SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report June 23, 1999
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Date of earliest event reported)
New York State Electric & Gas Corporation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact name of registrant as specified in its charter)
New York 1-3103-2 15-0398550
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
P.O. Box 3287, Ithaca, NY 14852-3287
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of principal executive offices) (Zip Code)
607-347-4131
Registrant's telephone number, including area code . . . . . .
NA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Former name or former address, if changed since last report)
Item 5. Other Events
Nine Mile Point nuclear generating unit No. 2
(See Form 10-Q for quarter ended March 31, 1999, Item 2 (b) -
Liquidity and Capital Resources)
On June 24, 1999, New York State Electric & Gas
Corporation and Niagara Mohawk Power Corporation issued the
following news release regarding the sale of their ownership
interests, 18 percent and 41 percent, respectively, in the Nine
Mile Point nuclear generating unit No. 2 to AmerGen Energy
Company:
NIAGARA MOHAWK AND NYSEG
TO SELL NUCLEAR ASSETS TO AMERGEN ENERGY
FOR IMMEDIATE RELEASE
SYRACUSE and BINGHAMTON, June 24, 1999 Niagara Mohawk
Power Corp. will sell its ownership of the Nine Mile Point 1 and
2 nuclear plants, and New York State Electric & Gas Corp. (NYSEG)
will sell its ownership of the Nine Mile 2 nuclear plant, to
AmerGen Energy Company, a joint venture of PECO Energy Company
and British Energy, under an agreement announced today.
Niagara Mohawk is a wholly owned subsidiary of Niagara
Mohawk Holdings, Inc. (NYSE:NMK). NYSEG is a wholly owned
subsidiary of Energy East Inc. (NYSE: NEG).
At closing, Niagara Mohawk will receive $63.55 million in
proceeds based on its 41 percent ownership share of Nine Mile 2
and NYSEG will receive $27.9 million in proceeds based on its 18
percent ownership share. Niagara Mohawk will also receive $71.7
million for Nine Mile 1. Niagara Mohawk and NYSEG may receive
additional payments through a financial sharing agreement based
on actual market prices through 2012.
The sale furthers Niagara Mohawk s and NYSEG s strategies to
exit the generation business and advances AmerGen s efforts to
become a premier operator of nuclear plants in the United States.
The sale of our nuclear assets is another step toward
creating a competitive generation market, a key component of our
PowerChoice plan to reduce rates and provide customer choice,
said William E. Davis, Niagara Mohawk s chief executive officer.
This sale will also protect customers and shareholders from
unforeseen operating and decommissioning costs. In addition, the
sale to AmerGen puts the plants in the hands of a proven operator
committed to pursuing growth in the nuclear generation business.
That is good news for the plants employees and the region s
economy.
Michael I. German, president and chief operating officer of
NYSEG said: This sale is in the best long-term interest of
NYSEG s customers and the State of New York. It helps insulate
our customers from further rate increases and brings a world-
class operator of nuclear plants into New York state.
AmerGen was formed in 1997 as a joint venture by PECO
Energy, of Philadelphia, and British Energy, of Edinburgh,
Scotland, to purchase and operate nuclear plants in the United
States. Both companies have a strong commitment to the future of
nuclear power and share similar operational cultures involving
people, processes, safety and reliability.
"We are pleased to announce an agreement to add Nine Mile
Point and its excellent operating staff to our portfolio of
AmerGen generation assets, said Dickinson M. Smith, chief
executive officer of AmerGen. When the sale is completed, our
business goals will be to operate the units with a total
commitment to safety, to provide reliable, efficient energy for
the region for many years to come, and to continue Niagara
Mohawk's tradition of being a good, involved neighbor in the
community."
Dr. Robin Jeffrey, AmerGen president and executive director
of British Energy's North American ventures said: "Nine Mile
Point will be our largest potential acquisition to date, and it
marks real progress in our North American strategy. We are
committed to delivering shareholder value and growth, and we are
confident both units at Nine Mile Point will play a significant
role as AmerGen realizes its commercial potential in North
America's electricity market."
