PSEG Power has reached an agreement to sell its Guadalupe and Odessa natural gas combined-cycle power plants in Texas. The plants will be sold in two separate transactions.
The Odessa plant in west Texas will be sold to High Plains Diversified Energy Corporation (HPDEC), a municipal utility formed by the West Texas Municipal Power Agency. The Guadalupe plant in south Texas will be purchased by MinnTex Power Holdings LLC, a private equity investor.
PSEG Power fully expects both transactions to close in the first half of the year. If all things go well, the sale of the Guadalupe plant could close at the end of February and the sale of the Odessa plant could close at the end of the first quarter.
The transactions have a combined equity value of $687 million, or $343 per kwh.
“I am proud of the employees in Texas and what we have accomplished together. Both Guadalupe and Odessa are well-managed and well-run assets that have incorporated much of the Operational Excellence Model from the beginning with Fossil. We’ve also implemented best practices from the Texas plants across the fleet,” said Rich Lopriore, President, PSEG Fossil. “Strategically, this transaction presents PSEG with the financial strength to make disciplined investments for growth, ensuring the company continues to provide safe, reliable, economic and green energy.”
This year marks the tenth anniversary that Guadalupe and Odessa began commercial operations. PSEG Global developed the Guadalupe and Odessa plants in an equal 50 percent partnership with Panda Energy in 1999. PSEG acquired the balance of the plant in 2004 and ownership of the plants was transferred from PSEG Global to PSEG Power in late 2008.
“In my short tenure with the stations, I have come to appreciate the Texas spirit of cooperation and steadfast commitment to achieve operational excellence. Several improvements have been notable, such as unit responsiveness, heat rate improvements and reduced fuel use at start-up,” said Director Power Generation Dominic DiBari. “I want to thank the entire team for their due diligence and support throughout the sales process.”
Guadalupe and Odessa are natural gas-fired combined-cycle power plants that use state-of-the-art technology. The plants’ advanced technology ensures maximum efficiency, requiring one-third less fuel and water for operation than conventional power plants. Combined, the plants have a generating capacity of 2,000 megawatts.
The High Plains Diversified Energy Corporation (HPDEC) is a municipal utility company created by the West Texas Municipal Power Agency (WTMPA) and Republic Power Partners, LP (RPP) as part of a public-private partnership designed to develop clean energy and transmission in West Texas. The HPDEC develops, constructs and operates generation and transmission assets for use in the Panhandle region of Texas.
MinnTex Power Holdings LLC is an entity created by a private equity fund based out of Minnesota.
Each new owner will be contracting with an O&M Manager to oversee operations of the units, and will be providing an overview of their firms and transition plans for employees in the coming weeks. |
