PGL Peoples Energy Corp

Peoples Energy (NYSE:PGL) today announced that it has signed an agreement with J-POWER USA Development Co., Ltd (J-Power) to sell its 50 percent equity interest in Elwood Energy (Elwood) and 100 percent interest in COB Energy Facility (COB) for $110 million, subject to certain closing adjustments. The transactions are subject to final approval of the Board of Directors of J-Power's parent company, Electric Power Development Co., Ltd., which is expected to occur in mid October. These sales will complete the divestiture of all power assets owned by Peoples Energy, consistent with plans announced last February to exit the power generation business. Elwood is a 1350-megawatt, natural gas-fired "peaker" electric power plant located approximately 60 miles southwest of Chicago. It began operation as a joint venture between Peoples Energy and Dominion Energy, Inc. in the summer of 1999. Elwood has approximately $330 million of debt outstanding which is non-recourse to Peoples Energy and Dominion. The sale of the Elwood equity interest is subject to approval by the Federal Energy Regulatory Commission (FERC) pursuant to Section 203 of the Federal Power Act (review of market power issues) and satisfaction of antitrust requirements under the Hart-Scott-Rodino Act, which are both expected to occur by the end of the calendar year. COB is a development project located in Klamath County, Oregon. COB has received its site certificate from the Oregon Energy Facility Siting Council for the construction of a 1150 megawatt combined cycle facility. The closing for both sales will take place shortly after receipt of the Elwood FERC and HSR approvals, at which time the Company expects to record a sizable gain on the sale in line with expectations. Cash proceeds will be used to reduce short-term borrowing at Peoples Energy Corporation. Elwood currently sells 100% of the plant's output to Exelon Generation and Constellation Energy under existing long-term power purchase agreements. The sale by Peoples Energy will have no significant impact on the power sales agreements, plant operations or Elwood's outstanding senior secured notes. Peoples Energy, a member of the S&P 500, is a diversified energy company comprised of three primary business segments: Gas Delivery, Oil and Gas Production and Energy Marketing. The Gas Delivery business serves about one million retail customers in Chicago and northeastern Illinois. Visit the Peoples Energy web site at PeoplesEnergy.com. Forward-Looking Information. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as the expected gain on the company's sale of its interest in Southeast Chicago Energy Project. Generally, the words "may", "could", "project", "believe", "anticipate", "estimate", "plan", "forecast", "will be", and similar words identify forward-looking statements. Actual results could differ materially from such expectations because of many uncertainties, including, but not limited to, the timing of the closing of the sales transactions, approval of the transactions by governmental agencies, effectiveness of the Company's risk management policies and the creditworthiness of customers and counterparties; regulatory developments in the United States, Illinois and other states where the Company does business; changes in the nature of the Company's competition resulting from industry consolidation, legislative change, regulatory change and other factors, as well as action taken by particular competitors; and terrorist activities. Some of the uncertainties that may affect future results are discussed in more detail in Peoples Energy's filings with the SEC, as such information may be updated by subsequent filings under the Securities Exchange Act of 1934. All forward-looking statements included in this press release are based upon information presently available, and Peoples Energy assumes no obligation to update any forward-looking statements.