As part of the agreement, AmerGen will offer to continue
employment to the approximately 1,330 employees at the two plants
and will accept the current collective bargaining agreement with
International Brotherhood of Electrical Workers Local 97.
The agreement also calls for Niagara Mohawk and NYSEG to
purchase electricity from AmerGen at negotiated prices for three
years from Nine Mile 2. A similar five-year agreement is
in place between Niagara Mohawk and AmerGen for electricity from
Nine Mile 1.
The Nuclear Regulatory Commission, Federal Energy Regulatory
Commission, New York State Public Service Commission, and other
regulatory bodies must approve the sale. Completion of the sale
is expected early next year.
AmerGen will assume full responsibility for the
decommissioning of Nine Mile 1 and its eventual ownership share
of Nine Mile 2. The decommissioning fund will be pre-funded to a
fixed amount by the sellers, with all potential costs above the
fixed amount paid by AmerGen.
Nine Mile Point is a two-unit boiling water reactor site.
Nine Mile 1, a 614-megawatt unit, began producing electricity in
1969. Nine Mile 2, a 1,140-megawatt unit, began producing
electricity in 1988. Niagara Mohawk operates both plants. The
plants are located in Scriba, N.Y., approximately 40 miles north
of Syracuse.
In addition to Niagara Mohawk and NYSEG, the other Nine Mile
2 co-owners are: Long Island Power Authority (18 percent),
Rochester Gas and Electric Corp. (14 percent), and Central Hudson
Gas & Electric Corp. (9 percent). Their ownership shares of the
plant are not included in the sale. Options available to the co-
owners include matching the AmerGen offer, participating in the
sale or retaining their ownership interest. Niagara Mohawk is
the operator and sole owner of Nine Mile 1.
Niagara Mohawk, a subsidiary of Niagara Mohawk Holdings
Inc., is a regulated energy delivery company with the largest
service territory in New York State. The company serves more
than 1.5 million electricity customers and more than 540,000
natural gas customers across 24,000 square miles.
NYSEG is a subsidiary of Energy East Corporation, an energy
delivery, products and services company doing business in New
York, Massachusetts, Maine and New Hampshire. NYSEG supplies,
markets and delivers electricity to 817,000 customers and natural
gas to 243,000 customers across more than 40% of upstate New
York.
PECO Energy is an electric and gas utility serving 1.5
million electric customers in the five-county Philadelphia area
and 400,000 natural gas customers in four suburban counties. It
is one of the nation's largest nuclear utilities, producing more
than 33.5 billion kilowatt-hours of electricity in 1998 at its
Limerick and Peach Bottom generating stations. PECO Energy has
set new nuclear performance standards in safety, availability and
capacity factors, efficient refueling outages, and low operating
and maintenance costs.
PECO Energy also owns and operates coal, natural gas, oil,
landfill gas and hydro power plants. PECO Energy's Power Team
operates a 24-hour energy trading floor with transactions in 47
states and Canada.
British Energy provides more than 20 percent of Britain's
electricity and is the U.K.'s largest generator. It owns and
operates 15 nuclear power reactors in the United Kingdom, with
9,600 megawatts of generation, including seven advanced gas-
cooled nuclear stations and one pressurized water reactor
station. In July 1996, British Energy was successfully
privatized through a public offering of stock. The company has
distinguished itself on nuclear operations through its
outstanding safety record and by reducing costs and increasing
output and profit following privatization, it has market
capitalization equivalent to $5.9 billion (U.S.) and has
approximately 5,100 employees.
J. P. Morgan & Co. Inc. acted as financial advisor to the
sellers.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NEW YORK STATE ELECTRIC & GAS CORPORATION
(Registrant)
By /s/Sherwood J. Rafferty
Sherwood J. Rafferty
Senior Vice President
and Chief Financial Officer
Date: June 24, 1999