Princeton, N.J., August 13, 2010 — NRG Energy, Inc. signed an agreement with an affiliate of The Blackstone Group L.P. to purchase 3,884 MW of Dynegy Inc. assets in California and Maine for $1.36 billion, or $351/kilowatt.
In a separate transaction, NRG has agreed to acquire the Cottonwood Generating Station, a 1,279 MW natural gas-fueled plant in the Entergy zone of east Texas, from Kelson Limited Partnership for $525 million, or $410/kilowatt.
The company intends to fund both acquisitions with a combination of cash and other funding sources. Both acquisitions are expected to close by year-end.
Assets include the 1,279 MW combined cycle Cottonwood unit; Moss Landing units 1, 2, 6 and 7 (2,529 MW total); the 540 MW Casco Bay plant; the 650 MW Morrow Bay plant; and the 165 MW Oakland combustion turbine unit.
The assets strengthen NRG’s regional and dispatch diversity by expanding the company’s load following mid-merit generation profile. The addition of combined cycle plants in northern California expands capabilities across the state, advances the company’s ability to “firm” renewable resources with highly efficient gas generation, while lowering the overall carbon intensity of NRG’s fleet.
NRG currently contracts with Cottonwood, one of the newest and most efficient plants in the region, to support current long-term contracts in Louisiana, Arkansas and East Texas.
Owning Cottonwood will allow for future contracting opportunities and will enable NRG to provide additional balancing and ancillary services. The Company expects the transactions will be accretive to adjusted EBITDA and free cash flow immediately.
“We’ve sought for many years to fill the gap in our combined cycle gas portfolio in our core markets,” said David Crane, President and CEO of NRG Energy. “With these acquisitions of ideally located assets, we are filling that gap in three of our four core regions while furthering our long-standing strategy of being a regionally focused, multi-fuel scale generator with the ability to dispatch our assets efficiently across the merit order in each of our core markets.”
Blackstone Senior Managing Director David Foley said, “Blackstone’s relationship with NRG began with NRG’s acquisition of Texas Genco five years ago and we are pleased to continue that partnership by working together on an exclusive basis to structure this innovative transaction involving the simultaneous sale of certain Dynegy assets to NRG with the closing of Blackstone’s acquisition of Dynegy.”