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Centrica plc's North American subsidiary, Direct Energy, has agreed to sell its Texas gas-fired power stations to Blackstone Energy Partners for $685 million in cash. The three units, located in Paris, Bastrop, and Mission, have a combined capacity of 1,295MW. As part of the transaction, Direct Energy has also entered into a three year call option arrangement for an equivalent amount of capacity with Blackstone.
Badar Khan, President and CEO of Direct Energy, said:
"This transaction allows us to realise value from our gas-fired fleet, while ensuring stability of price and supply in the Texas power market through the call option arrangement."Residential retail supply is key to our North American business, and with sufficient generation capacity in Texas, we can support our downstream business through contractual arrangements, rather than asset ownership."
Centrica plc will return the proceeds from this sale to shareholders through a £420 million extension of its share repurchase programme, which will be conducted over the course of 2014.
Direct Energy will keep the right to buy the power produced by the plants at a certain price for three years, the company said.
Blackstone last year announced the final closing on just over $2.5 billion for Blackstone Energy Partners (BEP) its first dedicated energy focused private equity fund. BEP invests in control and control-oriented equity investments within the energy and natural resources sector on a global basis.