GPU To Sell Three Mile Island Unit 1 To AmerGen.NEW YORK--(BUSINESS WIRE)--July 20, 1998--Standard & Poor's CreditWire 7/20/98--On July 17, 1998, GPU GPU: see secret police. (Graphics Processing Unit) A specialized logic chip devoted to rendering 2D or 3D images. Display adapters contain one or more GPUs for fast graphics rendering. Inc. (A-/Stable/-) announced that it reached an agreement in principle to sell its 786MW Three Mile Island Unit 1 (TMI-1) nuclear generating facility to AmerGen Energy Co. (unrated). This transaction is supportive of GPU's and its electric utility operating subsidiaries' credit quality. Standard & Poor's ratings and outlook for the GPU companies are unchanged. AmerGen is a joint venture between PECO PECO Países da Europa Central e Oriental (Portugal) PECO Philadelphia Electric Company PECO Public Education Capital Outlay PECO Pelagic Cormorant (phalacrocorax pelagicus) Energy Co. and British Energy British Energy plc (LSE: BGY) is the UK's largest electricity generator by volume and a constituent company of FTSE 100. It is primarily an operator of formerly state-owned nuclear power stations. PLC. TMI-1 is jointly owned by GPU subsidiaries Jersey Central Power & Light Co. (JCP&L; BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. +/Stable/-), Metropolitan Edison Co. (MetEd; BBB+/Positive/-), and Pennsylvania Electric Co. (Penelec; A-/Stable/-). JCP&L and Penelec each have a 25% ownership interest in TMI-1, while MetEd has a 50% interest. A definitive agreement is expected to be executed within 90 days. The closing is subject to a series of regulatory approvals, and is expected to occur by year-end 1999. The sale price of $100 million consists of $23 million for the plant and $77 million for the fuel, the latter of which would be payable in five equal annual installments. The book value of the plant is roughly $600 million. AmerGen could also be responsible for up to $80 million in "contingency payments" to GPU from 2002 to 2012 to reflect a sharing of the plant's revenues at or above the market price of power assumed in the transaction. Standard & Poor's positive opinion of the agreement is partly based upon the belief that both regulatory commissions will ultimately authorize To empower another with the legal right to perform an action. The Constitution authorizes Congress to regulate interstate commerce. authorize v. to officially empower someone to act. (See: authority) recovery of book value, as well as any shortfall in funding for decommissioning Decommissioning is a general term for a formal process to remove something from operational status. Some specific instances include:
The modest proceeds from the sale of TMI-1 will be used to offset costs Costs for which funds have been appropriated but will not be obligated because of a contingency operation. See also contingency operation. that are stranded by the opening of the electric markets to competition in New Jersey and Pennsylvania. More significant from a credit perspective is GPU's strategy to transform itself into a lower-risk transmission and distribution entity operating domestically and internationally. As part of its strategic focus on the delivery system, the company is auctioning off its entire portfolio of generating assets, with the exception of the 619MW Oyster Creek Oyster Creek may refer to:
tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. over the past several years. While Standard & Poor's views the general ratings outlook for GPU and its utility subsidiaries positively, a number of transition-related issues remain undecided. Foremost among these are the level of stranded-cost recovery that the Pennsylvania and New Jersey commissions will ultimately allow the utilities, especially since the Pennsylvania commission has ordered a significantly lower level of recovery than MetEd and Penelec requested in their initial proposals. On July 20, GPU appealed aspects of the Pennsylvania commission's orders to the Pennsylvania Commonwealth Court and the U.S. District Court for Eastern Pennsylvania. The company also filed an alternative restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan with the commission, Standard & Poor's said. --CreditWire
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