Aquila buys generation assets from GPU

UtiliCorp United unit Aquila Energy, a large gas and power wholesaler, will buy interests in six power plants located in the US from GPU Inc. for $225 million. GPU�s interests in the plants to be sold are 500 Mw of operating capacity and one-half of a 715 Mw project in development. With this acquisition, Aquila will own or control more than 3,500 Mw of generation in operation, construction, or active development.


UtiliCorp United Inc. unit Aquila Energy, a large gas and power wholesaler, will buy interests in six power plants located in the US from GPU Inc. for $225 million.

GPU�s interests in the plants to be sold include 500 Mw of capacity and one-half of a 715 Mw project in development.

With this acquisition, Aquila will own or control more than 3,500 Mw of generation in operation, construction, or active development.

Aquila has been openly looking to combine its trading and marketing expertise with a suite of generation assets from another company and spin the resulting entity off to the public and to shareholders. The search for such an arrangement that began early this year has so far come up empty handed. Physical assets are needed to back up the trading operation.

�That search continues,� says Al Butkus, spokesman for UtiliCorp. �It�s still in the cards. The year is not over yet.�

Meanwhile, Aquila is looking to buy more generation starting with the GPU purchase. Aquila last bought a power plant in 1997 in Jamaica, he says.

Butkus suggests that Aquila could have an initial public offering by itself without a generating stake from another company, once Aquila has a portfolio of generation assets.

The GPU plants to be purchased are located in New York, New Jersey, Georgia, Florida, and Mississippi. GPU has already sold it international generation. GPU, owner of three East Coast utilities, said it expects to record a gain on sales of $60-80 million. GPU, which is being acquired by FirstEnergy Corp., will use proceeds to reduce debt.

UtiliCorp says the purchase will increase earnings immediately after completion. The deal is expected to close by yearend.

GPU, which has been disposing of its generation assets, and FirstEnergy Corp. reported Aug. 8 FirstEnergy would acquire GPU for about $4.5 billion in cash and stock.

More in Companies