AES wins battle for EDC
US energy group AES Corp. has succeeded in gaining control of Venezuelan utility CA La Electricidad de Caracas (EDC) after a bitter six-week battle. AES’ bid for the utility ended in June after it bought 73.1 per cent of Grupo EDC’s outstanding shares for $1.5bn.
AES has agreed not to rename EDC for at least five years, and to continue with the current $300m share buyback plan. It will sell some of EDC’s non-core assets to Spanish group Union Fenosa in line with a recent agreement preventing Union Fenosa from launching a rival bid for EDC. EDC is seen by analysts as one of Venezuela’s few success stories.
AES President and CEO Dennis Bakke said: “We are pleased to bring Grupo EDC into AES’ family. This investment reaffirms our commitment to Venezuela and positions AES as a leading player in the Latin American electricity sector.” AES’ shares fell ten per cent after the news, reflecting concerns that it paid too much for EDC. It had originally offered $863m when it launched its bid in late April.
The takeover was a battle for AES, and was viewed by some EDC shareholders as hostile. EDC attempted to stall AES’ bid for a controlling stake, by launching a share buyback plan and then buying a minority stake in Florida Public Utilities.
AES struck an alliance deal with Union Fenosa, seen as a potential rival bidder, to facilitate the takeover. Union Fenosa agreed not to make a competing offer for EDC and in return was given the right to buy EDC’s non-core assets.
Alberta utility orders 40 microturbines
Alberta, Canada-based utility Mercury Electric Corporation has placed an order with Honeywell Power Systems for 40 microturbines. The units will be used in a variety of applications, including flare gas mitigation, cogeneration, standby and back-up power and base load power.
The order illustrates the growing market for distributed generation products in North America. Most of the Parallon 75 turbogenerators will be delivered to oil production facilities in western Canada, where they will generate power from flare gas. The remaining units will be sited at commercial and industrial sites including a West Jet Airlines call centre.
The Parallon 75 can generate 75 kW of power using a raw solution gas created from flared gas. “Mercury Electric orporation believes the application of this technology to conserve previously flared solution gas will reduce the levels of greenhouse gases currently being emitted from oil fields,” said Bob Williams of Mercury.
Mexico to inspect NPP
Mexico has agreed to allow an inspection of its only nuclear power plant after pressure from environmental organizations which believe that the plant is on the verge of a technical failure. The Federal Electricity Commission (CFE) has said that it will appoint an independent group of consultants to the task.
Greenpeace has leaked a report on the the Laguna Verde nuclear plant which cited several technical and managerial shortcomings. The group has been calling for an independent inspection of the plant to be carried out for several weeks, claiming that a series of accidents have been covered up.
A report by consulting engineers Large and Associates, based on a World Association of Nuclear Operators (WANO) inspection and obtained by Greenpeace, stated that the plant was “on the verge of institutional failure” due to bad organization and maintenance. WANO inspectors visited the plant in November 1999 at the request of the Mexican government.
CFE said that it is confident that Laguna Verde will pass the independent inspection.
First merchant plant for New York
Pacific Gas & Electric Corp. is to construct the first merchant power plant to be built in New York state following approval by the New York Public Service Commission of the project’s environmental permits.
The $500m, 1080 MW Athens Generating station will, according to the state department of environmental conservation, be the cleanest and most environmentally friendly power plant in the USA.
Athens will house three natural gas fired combined cycle units rated at 360 MW each. Pacific Gas and Electric has scaled back the environmental impact of the project, minimizing the water flows required for plant cooling. Commercial operation of the first unit is slated for summer 2002.
DOE signs Alstom for coal combustion development
The US Department of Energy (DOE) has awarded Alstom Power a contract to develop an in-furnace combustion system that will reduce emissions of nitrogen oxide (NOx) from coal-fired power plants to below 0.15 lb/MMBtu.
The new system will allow utilities to reduce their NOx emissions at less than half the cost of installing a conventional selective catalytic reduction system, without increasing the level of unburned carbon in fly ash. The contract is worth $1.9m, and Alstom Power will provide an additional $500 000.
Brazil: Power engineering and energy company Inepar Energia is looking to strengthen its position in the Brazilian and Argentine markets through an alliance with an unnamed partner. Inepar is said to currently be in negotiations with the partner, which would provide investment to assist its growth in the region in return for a stake in the company. Inepar has an installed capacity of 6300 MW in addition to transmission and distribution assets.
Chile: The National Energy Commission has said that it may introduce a spot market trading short term bilateral contracts to prevent power companies dominating the electricity market. It is studying market models in Norway, Spain, Colombia and the USA. Currently, grid despatch boards known as CDEC boards decide which generators are despatched. The CDEC boards are made up of power company officials.
Costa Rica: National power company Instituto Castarricense de Electricidad (ICE) has awarded Oxbow Power Corp. a contract to build and operate a 39 MW hydropower plant. The project will be implemented by a consortium comprising Oxbow, BEL Engineeirng and Jose Altmann & Compania Limitada, and commercial operation is slated for early 2003. The project, on Rio General near San Jose, will cost around $78m. Oxbow will operate the plant for 17 years, selling the output to ICE.
Ecuador: President Gustavo Noboa has said that he will deliver a bill to Congress this month (July) allowing the private sector to invest in the telecommunications, power and oil sectors. The bill would allow companies to invest in these industries, which are currently closed, through the sale of majority stock in state firms.
Peru: Canada’s Hydro-Quebec has said that it will complete the construction of a 605 km transmission line connecting Peru’s southern and northern electricity grids by the end of August 2000. The $179m project is 88 per cent complete, and testing of the line has already started. Hydro-Quebec and its partners will lease the line for the next 30 years.
USA: ABN AMRO has issued a bullish outlook for independent players in the deregulating and converging US power and natural gas markets. It said that expected tight supply in regional power markets will favour “agile and independent energy producers”, and that predicted explosive growth in the convergence market for electricity and natural gas should allow these companies to achieve growth rates exceeding 20 per cent annually. ABN named Calpine, Duke Energy, Dynegy, NRG Energy and Southern Co. as being in a good position.