TAMPA, Fla., May 17 /PRNewswire-FirstCall/ -- TECO Power Services today
announced that its TECO-Panda Generating Company joint venture has signed
contracts with SNC-Lavalin Constructors Inc., a subsidiary of SNC-Lavalin
Group, Inc., to replace NEPCO (an Enron subsidiary) and to complete the
engineering and construction of the 2,205-megawatt Union Power Station and the
2,145-megawatt Gila River Power Station. Union is located in El Dorado,
Arkansas, and Gila River is located in Gila Bend, Arizona.
In addition, TECO Power Services announced that it has signed contracts
with SNC-Lavalin to replace NEPCO and complete two additional facilities, the
599-megawatt Dell Power Station in Dell, Arkansas, and the 599-megawatt
McAdams Power Station in Kosciusko, Mississippi. These two projects are
wholly owned by subsidiaries of TECO Power Services.
Coincident with the execution of the four contracts, SNC-Lavalin
Constructors Inc. will hire substantially all of NEPCO's management and staff.
As a result, management and staff overseeing the projects will remain the
same, ensuring continuity, job knowledge and maintenance of the construction
quality and schedule. The projects will be completed on a cost-plus-fee
basis, with the fee portion at-risk until the completion of the projects. The
new contracts and the NEPCO termination will become effective at midnight on
May 17, 2002.
TECO Power Services President Rick Ludwig said, "This is good news for the
projects and for TECO Energy. SNC-Lavalin Constructors Inc. is backed by SNC-
Lavalin Group's excellent reputation and years of experience in industrial
construction. With this financially stable company, we are confident our
projects will continue on schedule, using the same highly qualified personnel
to oversee the process. In addition, this eliminates the risk that the
projects would be drawn into the Enron bankruptcy, which could have impacted
our large project financing."
SNC-Lavalin's Executive Vice President-Power Klaus Triendl said, "The
NEPCO team's know-how and experience, combined with SNC-Lavalin's existing
thermal power expertise, will benefit all four of these major independent
power construction projects."
GILA RIVER AND UNION
TECO-Panda Generating Company has already obtained approval from the
lending bank group financing the construction of the Gila River and Union
power stations for the new contracts with SNC-Lavalin Constructors Inc. No
interruption of funding will occur. TECO Energy remains responsible for
potential construction cost overruns for the two projects. This amount
(including additional oversight and other requirements of the lending bank
group and credits for improvements in other project costs), previously
estimated to be approximately $63-million for the two joint venture projects
is now estimated to be approximately $90 million with the SNC-Lavalin
DELL AND MCADAMS
Work on project financing of TECO Power Services' Dell and McAdams
facilities is underway and expected to be completed later this year. The
potential EPC-related construction cost overruns, including estimates for
additional oversight and other requirements necessary to complete the
financing, previously estimated to be approximately $17 million, are now
estimated to be approximately $27 million with the SNC-Lavalin arrangement.
As previously reported by TECO Energy, construction cost overruns
associated with the four projects were the result of Enron's centralized cash
management procedures, which "swept" funds before they were applied to pay
project costs. The exposure for cost overruns under the NEPCO contracts was
significantly mitigated by each project drawing on NEPCO letters of credit, as
well as NEPCO's agreement to forego profit and eliminate certain contingency
Overall, the four projects' estimated $117 million in potential net cost
overruns outlined above will be amortized over 30 years and represent a small
increase relative to the $3.4-billion estimated total cost for these projects.
In addition, the project budgets contain contingency amounts still available
that could absorb most of these overruns if the amounts are not needed for
ABOUT THE COMPANIES
TECO Power Services is a subsidiary of TECO Energy, Inc. (NYSE: TE), a
Tampa-based energy holding company included in the S&P 500 Index, with more
than $2.6 billion in revenues. TECO Power Services builds, owns and operates
independent power plants, with an emphasis on high growth areas of North
America. Other TECO Energy subsidiaries include Tampa Electric, Peoples Gas,
TECO Transport, TECO Coal, TECO Coalbed Methane and TECO Solutions. TECO
Energy as a whole has nearly 11,000 megawatts of electric generation, either
operating or in construction.
SNC-Lavalin (Toronto: SNC) is one of the leading groups of engineering and
construction firms in the world and a global leader in the ownership and
management of infrastructure. The SNC-Lavalin group of companies has over
14,000 employees in offices across Canada and in 30 other countries around the
world. SNC-Lavalin is currently working in some 100 countries.
Note: This press release contains forward-looking statements, which are
subject to the inherent uncertainties in predicting future results and
conditions. Certain factors that could cause actual results to differ
materially from those projected in these forward-looking statements include
SNC-Lavalin Constructors Inc.'s ability to complete construction of the Union,
Gila River, Dell and McAdams power stations on schedule and according to plan
and TECO Power Services' ability to complete financing for the Dell and
McAdams facilities. Additional factors are discussed under "Investment
Considerations" in TECO Energy's Annual Report on Form 10-K for the year ended
December 31, 2001, and reference is made hereto.
MAKE YOUR OPINION COUNT - Click Here
SOURCE TECO Power Services