Campus Distribution Grid Selling and Buying 

Some large university power distribution grids have been sold and bought in recent years — with mighty handsome payouts.  On what basis — data, for example — were these decisions made?  We collaborate with IEEE experts to investigate the background on these transactions.

Norton Rose Fulbright: University Energy Partnerships

Selling or buying an electrical power distribution system is a complex process that involves various technical, financial, and regulatory considerations. Here are some key considerations for both sellers and buyers:

For Sellers:

1. Asset Valuation:
   • Conduct a thorough assessment of the current value of the distribution system, considering the condition of equipment, age, and maintenance history.
2. Regulatory Compliance:
   • Ensure that the distribution system complies with all relevant regulatory standards and environmental regulations.
3. Documentation and Records:
   • Compile comprehensive documentation, including maintenance records, operational history, and any relevant regulatory approvals.
4. Liabilities and Risks:
   • Identify and disclose any potential liabilities or risks associated with the distribution system, such as environmental liabilities or pending legal issues.
5. Future Capital Expenditures:
   • Clearly outline any anticipated future capital expenditures that the buyer may need to make for system upgrades or maintenance.
6. Customer Contracts and Relationships:
   • Provide information about existing customer contracts and relationships, as they may be valuable to the buyer.
7. Personnel Transition:
   • Plan for a smooth transition of personnel, ensuring that the buyer has access to necessary skills and knowledge.

For Buyers:

1. Due Diligence:
   • Conduct a thorough due diligence process to assess the condition, performance, and potential risks associated with the distribution system.
2. Regulatory Approval:
   • Confirm that the distribution system complies with all regulatory requirements, and understand the process and timeline for obtaining necessary approvals.
3. Infrastructure Compatibility:
   • Ensure that the acquired distribution system is compatible with the existing infrastructure and technologies of the buyer.
4. Future Expansion and Upgrades:
   • Assess the potential for future expansion and determine if upgrades or modifications will be required to meet the buyer’s long-term goals.
5. Financial Analysis:
   • Perform a detailed financial analysis, including a cost-benefit analysis, to determine the economic viability of the acquisition.
6. Transition Plan:
   • Develop a transition plan to smoothly integrate the acquired distribution system into existing operations, including personnel, systems, and processes.
7. Liabilities and Contingencies:
   • Identify and assess any potential liabilities or contingencies associated with the acquisition and plan accordingly.
8. Contractual Agreements:
   • Review and negotiate contractual agreements, including warranties, indemnities, and any ongoing service agreements.

Common Considerations for Both Parties:

1. Environmental Impact:
   • Assess the environmental impact of the distribution system and ensure compliance with environmental regulations.
2. Community and Stakeholder Relations:
   • Consider the impact of the transaction on local communities and maintain positive stakeholder relations.
3. Insurance and Risk Mitigation:
   • Ensure that appropriate insurance coverage is in place and develop strategies to mitigate potential risks.
4. Technology Integration:
   • Evaluate the compatibility of technology platforms and ensure a seamless integration into existing systems.
5. Transition Period:
   • Plan for a transition period to minimize disruptions during the transfer of ownership.

Engaging legal, financial, and technical experts is crucial for both parties to navigate the complexities of selling and buying an electrical power distribution system. Additionally, open communication and transparency between the parties can contribute to a successful transaction.