NRG Energy issues notice that it disagrees with FERC order and seeks more information

MINNEAPOLIS, Minn., July 18, 2002 — In another round of the complex tug of war for FirstEnergy’s generating assets, NRG Energy issued a notice that it disagreed with FERC’s latest order concerning the potential merger and asked for more information.


NRG Energy on Wednesday told FirstEnergy Corp. it “disapproves” the “Order Clarifying Order” that was issued Tuesday by FERC in connection with NRG’s intended purchase of certain generating assets from FirstEnergy.

This notice is required by the terms of the Purchase and Sale Agreements between those parties in order to preserve NRG’s right to evaluate the potential effects of the Order on NRG’s future ownership and operation of those plants. As NRG explained in its filings with the Commission, NRG is awaiting information from FirstEnergy that is necessary for NRG to conduct this analysis.

Tuesday’s Commission Order arose out of an attempt by FirstEnergy to clarify the terms of the Commission’s July 2 order that had approved NRG’s purchase of the FirstEnergy assets, but had conditioned that approval on NRG’s agreement to comply with certain terms of a Merger Settlement Agreement.

That Merger Settlement Agreement had been entered into by FirstEnergy and the City of Cleveland in 1997, but was not disclosed to NRG by FirstEnergy before the Purchase and Sale Agreements were signed. NRG is not a party to the Merger Settlement Agreement and did not agree to assume any of its obligations when it agreed to purchase these assets.

In its latest filing, FirstEnergy had asked the Commission to relieve NRG of all responsibilities under the Merger Settlement Agreement, saying that it had entered into an “agreement” with the City of Cleveland that permitted FirstEnergy to be solely responsible for that compliance.

As stated in its Commission filings, NRG has so far not received any information regarding this important new agreement, except for a copy of a brief letter from FirstEnergy to counsel for the City of Cleveland describing FirstEnergy’s “understanding” of the agreement.

In its Order, the Commission failed to grant this request by FirstEnergy, holding that NRG still “must notify both FirstEnergy Companies and the City of Cleveland if it intends to remove any of the generating facilities from service….This notification must be given sufficiently in advance of the removal from service to allow FirstEnergy Companies to fulfill, its obligations under the Merger Settlement Agreement.”

Since NRG is being asked to assume this new obligation, it will continue to seek sufficient information from FirstEnergy to evaluate its potential impact on NRG’s ownership and operation of the facilities before deciding on its appropriate course of action.

Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. Formed by the merger of Denver-based New Century Energies and Minneapolis-based Northern States Power Co., Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis. More information is available at www.xcelenergy.com.


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