. Exelon will record a pre-tax loss estimated to be approximately $275 million in the third quarter to reflect the difference between the estimated sale price and the carrying value of the plants.
That’s three coal-fired plants, in nearby MD, with a total capacity of 2648 megawatts selling for a total of $400 million in August 2012. Compare that to FE’s claim that the Harrison Power Station’s 1,984 megawatt capacity that FE is claiming is worth more than four times as much. That sale was pretty public, here, here and here.
So even if you have to make a few adjustments in differences between the two deals, is the Harrison plant really worth more than four times as much as three plants with 1/3 more capacity?
Does FE really think the WV PSC is that stupid?