ATLANTA Southern Company announced today that it has signed a letter of intent with Dynegy, Inc., for the early termination of all long-term wholesale power contracts between the two companies. Under the letter of intent, Dynegy would pay Southern Company $155 million for the right to exit three wholesale power contracts totaling 1,100 megawatts of generating capacity. The parties agreed to use their best efforts to complete and execute definitive documentation reflecting the terms of the letter agreement by
May 30, 2003.
By agreeing to a financial settlement for the obligations under these contracts, were helping to ensure a more stable outlook for the long-term planning and operation of our competitive generation business, said Allen Franklin, Southern Company president and chief executive officer. Given the events that have transpired in the independent power sector over the past 18 months, we believe this agreement is in the best interest of our customers and our shareholders.
We are exploring several options to remarket the capacity that was contracted to Dynegy, added Paul Bowers, President of Southern Company Generation & Energy Marketing and President and CEO, Southern Power, a Southern Company subsidiary that builds, owns and manages the companys competitive generation assets. He noted that Southern Company has signed several new wholesale power contracts in the Southeast where additional future capacity has not been committed.
Under two operating agreements that it signed with Southern Company, the Houston-based Dynegy, Inc., was receiving 485 megawatts of energy from wholesale agreements that were due to expire in 2005 and 2011. The third agreement for 615 megawatts was set to begin in 2005.
Franklin noted that todays announcement does not impact the wholesale generating capacity that the company is scheduled to complete in 2003. Looking beyond 2003, Franklin noted that
our competitive generation strategy remains on track and we are committed to meeting the operational and financial goals we have set.
With 4 million customers and nearly 37,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier super-regional energy company in the Southeast and a leading U.S. producer of electricity. Southern Company owns electric utilities in four states, a growing competitive generation company, an energy services business and a competitive retail natural gas business, as well as fiber optics and wireless communications. Southern Company brands are known for excellent customer service, high reliability and retail electric prices that are 15 percent below the national average. Southern Company has been named two consecutive years No. 1 on Fortune magazines Americas Most Admired Companies list in the Electric and Gas Utility industry. Southern Company has more than 500,000 shareholders, making its common stock one of the most widely held in the United States. Visit the Southern Company Web site at www.southerncompany.com.
Dynegy, Inc. owns operating divisions engaged in power generation, natural gas liquids and regulated energy delivery. Through these business units, the company serves customers by delivering value-added solutions to meet their energy needs. Its web site is