Dominion, a company that generates, transmits and distributes electricity, has reached an agreement with the utility service company Exelon to terminate a power purchase agreement between the two companies for power sold from Dominion's 515MW State Line power station in Hammond, Indiana.
The cost to terminate the power purchase agreement, purchase coal inventories on hand and in transit as of the closing date, and other assets is approximately $233 million. The power purchase agreement was scheduled to end in December 2012.
Certain conditions must be met for the termination agreement to become final, such as receiving Federal Energy Regulatory Commission approval and consents of third parties. Upon closing, the output of State Line will be sold to the PJM Interconnection regional grid. The transaction is expected to close before the end of 2007.
Thomas Farrell II, chairman, president and CEO of Dominion, said: There is enormous value trapped in our midwest generation fleet by below-market contracts scheduled to expire beginning in 2012.
As a result of this transaction, we are raising our current 2008 operating earnings per share outlook of $6 or more per share to $6.10 to $6.25 per share and are affirming our expected average annual operating earnings per share growth of at least 6% thereafter.