Constellation buys natural gas plants for $365 million

Baltimore-based utility owner Constellation Energy Group has agreed to buy two power plants in Texas from Navasota Energy Partners for $365 million.  Constellation is buying the Colorado Bend Energy Center near Wharton, 97 kilometers south-west of Houston, and the Quail Run Energy Center near Odessa in West Texas. The natural gas-fired plants can generate 550 megawatts of electricity each, and can also be expanded by another 275 megawatts each. The plants can power an estimated 550,000 typical homes. The purchase will give Constellation power capacity in Texas markets where it already sells electricity to customers. The company has said it will spend $1 billion during the next two years to increase generation assets in areas where it already delivers power. The money comes from ConstellationÔÇÖs sale of 49.99 percent of its nuclear generation business to Electricit├® de France (EDF) last year. Commenting on the deal, Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy, said: "These modern, well-managed natural gas assets represent an important addition to our generation portfolio and are an ideal fit to support our expanding commercial businesses in Texas. "Matching our generation and load-serving businesses in competitive markets should drive greater efficiencies in capital requirements, realized earnings and cash flow." If state and federal regulatory approvals are given, the purchase could close by the end of June, Constellation said. Navasota is an energy development company based in Magnolia, Texas. It builds and manages power plants throughout the state. Asset deals have picked up in the power sector recently following a downturn in wholesale electricity prices and years of declining demand. Recent deals include the purchase by private equity firm Energy Capital Partners of three New England power plants from BG Group; and the sale by Calpine of two power plants in the Denver area to Xcel Energy. Companies including Calpine, PPL and the North American unit of the UK's Centrica have all expressed interest in acquiring plants. Constellation owns approximately 7,100 megawatts of generating capacity throughout the US and Canada, delivering electricity and natural gas through the Baltimore Gas and Electric Company. In 2009 it had revenues of $15.6 billion.