New Jersey-based Public Service Enterprise Group, fulfilling a two-year old goal, is making a major bet on its nuclear power assets as fears of global warming rise. The multi-state utility company is selling all its coal and natural gas generating assets to a subsidiary of Boston-based ArcLight Capital Partners.
PSEG’s deal with ArcLight’s Parkway Generation and Generation Bridge II involves 6,750-MW of generating capacity in 13 units, for a price of about $1.92 billion. The plants, not all currently in service, are in Maryland, New Jersey, New York, and Connecticut. ArcLight, a private equity firm founded in 2001, describes itself as a pioneer in an asset-based approach to investing in the energy sector.” The firm says it “has invested approximately $25 billion in 113 transactions since inception.”
Online publication E+E Leader said, “Combined with the sale of its Solar Source assets in June, PSEG expects to receive approximately $2.15 billion in after-tax net proceeds, compared to a book value of $4.5 billion listed in the company’s SEC filings.” The companies said they expect the deal to close this year or early in 2022.
PSEG, an early enthusiast for nuclear power, today operates the Salem and Hope Creek nuclear plants in New Jersey and is co-owner of the Peach Bottom plant near Philadelphia, Pa. PSEG owns 57% of the two-unit Salem station (Exelon owns the remaining share). It consists of two 1,200-MW Westinghouse pressurized water reactor. The units went into service in 1977 and 1981. The station has a lifetime capacity factor of 70.5%.
Hope Creek, which PSEG wholly owns, is a single, 1,200-MW General Electric mark 1 boiling water reactor that went into service in 1986, after 10 years of construction. It has an 87.1 lifetime capacity. Both New Jersey reactors are co-located on a site in southern New Jersey.
Peach Bottom, owned 50% by PSEG and Exelon, consists of two 1,300-MW GE mark I boiling water reactors, which went into service in 1974, with a lifetime capacity factor of 76.9%. Peach Bottom saw an interesting protype reactor technology designed by General Atomics, a high-temperature, graphite moderated, helium cooled reactor with 40-MW of generating capacity. Going into service in 1967, it operated well, but the only full-scale follow-on, at Fort St. Vrain in Colorado, was a construction and financial failure, and was converted to a 1,000-MW natural gas generator.
Announcing the deal with ArcLight, PSEG CEO Ralph Izzo said, “With today’s agreement, which is the result of a robust sale process, PSEG is on track to realizing a more predictable earnings profile.”
PSEG’s move was encouraged by the New Jersey Board of Public Works, which in April extended a subsidy, “zero-emission certificates” for the three PSEG units in the state. The BPU said in a press release, “At a total of $300 million, the certificates ensure that the plants, which supply the State with over 90 percent of in-state carbon-free generation and 37.5 percent of its overall in-state energy supply will remain operational.”
–Kennedy Maize