SEI to file reorganization plan for Cajun

Southern Electric International, a subsidiary of Southern Company, today announced plans to submit a cash offer of $1.04 billion for the non-nuclear assets of Cajun Electric Power Cooperative.

The offer will be part of a reorganization plan that would lower electricity prices for customers and eliminate protracted, expensive litigation. Southern Electric expects to file the reorganization plan in the U.S. Bankruptcy Court for the Middle District of Louisiana.

“This plan would balance the interests of creditors and customers and allow an experienced electric utility to move forward with the efficient operation of Cajun’s non-nuclear assets,” said former Louisiana Gov. David C. Treen, a partner in Deutsch, Kerrigan & Stiles, a law firm that represents Southern Electric in the case.

Under the plan, Southern Electric would enter into 25-year contracts to provide all the electricity requirements of the distribution cooperatives currently buying electricity from Cajun, headquartered in Baton Rouge, La. Wholesale rates under these contracts would begin at 3.98 cents per kilowatt-hour, nearly one-fifth less than Cajun’s current wholesale rate of 4.88 cents per kilowatt-hour. The distribution cooperatives that buy electricity from Cajun serve more than 1 million people in Louisiana.

In addition, the plan will call for Southern to enhance the economic development efforts of the distribution cooperatives by offering special incentive rates to new commercial and industrial customers who are heavy users of electricity.

The plan also would eliminate at least 11 lawsuits spawned by Cajun’s bankruptcy and its involvement in the River Bend nuclear facility.

Atlanta-based Southern Company (NYSE: SO), the nation’s largest producer of electricity, is the parent firm of five electric utilities: Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric. Other subsidiaries include Southern Communications Services, Southern Nuclear, Southern Development and Investment Group and Southern Company Services. Southern Company’s common stock is one of the 20 most widely held corporate stocks in America.

Southern Electric, also based in Atlanta, develops, builds, owns and operates power production and delivery facilities and provides a broad range of technical services to industrial companies and utilities in the U.S. and international markets. It also administers energy trading and marketing activities through Southern Company affiliate Southern Energy Marketing.