Power plant asset values ... a pricing point from a nuclear plant sale

Yesterday FPL Group (FPL) announced the purchase of 70% of the Dunae Arnold Nuclear Station from Alliant Energy (LNT). 

FPL agreed to pay $387 million for approximately 420 MW (70% of the 598 MW power plant) -- which includes the purchase of the nuclear fuel and various working capital items.  If the nuclear fuel and working capital items are excluded, FPL is paying approximately $715/KW for the nuclear plant.

The agreement also includes a contract through the remaining licensed life of the nuclear plant (2014), though FPL expects to request a license extension (and we would expect this extension to be granted).  The power purchase agreement calls for an initial price paid to FPL by LNT of $46/mwh, escalating to $61/mwh by the end of the contract period.

FPL expects the power plant purchase to add about $0.03 to $0.04 to its earnings per share each year of the contract.

FPL's news release is at:  FPL News Release on Duane Arnold Purchase

Also, yesterday, Dominion Resources (D), announced the CLOSE of a previously announced purchase of the Kewaunee Nuclear Power Plant from LNT and WPS resources (WPS) (Dominion Resources Close on Kewaunee Purchase).  D had agreed to pay $220 million ($194 million excluding nuclear fuel) for the 100% ownership of the then-545 MW nuclear plant (about 375/KW) ... and as part of the sales agreement, D would have a power sales contract through the end of the plant license term (2013).  The agreement took 16 months to get approved, and 18 months to close.  The original press release is:  D Press Release on Announced Agreement to Buy Kewaunee.  [Addendum:  According to one news report, the closing price was 13% lower than the initial price of the announcement: Power Markets Daily Story.]

This continues our series of articles highlighting power plant sales.  The full list can be seen in the Sector Outlook and Theme page on this site:  Sector Outlook and Theme Index.  Scroll down, and you will see 6 additional articles on pricing points for various plant sales, plus a discussion about the Bull and Bear Cases for merchant power generation values, and a discussion that includes some views on merchant generation in the discussions from the EEI conference.