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Reduced Electricity Demand Results in More Power Plant Sales Power plants are being sold in greater numbers as the ongoing economic slump keeps electricity demand—and prices—low.
In April Pepco Holdings Inc. announced it would sell its power-generation business to Calpine Corp. and would instead be focusing on its regulated electricity delivery businesses.
Joseph Rigby, chairman and CEO of Pepco, told Dow Jones & Co. that the company believed the value of its generation business “was never fully recognized in [its] market valuation.”
A sale of three of BG Group PLC’s New England power plants to private equity firm Energy Capital Partners represents a 50 percent loss for BG Energy. It had purchased those plants during 2006 and 2007.
Some sellers are being forced to unload assets by financial problems, while others are simply betting that demand will not rebound soon enough to outweigh risk.
Most sales have been of natural-gas fired plants, which are appealing to buyers anticipating a demand rebound while seeking to avoid the risk of owning coal-fired assets in the case that CO2 restrictions are implemented.
Among the other companies purchasing or interested in purchasing such assets are NRG Energy Inc., PPL Corp., Constellation Energy Group Inc. and the North American unit of U.K.-based Centrica PLC. In the last two years power demand has fallen by five percent. Electricity use is back on the rise, but the disappearance of some industrial demand and efforts to promote widespread efficiency leads some to speculate that a significant demand rebound may not happen in the short-term. |
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