ABB, AES, Australasia, Latin America, North America, Siemens

Americas World News

Issue 1 and Volume 12.

News digest

Argentina: Argentina must invest $450m per year to add an additional 1000 MW annually to keep up with demand, according to Oscar Dores, director of the Foundation for Electric Development.

Brazil: Fiat Engineering do Brasil has awarded an order to Metso Automation for the supply of two steam turbine control systems for existing units 1 and 2 of the Santa Cruz power plant, located in Rio de Janieiro, Brazil.

Canada: Construction of the $95m Summerview Wind Farm will begin immediately, with work on the electricity generating facility to be completed by July 2004, officials at Transalta have said.

Chile: Chile-based energy holding company Enersis will invest some $400-600m in 2004 in the expansion, maintenance and completion of power generation projects in Chile and Brazil.

Mexico: Mexican utility Comision Federal de Electricidad (CFE) will buy three turbines from Siemens Westinghouse Power Corp. with the help of a $140.6m loan guarantee. CFE will install the gas fired turbines at a 150 MW power plant in San Lorenzo, Puebla and a 300 MW plant at Tuxpan, Veracruz.

Mexico: ABB has been awarded a contract to maintain the SCADA/EMS systems at Mexico’s national utility, Comision Federal de Electricidad (CFE). The project will ensure that CFE’s installation of ABB’s systems are kept up to date over a four and a half year period.

USA: FERC said that Duke Energy will pay $2.5m to settle all outstanding matters relating to the western electricity crisis in 2000 and 2001. The settlement addresses allegations regarding potentially manipulative bidding practices in the California market, known as economic withholding, as well as physical withholding of electric generation supplies.

USA: CSFB Private Equity, the private equity arm of Credit Suisse First Boston, announced it has completed its previously announced acquisition of all of the equity interests in United American Energy Holdings through affiliates of DLJ Merchant Banking Partners and its affiliated co-investors.

USA: Foster Wheeler has announced that its subsidiary, Foster Wheeler Power Group, has been awarded an order by Bechtel Power Corp. to design and supply a 400 MW pulverized coal fired boiler to be installed at the Springerville Generating Station in Arizona.

USA: The US energy market will need up to 13 liquefied natural gas import terminals over the next few years to supply fuel for electric utilities and manufacturing plants, according to the US government.

Brazil launches new model

Brazil has unveiled a new model for its electricity sector designed to attract investment, reduce power shortages and cut tariffs. The model involves the creation of two energy trading markets consisting of a regulated pool and a free market where distributors and generators can sign bilateral contracts.

The dual system will mean, on the one hand, existing power companies will sell their energy at a price set by a government agent, while the second market will entail power plants whose concessions have not yet been auctioned. Analysts predict that prices in the former will be R$50/MWh ($17/MWh) with the latter reaching R$100/ MWh.

However, the new model has been criticised by some market players, who argue that it will deter foreign investment as the government will have too much control. The existing regulator, Aneel, will have the role of overseeing that agents are following concession rules.

The government believes the model will prevent a repeat of problems in 2000-2, when poor planning and a severe drought led to electricity rationing.

Utilities suspend power grid plan

A collection of utilities in the southeastern USA have called off plans to create a regional power grid due to conflicts with regulatory bodies.

The utilities, which include Southern Co. Inc. and Entergy Corp., cancelled the integration of their transmission networks into the so-called SeTrans grid, due to differences between the Federal Energy Regulatory Commission (FERC) and state regulators.

The SeTrans grid would have stretched over eight states from South Carolina to Louisiana. It was conceived under proposed plans by FERC to combine electric utilities’ transmission grids into pooled networks to reduce bottlenecks and lower consumer costs. Utility commissioners in the southeast objected to FERC’s proposals, however, citing the region’s already low power rates and the fact that FERC’s new rules would burden their customers with the cost of building further transmission grids to benefit neighbouring states.

AES settles $1.2bn debt with BDNES

AES Corp. has ended a year-long, $1.2bn debt battle with Brazil’s National Development Bank (BNDES) by transferring assets to a new holding company.

The deal involves the transfer of AES stakes in electricity distributor Eletropaulo and three generation companies – AES Tiete, AES Uruguiana Empreendimentos and AES Sul Distribuidora Gaucha de Energia – to a newly created holding company called Brasiliana Energia.

The exchange means that BNDES will cancel $600m of debt in return for a 49.9 per cent stake in Brasiliana Energia while allowing AES to pay the remaining $515m of debt over 12 years. The debt is the result of AES’ acquisition of Eletropaulo in 1998.

Australian company gears up for Chilean hydropower assets

Australian renewable energy group Pacific Hydro has been named as the preferred bidder for $75.6m of hydropower assets in Chile.

The 39.3 MW Coya and 37 MW Pangal hydropower stations belong to Chile’s state owned copper producer, Codelco, which is divesting some of its non-core assets. Part of the negotiations included the sale of the plants’ output to Codelco under a four year agreement. The acquisition deal will be funded by a non-recourse bank debt, equity and possibly through a joint venture arrangement.

The Chilean electric power market is attracting foreign investment as it has grown by five to six per cent per year in recent years, and at around eight per cent per year throughout the 1990s.

AES Panama inks $320m financing deal

AES Corp.’s subsidiary, AES Panama, has closed a $320m financing deal for its power portfolio in Panama. The transaction is the largest private financing in Panama’s history.

The proceeds of the issuance will be used to refinance an outstanding bridge loan and fund the expansion and refurbishment of the Bayano hydroelectric plant. The company’s remaining financing needs may be met through a $75m facility with local banks and a $61m cashflow contribution from AES Panama.

The deal replaces a construction facility closed in September 2002. AES Panama has also approached EKN, the official Swedish export credit agency. EKN may consider providing a loan guarantee in addition to or in lieu of the Panamanian bank tranche.

AES Panama, the largest generating company in Panama, owns four power plants: the recently completed 120 MW Esti hydro facility, the 90 MW Chiriqui plant, the 248 MW Bayano facility and the 42 MW thermal facility.

The non recourse loan consisted of a four tranche transaction with a local and international bank, an institutional facility and an export credit facility.