LS Power has struck a deal to buy five power plants in the PJM Interconnection totaling 4.4 GW from Constellation Energy for about $5 billion, or $1.14 million/MW, the companies said Wednesday.
Driving the deal were conditions the U.S. Department of Justice and the Federal Energy Regulatory Commission set in its approval of Constellation’s purchase of Calpine, a transaction that closed in January.
When FERC approved the deal in July, it required Constellation to sell four PJM power plants to help prevent the Baltimore-based independent power producer from using market power to affect power prices. In December, the DOJ required Constellation to sell an additional PJM power plant, plus capacity in Texas. The five PJM power plants — Bethlehem, York 1, York 2, Hay Road and Edge Moor — are in Delaware and Pennsylvania and mainly burn gas.
Constellation and LS Power expect to close the deal, subject to regulatory approvals, late this year.
To satisfy the DOJ’s requirements for the Calpine purchase, Constellation sold its 19-MW stake in the Gregory power plant near Corpus Christi, Texas, earlier this year. To complete its obligations to the DOJ, it also must sell its 606-MW, gas-fired Jack Fusco power plant near Houston.
The LS Power-Constellation announcement comes about six weeks after LS Power sold 12.9 GW in gas-fired power plants — including about 7.4 GW in PJM — and C Power, a demand response company, to NRG Energy for about $13 billion in cash and NRG stock.
As part of the Constellation announcement, Paul Segal, LS Power CEO, said PJM is at the “epicenter of the surge in electricity demand, and these are exactly the kind of assets the grid needs — efficient, dispatchable gas generation that can deliver reliable power around the clock.”
LS Power’s development team is advancing baseload generation projects in U.S. markets, according to Segal.
In other recent deals in the PJM market, Talen Energy in January said it planned to buy three gas-fired power plants from Energy Capital Partners totaling 2,567 MW for $3.45 billion, or about $1.3 million/MW.
Also in January, Vistra said it planned to buy Cogentrix Energy and its 5.5-GW gas-fired fleet — including 3.2 GW in PJM — for about $4 billion, or $730,000/MW.
