The UK’s International Power is building on its portfolio of power plants in North America through the acquisition of 1857 MW of peaking capacity in the USA.
The electricity generation firm is to spend just under $900 million to buy four power plants in four states from a subsidiary of Tenaska Power Fund and an affiliate of Warburg Pincus. It expects the acquisition to immediately enhance cash flow and deliver a strong return on investment.
The four power plants – located in the PJM and MISO power markets – will complement International Power’s existing portfolio in the country consisting of eight plants in Georgia, Texas and Massachusetts. The plants all began commercial operation in 2002.
Philip Cox, CEO of International Power said, “This acquisition of modern peaking plants in attractive power markets … improves further our ability to benefit from tightening reserve margins in the region. The acquisition is at a material discount to new build costs and is expected to deliver a strong return on investment.”
International Power is buying the 625 MW Armstrong plant in Pennsylvania (PJM), the 313 MW Pleasants plant in West Virginia (PJM), the 616 MW Troy plant in Ohio (MISO) and the 303 MW Calumet plant in Illinois (PJM). The purchase price of the plants is $856.4 million, plus debt service reserve and transaction costs of $38.6 million.
International Power believes that projected electricity demand growth in the PJM and MISO markets will result in reduced margins over the next few years. The PJM market covers the majority of electricity load in the states of Pennsylvania, New Jersey, Maryland, Delaware and West Virginia, while MISO covers 15 states in the Midwest.
UK-based International Power currently owns stakes in 4948 MW of generating capacity in the US. It also holds a 35 per cent stake in a 548 MW LNG-fired plant in Puerto Rico.
Sian Crampsie
May 13, 2008
Linkedin
