Constellation Energy CEO Eyes Purchases Of Power Plants
December 15 2009 - 12:49PM
Dow Jones News
Constellation Energy Group Inc. (CEG), flush with cash from the
recent sale of nearly half of its nuclear business, wants to buy
power plants in Texas and the Northeast U.S., the company's
chairman and chief executive said Tuesday.
In a telephone interview, Mayo Shattuck said Constellation has
more than $1 billion of cash that could go to plant purchases in
the next one to three years, adding that the market for power plant
deals looks favorable. He is comfortable with the scale of the
company's power-plant fleet in the East's 13-state PJM
Interconnection, the country's largest electricity market, but
wants to cut the amount of collateral it must post in areas where
it has retail customers and no plants.
"It is going to be very helpful to our collateral position,"
Shattuck said.
In recent months, several generators have said they'd like to
pick up plants in the depressed U.S. power market, with Calpine
Corp. (CPN), NRG Energy Inc. (NRG) and PPL Corp. (PPL) expressing
interest. Deals have faced hurdles, however, as buyers and sellers
can't agree on price. Although power demand and wholesale
electricity prices have dropped substantially from highs reached in
mid-2008, plant owners aren't yet being forced by investors or
creditors to sell.
Constellation last month completed the $4.5 billion deal with
Electricite de France SA (EDF.FR), capping off a turbulent year in
which the power generator and owner of Maryland's largest
utility--Baltimore Gas & Electric--faced the possibility of
filing for bankruptcy protection. Shattuck said a majority of the
money raised through the deal would go to strengthen the company's
balance sheet and maintain its credit ratings.
But he also envisions expanding the company's power-plant fleet
so it can rely more on its own generation rather than buying from
wholesale-power markets to supply retail customers. As a retail
supplier, Constellation operates as a middleman between power
suppliers and customers. Having plants to back up these supply
contracts with actual electricity supplies will allow Constellation
to cut the amount of cash it needs to tie up as collateral.
Shattuck said its regional supply needs, not the type of fuel a
plant uses, will determine what sort of plants the company buys.
Fluctuating fuel prices and increased focus on emissions of
pollutants and greenhouse gases have led power-market participants
to closely watch how power companies are balancing their generation
fleets.
Shattuck said that the company would focus on buying assets
rather than whole companies. It will also consider buying such
renewable-power assets as wind farms, since it markets renewable
power and other products to its retail customers. He added that
Constellation is becoming more active in renewable power in
Maryland, which has growing requirements for power to come from
clean generation. In the last month, the company announced plans to
develop a large-scale solar facility in the state, while also
acquiring a wind-power project there.
Shares of Constellation were recently trading up 16 cents at
$35.25.
-By Mark Peters , Dow Jones Newswires; 212-416-2457;
mark.peters@dowjones.com
Constellation Energy (NYSE:CEG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Constellation Energy (NYSE:CEG)
Historical Stock Chart
From Jul 2023 to Jul 2024