Americas

Iberdrola wins Celpe

Spanish utility Iberdrola led a consortium that bought Brazilian electricity distributor Celpe in an auction on the Rio de Janeiro stock exchange. The consortium, consisting of Iberdrola, Banco do Brasil and pension fund Previ, was the only bidder and paid the minimum asking price for the utility.

The purchase extends Iberdrola’ presence in Brazil’s north-eastern market where it already controls distributors in Bahia and Rio Grande do Norte states. Iberdrola and its partners have said that they will invest R$1bn ($574m) in Celpe over the next five years in the construction of a new generation plant and the modernization of the distribution system.

The north-east of the country is an attractive market with rapidly growing electricity demand and a high proportion of domestic and commercial consumers who pay higher rates than industrial consumers. Celpe serves about 1.9m consumers. Iberdrola paid R$1.78bn for a 79.6 per cent stake in the utility.

US group Utilicorp was also expected to take part in the auction with Brazilian construction company Queiroz Galvao, but dropped out shortly before the sale.

Richardson endorses distributed generation

US Energy Secretary Bill Richardson has called on federal and state policy makers to help utilities mobilize additional power resources to prevent grid outages like those experienced in the USA last summer. He strongly recommended the deployment of distributed generation technologies to shore up grid reliability.

Richardson’s comments coincided with the release by the Department of Energy (DOE) of a final report into last year’s outages in the Midwest and northeast. He called on Congress to pass reliability legislation as part of wider electricity industry restructuring legislation.

The DOE recommended that state regulatory agencies ease barriers to the use of microturbines and other small generating systems, and called for market-based approaches to reliability. Poor grid reliability was mainly the result of policy makers failing to keep pace with rapid change in the electricity industry, said Richardson.

The DOE report found that many utilities preparing for deregulation have reduced investment in reliability programmes. Recommended market-based approaches to improving grid reliability could include competitive markets for ancillary services.

Tucuri phase II awarded

Electrobras subsidiary Electronorte has awarded a $313m contract for the development of phase II of the Tucuri hydropower plant to a consortium comprising ABB Alstom Power, Odebrecht, Inepar-Fern and GE Hydro Inepar. The project will add 3670 MW of additional generating capacity to the existing 4250 MW plant on the Tocantins river in Para state, Brazil.

Phase II will be financed by Electrobras and BNDES and involves the supply, erection and commissioning of 11 units of 380 MW each as well as intake gates, penstocks, stop-logs for draft tubes, cranes, protection and control systems and insulated busbars. ABB Alstom Power said that it will supply the majority of the generating equipment for the project.

Construction of the plant has already started, and the new units are scheduled to enter commercial operation at the beginning of 2003. The plant is owned and operated by Electronorte. The existing Tucuri plant, which was completed in 1984, supplies power to the whole Amazon region.

  • Brazil’s federal government has reaffirmed its commitment to the 11 000 MW Belo Monte hydropower plant on the Xingu river, Para state. The project has been on hold for ten years due to environmental concerns but could now start operations in 2009. It will be constructed at a cost of R$6bn ($3.45bn) through a National Electric Agency concession.

NEES-National Grid approval

The US Securities and Exchange Commission has approved the merger between the New England Electric System (NEES) and National Grid Group. This was the final regulatory hurdle required for the merger, which was originally announced in late 1998.

The final sale price for the merger values NEES at $3.2bn. On closure of the deal, National Grid will acquire all outstanding shares of NEES, which will be renamed National Grid USA. NEES will serve as the base for the US operations of National Grid, which is seeking opportunities in the US electricity transmission and distribution sector.

PowerGen acquires US group

UK energy company Power-Gen has announced that it has agreed terms to buy US electricity and gas company LG&E Energy Corp. for $3.23bn. PowerGen finalized the deal some two years after first starting to seek a platform for growth in the USA.

LG&E’s Kentucky base represents around 25 per cent of the US electricity market and the acquisition gives PowerGen a strong foothold there.

PowerGen chairman and CEO Ed Wallis said: “Buying LG&E secures a stream of high quality, stable earnings which support shareholder value in the short term whilst providing us with the opportunity to grow our earnings in the future”.

News digest

Brazil: Brazilian businesses and industrial companies have expressed doubt as to whether the Thermoelectric Priority Program will reach its goal of developing almost 15000 MW of generating capacity by the end of 2003. Under the emergency programme, 44 power plants should be developed over the next three years, but only 310 MW will be up and running by 2001. The government has offered incentives to power plant developers under the programme but manufacturers and other businesses remain concerned that electricity demand will outstrip supply over the next few years.

Canada: Ontario Power Generation wants to sell or lease two of its large fossil fuel power plants with a combined generating capacity of 3280 MW. The move is in line with the company’s commitment to reduce its share in the province’s wholesale generating market. The two plants are a 2140 MW plant near Kingston and a 1140 MW plant in Mississauga.

Chile: The government of Chile is to jointly tender its 38.8 per cent stake in the Colbun power firm and its 66.7 per cent stake in the Electroandina power firm. The joint sale is expected to fetch at least $162m. A likely suitor for the companies is Belgian firm Tractebel, which already holds a 45 per cent stake in Electroandina and a 21 per cent stake in Colbun.

Chile: GasAtacama SA is to spend $6m on a project that will allow its two gas turbine units at its Nopel facility to operate independently of each other. The investment will help to prevent repeated grid failures that the country’s northern grid has been experiencing recently. Until the conversion is complete, it will be able to use no more than 270 MW of Nopel’s total 560 MW capacity. Chile’s large mining operations were shut down by a series of blackouts during February.

Colombia: The mines and energy ministry has said that potential investors in the privatization of generator Empresa de Generacion y Comercializacion de Energia (Isagen) have until June 30 to submit bids. The original deadline for bidding was mid-April and has been pushed back to give local utility Empresas Publicas de Medellin (EPM) more time to prepare a bid. Analysts consider EPM a leading contender in the sale, which is expected to raise $385m.

Mexico: Canada’s TransAlta has won a bid to construct a 250 MW power plant in south-central Mexico. The contract gives TransAlta a foothold in Mexico’s power market, which is currently seeing annual growth of six per cent. The plant will run on natural gas and will sell power to the national grid under a 25-year agreement.

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