An Entergy (NYSE:ETR) affiliate has agreed to sell its 583-MW Rhode Island State Energy Center in Johnston, R.I., to a Carlyle Group (NASDAQ:CG) affiliate, Carlyle Power Partners.
The combined-cycle natural gas power plant, which entered commercial service in 2002, is being sold by Entergy Wholesale Commodities (EWC) for a base sales price of roughly $490m, subject to closing adjustments.
Entergy had bought the plant in December 2011 for $346m. The plant had a capacity factor of roughly 38% in 2013, according to GenerationHub data.
Carlyle said in its news release that equity capital for the transaction will come from Carlyle Power Partners II L.P and Carlyle Power Opportunities Capital Partners L.P.
Carlyle Managing Director and Co-Head of Carlyle Power Partners Matt O’Connor said the Rhode Island plant is among the most efficient combined cycle facilities in New England. “New England represents an attractive market for investment due to its transparency and incentives for reliable generation,” O’Connor added.
The Carlyle official also said that the retirement of aging generation in the region is putting more importance on efficient gas-fired generation.
Entergy expects to record a net gain of approximately $0.50 per share assuming closing of the sale occurs in the fourth quarter 2015, subject to working capital and other adjustments. The gain on sale will be classified as a special item, and as such, excluded from operational earnings.
The transaction is contingent upon, among other things, obtaining necessary regulatory approval from the Federal Energy Regulatory Commission (FERC) and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Closing is targeted for the end of 2015.
“Our strategy for EWC is focused on being disciplined about reducing risk and freeing up financial resources for other opportunities,” said Entergy Chairman and CEO Leo Denault. The Rhode Island natural gas plant “has been a very good investment for us, and its sale is consistent with that strategy.”
Entergy owns and operates power plants with approximately 30,000 MW of electric generating capacity, including nearly 10,000 MW of nuclear power.
The acquisition is being done in conjunction with Carlyle’s portfolio company Cogentrix Energy Power Management, LLC (Cogentrix) and increases the size of Carlyle’s power generation portfolio to 18 power plants totaling more than 4,900 gross MW.