PLAINFIELD, Ind., Sept. 18, 2002 — PSI Energy Inc. has reached a settlement agreement with the Indiana Utility Consumer Counselor and the staff of the Indiana Utility Regulatory Commission on a proposal to add new electric power generation to the PSI system to serve the growing demand for power in Indiana.
The settlement agreement involves PSI’s purchase of Cinergy’s Henry County, Indiana, and Madison, Ohio, gas-fired peaking power plants. The output of these plants was dedicated to PSI and its customers in the summer of 2002, and the two plants ran a total of 3,482 hours to meet that demand.
Under the terms of the settlement agreement reached recently, PSI will acquire the plants to directly serve the needs of PSI and its customers. The parties will now seek final approval of the settlement agreement from the Indiana Utility Regulatory Commission. Approvals from federal agencies are also necessary for PSI to complete the acquisition.
“This summer our customers set new records for power demand,” said PSI President Douglas F. Esamann. “The PSI system needs additional generation to meet our strong customer growth and to build an adequate reserve. The Henry County and Madison plants are already built, operational and interconnected to our system. They are an economic and reliable fit for our current and future needs.”
Under the agreement, PSI will be permitted to acquire the two plants at a price based on the December 1, 2002 net book value. In addition, PSI will be permitted to defer depreciation and carrying costs associated with the plants from December 1, 2002, until the cost of the plants is fully reflected in PSI’s base rates in 2004.
If approved by the IURC, Cinergy believes this settlement, coupled with the previously approved summer 2002 capacity sale, will result in a downward adjustment of approximately 12 cents per share from Cinergy’s 2002 earnings estimates.
Gas-fired peaking plants are highly efficient and environmentally friendly power generating facilities used to produce electricity during times of high customer demand, usually during the summer when customers use more electricity for air conditioning.
Because the plants run on natural gas and are designed so that they can be brought on line quickly when demand for power peaks, they would help diversify the company’s current generation assets, which are primarily coal-fired and operate around-the-clock.
The Henry County Generating Station is capable of producing approximately 130 megawatts, 50 megawatts of which is dedicated to the Wabash Valley Power Association through an earlier contract. The Madison Generating Station in Butler County, Ohio, can produce 576 megawatts. Both are natural gas-fired units.
PSI Energy is Indiana’s largest electric supplier, serving more than 700,000 customers in portions of 69 of Indiana’s 92 counties. Its parent company is Cinergy Corp., based in Cincinnati, Ohio.
Source: Cinergy Corp.