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FOLSOM, N.J. -- Marina Energy, LLC, a subsidiary of South Jersey Industries, has entered into a 20-year contract with Marina District Development Corporation to provide energy services to The Borgata Resort. The agreement, announced by SJI President Charles Biscieglia today at a news conference in Atlantic City, is believed to be the largest energy contract ever executed in the casino industry and one of the largest ever in South Jersey.
The agreement, signed in December 2000, provides The Borgata with heat, hot water and cooling via a new $40 million plant which will use natural gas delivered by South Jersey Gas and supplied by South Jersey Energy. Marina Energy was also awarded a 20-year contract to supply the casino resort's electricity. Other energy related services will also be provided.
Said SJI President Biscieglia, "The agreement is valuable to our customer, The Borgata, as it enables them to focus their time and considerable talent on their strategic and financial objectives. By using South Jersey Industries -- the proven local energy experts -- to deal with their energy concerns, The Borgata management and staff will do what they do best, plan and operate a successful and profitable entertainment experience. We see this approach as a growing trend in the casino and other industries, as the energy business becomes increasingly complex."
According to Biscieglia, this approach eliminates the need for the business enterprise to hire in-house expertise. As well, the off-site plant eliminates the capital cost of a boiler room within the casino resort, and the ongoing operating costs associated with staffing, maintenance, repair, pressure control and monitoring. The plan also frees up valuable, potentially revenue-generating space within the facility.
"We are pleased to have established a long-term association with South Jersey Industries, a respected Atlantic County-based company," said Kevin J. Sullivan, vice president of planning and project manager of The Borgata. "The agreement further illustrates our commitment to maximizing economic growth and development opportunities for the region in conjunction with our project."
The agreement is a clear and emphatic execution of SJI's strategy which focuses on its role as the leader in energy and energy services for southern New Jersey and its local communities. The project produces a valuable synergy within SJI resulting in multiple income streams, as the three provider companies -- Marina Energy, South Jersey Gas and South Jersey Energy -- are all wholly owned by SJI.
Revenue from the executed agreements is projected to total hundreds of millions of dollars over the contract term. The project will generate positive income for SJI in 2003, its first year of operation, and in each year thereafter, at a return on equity greater than that provided by SJI's regulated subsidiary. The contract, and others like it, support SJI's financial strategy for 2003, and thereafter, of annual earnings growth in excess of 10 percent with non-regulated businesses representing at least 20 percent of those earnings.
The $40 million district heating and cooling plant will be constructed on a 40-acre site adjacent to The Borgata property. The land has been acquired and bulk variances and site plan approval were secured. Additional permitting is already in progress. Thomas J. Sykes, AIA, PP, of SOSH Architects in Atlantic City designed the facility to be in harmony with the surrounding area and the enhanced casino resort environment unfolding in the marina district.
Scheduled to be completed and commercially available by July 1, 2003, the plant will generate 12,850 gallons per minute of chilled water for cooling and 5,000 gallons per minute of hot water for heating and commercial use.
The plant was designed to be easily expandable with moderate incremental investment. Significant additional revenue potential is possible based upon the development plans for the area which include the publicly announced MGM/Mirage project. Adjacent to these sites is 27 acres to accommodate a third new casino and Harrah's already announced expansion of 450 rooms provide SJI's companies with outstanding prospects for expanded energy and related services in the burgeoning marina district.
South Jersey Industries (NYSE: SJI) is an energy services holding company for South Jersey Gas and South Jersey Energy. Visit http://www.sjindustries.com for more information about SJI and its subsidiaries.
Marina District Development Company is a joint venture between Boyd Gaming Corporation and MGM Mirage. The $1 billion Borgata project is scheduled to open in 2003. It will be the first new resort in Atlantic City in 13 years and the region's largest hotel with 2,010 guest rooms and 120,000 square feet of gaming space.
Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a leading diversified owner or operator of 11 casino entertainment properties located in Nevada, Mississippi, Illinois, Indiana and Louisiana. For more information on The Borgata, or to follow the project's development progress, visit http://www.theborgata.com or use AOL keyword: borgata.
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