Exelon Buys Fourth Natural Gas Power Plant in Texas

2011-5-13

Two weeks after snatching rival Constellation Energy (CEG: 37.07, +0.40, +1.09%), Exelon (EXC: 42.00, +0.44, +1.05%) said it has purchased another combined-cycle natural gas-fired power plant in North Texas for $305 million as part of its efforts to expand its clean energy fleet.

The transaction with Sequent Wolf Hollow adds 720 megawatts of clean energy to Exelon’s fleet in the competitive Electric Reliability Council of Texas power market, where the company already operates three other natural gas-fired power plants.

John Rowe, Exelon’s chief executive, said the acquisition adds to its clean energy portfolio, while expanding the company’s presence in the competitive Texas energy market and creating value for shareholders.

The latest deal comes two weeks after Exelon announced a $7.9 billion purchase of Constellation Energy. Exelon said the Wolf Hollow plant allows the company to continue providing an abundance of clean energy for Constellation’s large customer base.

The Wolf Hollow plant builds on its commitment to clean energy as part of Exelon 2020, a business and environmental strategy to eliminate the equivalent of Exelon’s 2011 carbon footprint. The company is already one of the least carbon-intensive of the large    U.S. electric utilities.

“Forthcoming EPS clean air rules will make Exelon’s natural gas-fired power plants even more valuable and increase our role in the nation’s transition to a clean energy future,” Rowe said.

Located near Granbury, Texas, Wolf Hollow opened in August 2003 and is equipped with two Mitsubishi combined-cycle gas turbines. The plant serves the Dallas and Fort Worth areas of Texas.

Exelon currently has a power purchase agreement with Wolf Hollow through 2023 to purchase 350 MW of its output at above current observable market power prices, though the company said it intends to eliminate the existing power purchase agreement next year.

One of the nation’s largest electric utilities, Exelon will own and operate the plant, adding to its portfolio of natural gas-fired plants, including Handley, Mountain Creek and ExTex LaPorte, which have a total capacity of 2,222 MW and employ 80 people.

Because of its heavy involvement in the state, Exelon contributed $1.9 million a year in state tax payments to Texas.

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