NRG Energy Inc. and Dynegy Inc. reported plans Monday to acquire 1,330 Mw from Sierra Pacific Resources in a deal worth $634 million that will expand their co-owned power generation portfolio.
Under the agreement, NRG Energy and Dynegy will buy power generation facilities from Nevada Power Co., Sierra Pacific Resources' utility subsidiary.
The assets, which serve the Las Vegas, Nev., market include the 740 Mw gas-fired Clark generating station and 590 Mw of the 605 Mw, coal-fired Reid Gardner generation station, NRG and Dynegy said in a joint statement. The assets will be operated by NRG and Dynegy will serve as the power marketer and fuel supplier following the deal's completion.
As a result of the transaction, Dynegy Chief Executive Chuck Watson said his company is "comfortable raising its earnings per share forecast for 2001 to $1.75-$1.80/share." Analysts surveyed by First Call expect 2001 profits of $1.70/share, on average.
Combined with the assets Dynegy has developed and acquired throughout several regions of the country in 2000, Watson said the deal "increases our generating capacity by more than 4,000 Mw gross," comparable to many industry mergers without the regulated transmission and distribution.
The assets will complement NRG and Dynegy's current gas-fired peaking and intermediate California assets, providing the benefits of fuel and dispatch level diversification, said Craig Matacznski, president of NRG North America.
Under the deal, Nevada Power will purchase energy and ancillary services until March 2003. The transaction is subject to approvals from the US Federal Trade Commission, the Federal Energy Regulatory Commission, and the Nevada Public Utilities Commission. It is expected to close during the second quarter of 2001, the companies said.
Sale of the generation assets is a regulatory condition of the Sierra Pacific-Nevada Power merger completed in July 1999. The Reid Gardner and Clark stations are among the seven asset bundles included in an auction begun by Sierra Pacific earlier this year.