NewEnergyNews: US UTILITY SELLS ITSELF TO AUSSIES FOR NEW ENERGY FUNDING

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    Tuesday, October 30, 2007

    US UTILITY SELLS ITSELF TO AUSSIES FOR NEW ENERGY FUNDING

    Will the name Macquarie soon mean the same thing in the energy world that the name Murdoch means in the media world? When will US investors see the big bottom line in New Energy investments?

    Read about Puget Sound Energy's pioneering development of synergistic solar and wind installations
    : WIND AND SOLAR TOGETHER IN WASHINGTON STATE

    Need for cash spurs Puget Energy deal
    Drew DeSilver, October 27, 2007 (Seattle Times)

    WHO
    Puget Sound Energy (Steve Reynolds, CEO), Macquarie Infrastructure Partners’s consortium

    Puget Sound Energy's portfolio of sources. But Washington state, 4th in the US in wind energy production, can make more New Energy and now will with Macquarie's deep pockets for development of infrastrucutre, (click to enlarge)

    WHAT
    Puget Sound Energy’s parent company was acquired by the Macquarie consortium so as to fund new power plants and equipment. The consortium paid $30/share, a 25.3 percent premium over the stock price, driving Puget Sounds stock price higher than it has been since December 2000.

    WHEN
    - The complex deal allows Puget Sound until Dec. 10 to get better offers. Already approved by Puget Energy's board, it won’t be complete until the second half of 2008 because it requires approval from the Federal Energy Regulatory Commission and the state Utilities and Transportation Commission.
    - Successful in 2006 ($219.2 million earnings on $2.9 billion revenue), Puget Energy has struggled over the past five years.

    WHERE
    - Macquarie is Austalian. The consortium includes three big Canadian pension funds, Canada Pension Plan Investment Board, British Columbia Investment Management Corp. and Alberta Investment Management.
    - It took control of Pittsburgh's Duquesne Light Holdings this year and owns parts of Aquarion, a New England water utility, as well as a wireless tower operator, two Canadian port terminals and five U.S. and Canadian toll roads.
    - Puget Sound Energy has 1 million+ electric customers and 721,000+ natural-gas customers in the Puget Sound region.
    - The company will remain headquartered in Bellevue, Washington.

    WHY
    - The medium-sized utility required major capital infusion for its plans to build 10 wind farms and 10 gas-fired power plants in the next decade. It anticipated difficulties raising enough money in public markets to fund these ambitious plans.
    - Though this may be a long term loss of revenue for the state, experts blame regulators for preventing Puget Sound Energy’s plans to develop in a way that would provide profits from new plants and equipment.

    PSE's natural gas infrastructure is as valuable an asset as the affluent and diverse region the utility serves. (click to enlarge)

    QUOTES
    - Reynolds, who remain as Puget Sound Energy’s head: "We need reliable access to capital, not just for the next couple of years, but over the long term…[The consortium] will have the patience, risk tolerance and sophistication to work with us to provide capital, steward our investments, and spur the innovation necessary to meet our energy challenges now and in the future…If you don't continue to spend, you find yourself in catch-up mode the way we are with roads and bridges…We think there's a better model than constantly going back to the capital markets year after year."
    - Jim Bellessa, utility analyst: "When regulators do not allow a utility to get an adequate return on investment, the capital goes elsewhere…"

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