WASHINGTON, D.C., May 1, 2002 — Finalizing the first outright sale of a U.S.-based transmission system to an independent transmission company, Trans-Elect, Inc. announced Wednesday the closing of its purchase of the Consumers Energy transmission system, known as the Michigan Electric Transmission Company (METC).
The closing is the second major purchase completed this week by the privately-held, Washington, D.C.-based independent transmission company. On Monday, Trans-Elect, as a general partner of a new consortium named AltaLink, concluded a milestone agreement in Canada to own and operate the transmission system of Calgary-based Trans-Alta.
In a recent meeting approving Trans-Elect’s purchase of METC, the Federal Energy Regulatory Commission (FERC) hailed its action as the first time FERC has approved plans by an independent, stand-alone transmission company to acquire the power-grid assets of an investor-owned utility.
Commissioner Nora Mead Brownell stated, “This is the business model we’ve been encouraging, and frankly, we have great expectations.”
“FERC’s strong endorsement of the Trans-Elect model and our ability to bring these transactions successfully to the finish line has established Trans-Elect as the leader in independent ownership of transmission systems,” said Frederick W. Buckman, Jr., Chairman of Board and Chief Executive Officer of Trans-Elect.
“Final approval of this transaction, together with Monday’s closing of our purchase of AltaLink, creates a solid foundation for future transactions.”
GE Capital Global Energy, a unit of GE Capital Structured Finance, is a limited partner with Trans-Elect in purchasing these assets. In addition, CIBC World Markets Corporation and Deutsche Banc Alex.Brown, Inc. are financial advisors to Trans-Elect and are also providing the debt funding for the purchase.
Trans-Elect will now take over operation of 5,400 miles of 345 kilovolt (Kv) and 138 Kv transmission lines serving Consumers’ entire electric service territory in the Lower Peninsula of Michigan.
The sale, approximately $290 million, also includes 80 substations. Transmission rates charged to Consumers Energy and its customers will be maintained at the FERC-approved levels for a minimum of 3 1/2 years. The METC has also joined the Midwest ISO.
The AltaLink system includes more than 7,200 miles of transmission lines and 260 substations. The transmission lines carry voltage ranging from 69 Kv to 500 Kv. The deal cost approximately US$563 million.
Trans-Elect, the nation’s only truly independent transmission company, was formed in 1999 and is now a general partner of 12,600 miles of transmission in North America representing investment of about $850 million. Trans-Elect is creating a North American network of independently owned and operated electric transmission systems.