Reliant Energy Inc., an international energy services and energy delivery company, reached a definitive purchase agreement to acquire for $2.1 billion in cash 21 power plants located in the Pennsylvania, New Jersey and Maryland (PJM) power pool with 4,276 MW of net generating capacity from Sithe Energies.
The acquisition significantly advances Reliant`s strategy of owning power generating assets in key regions of the United States, and enhancing the commercial value of these assets by leveraging its strong trading and marketing skills. With the Sithe PJM assets, Reliant will have total net domestic generating capacity of over 23,000 MW operating in seven states.
The transaction is expected to be immediately accretive to Reliant`s earnings. Reliant expects to complete the transaction by the end of the second quarter of this year.
Steve Letbetter, Reliant`s chairman, president and CEO, said, “This is an exceptional opportunity for Reliant. In less than three years, we have evolved from a local electric utility operating primarily in Texas into a major international skill-based energy services company, with superior capabilities in generation, trading and marketing. The PJM assets fit extremely well with our strategy of creating a wholesale merchant position in key regions of the country and is a key component in allowing us to increase our earnings growth expectation to 10 to 12 percent annually.”
Of the 21 power plants Reliant will acquire, 16 are located in Pennsylvania, four are located in New Jersey and one is located in Maryland. These plants utilize three different kinds of fuel: coal (50%), oil/gas (46%) and hydro (4%) and represent a combination of baseload, peaking and intermediate generation. Reliant will manage and operate all 7,132 gross MW generated by these plants. The agreement also includes the purchase of 18 development sites that are adjacent to or nearby current generating facilities.