ComEd's Coal-Fired Plants Attract Nicor Amid Plans to Enter Electricity Market

Strategic Insights -

Naperville-based Nicor Inc. is exploring the possibility of bidding on ComEd's six coal-fired power plants, which have a bookkeeping value of $1.1 billion. As Nicor prepares to enter the electricity business, the company is forming an alliance with Houston-based Dynegy Inc. to build and buy gas-burning power plants in the Midwest. Nicor is also considering the possibility of purchasing coal-fired plants, which can be improved to handle gas, but may prove too costly to convert. The potential buyer of ComEd's coal assets is expected to be interested in building gas-fueled generators and in keeping the electricity supply for ComEd's local customers.

Key Takeaways:

  • Nicor Inc. is considering bidding on ComEd's six coal-fired power plants, which have a bookkeeping value of $1.1 billion.
  • Nicor is forming an alliance with Dynegy Inc. to build and buy gas-burning power plants in the Midwest, with a capacity of 50 to 500 megawatts and a budget of up to $250 million per plant.
  • Nicor and Dynegy are open to purchasing coal-fired plants, despite concerns that they may be too costly to convert to gas.
  • Unicom Chairman and Chief Executive John W. Rowe expects the coal plants to sell for $2 billion or more.
  • A.G. Edwards analyst Michael C. Heim believes that Nicor will focus more on developing new assets rather than buying existing power plants.
  • ComEd's six coal burners have a bookkeeping value of $183 million per plant, according to ComEd's estimates.

Statistics:

  • ComEd's six coal-fired power plants have a bookkeeping value of $1.1 billion.
  • The plants have a bookkeeping value of $183 million per plant per ComEd's estimates.
  • Unicom Chairman John W. Rowe estimates that the coal plants will sell for $2 billion or more.
  • Nicor and Dynegy expect to spend up to $250 million per plant on construction or purchase.
  • The alliance aims to build or buy plants with a capacity of 50 to 500 megawatts.

Sources:

  • "Nicor forms alliance for electricity business," by Dan Culloton, Daily Herald
  • "Unicom's Rowe hopes buyer for ComEd's coal assets will build gas plant," by Dan Culloton, Daily Herald
  • "A.G. Edwards analyst expects Nicor to focus on developing new assets," by Dan Culloton, Daily Herald