Exelon to buy 720 MW combined cycle natural gas fired power plant in Texas
It is equipped with two Mitsubishi combined-cycle gas turbines and serves the Dallas and Fort Worth areas
Chicago, May 12, 2011 — Exelon Corp. agreed to acquire Wolf Hollow, a combined-cycle natural gas-fired power plant in north Texas, from Sequent Wolf Hollow, LLC, for $305 million, as adjusted for working capital.
The transaction adds 720 MW to Exelon's fleet in the competitive Electric Reliability Council of Texas power market, where the company already owns and operates three other natural gas-fired power plants.
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.
In addition to eliminating the existing power purchase agreement, Exelon expects the transaction will be accretive to free cash flow beginning in 2012.
The transaction also creates long-term value for Exelon by adding an efficient combined-cycle natural gas-fired plant to Exelon's fleet in ERCOT.
Exelon Generation, which will own and operate the plant, already has a strong and growing presence in the Dallas, Fort Worth and Houston regions.
Exelon Generation's natural gas-fired plants at Handley, Mountain Creek and ExTex LaPorte have a total capacity of 2,222 MW and employ 80 people. Exelon contributes $1.9 million per year in state tax payments to Texas.
The Wolf Hollow transaction will build on the company's commitment to clean energy as part of Exelon 2020, a business and environmental strategy to eliminate the equivalent of Exelon's 2001 carbon footprint. Exelon already is the least carbon-intensive of the large U.S. electric utilities.
The Wolf Hollow transaction is subject to approval by the Public Utility Commission of Texas and the notification and reporting requirements under the Hart-Scott-Rodino Act.
Exelon plans to finance the transaction with existing cash flow and liquidity resources and expects to close it in the third quarter of 2011. Barclays Capital acted as financial advisor to Exelon.