Centrica plc’s North American subsidiary, Direct Energy, has agreed to sell its Texas gas-fired power stations to Blackstone for $685m in cash.
The three facilities – located in Paris, Bastrop, and Mission – have a combined capacity of 1,295 MW, United Kingdom-based Centrica said in a Dec. 18 announcement. As part of the transaction, Direct Energy has also entered into a three-year call option arrangement for an equivalent amount of capacity with Blackstone.
Badar Khan, President and CEO of Direct Energy, said: “This transaction allows us to realise value from our gas-fired fleet, while ensuring stability of price and supply in the Texas power market through the call option arrangement. Residential retail supply is key to our North American business, and with sufficient generation capacity in Texas, we can support our downstream business through contractual arrangements, rather than asset ownership.”
The transaction is subject to customary regulatory approvals and is expected to close in the first quarter of 2014. The transaction will be made through Centrica plc’s wholly-owned subsidiary, Direct Energy Power Holdings.
The affected power stations are:
- Bastrop, bought in 2004 from FPL Energy LLC, located in the ERCOT South Region, 540 MW (installed);
- Frontera (Mission), bought in 2004 from TECO Energy, ERCOT South, 495 MW (installed); and
- Paris, bought in 2006 through the acquisition of 100% of the partnership interests in Tenaska III Texas Partners, ERCOT North, 260 MW (installed).