We were retained by Madison Gas & Electric (MG&E) to prepare a condition assessment and valuation analysis of its gas-fired combustion turbine power plants. The valuation was required due to the provisions of the lease buyout terms and conditions.
The project included valuing the generating units using the market approach, cost approach, and income approach. The market approach included a comparison of similar units exchanged in the market. The cost approach included the development of a reproduction cost new less depreciation valuation. The income approach included the development of a revenue and expense pro forma model to analyze the potential Net Present Value of the unit to a potential acquirer. The study was prepared and provided to MG&E to support the lease buyout of their generating station.