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Calpine Corp. Completes $625 Million Natural Gas Plant Purchase

By Justin Loiseau - Feb 27, 2014 at 11:31AM

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The utility opts to buy, not build.

Calpine (NYSE: CPN) announced today that it has completed its $625 million acquisition of a Texas natural-gas, combined-cycle power plant. The company said the deal works out to approximately $595 per kilowatt.

Rather than build a new natural-gas plant, as many other utilities have done over the past few years, Calpine Corp. announced last December that it would purchase its 1,050 MW power plant from MinnTex Power Holdings.

According to Calpine CEO Jack Fusco in a statement today, the move should save his company and shareholders significant money:

The addition of Guadalupe Energy Center to our fleet at a discount to replacement cost, and at a time when electric demand in ERCOT [Electric Reliability Council of Texas] is increasing and the reserve margin is tightening, demonstrates our commitment to making disciplined capital allocation decisions to drive shareholder value.

The power plant is located in the south zone of ERCOT (Electric Reliability Council of Texas), a Texas electricity market organization that manages 75% of the Lonestar State's deregulated market.

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