Maryland-based Constellation Energy Corp. (CEG) has purchased two combined-cycle gas-fired electricity generating plants in Texas from privately-held Navasota Holdings for $365 million. Constellation adds 1,100 megawatts of capacity with this acquistion. Each plant has a project underway to add 275 megawatts to its capacity. The acquisition gives Constellation generation capacity in Texas, where it needs to increase its supply in order to meet its obligated load requirements.
Electricity generated at the two gas-fired plants in Texas will be sold in Texas through the state’s independent system operator, ERCOT, which controls 85% of the state’s electricity sales and 75% of the state’s land area, including all the major cities in the state.
Nuclear power generates about 65% of Constellation’s electricity. Last year the company sold 49.99% of its nuclear power group to France’s EDF for about $4.6 billion. The joint venture has applied to build a new nuclear generating unit at its existing Calvert Hills plant in Maryland, and wants to build a second unit at its Nine Mile Point plant in New York.
For the 2009 fiscal year, Constellation had adjusted EPS of $3.36, of which $2.58 was attibutable to the company’s merchant power business, while $0.80 of EPS was attributable to regulated power sales through its Baltimore Gas & Electric group.
Adding more generation capacity in Texas will only increase the company’s sales of merchant power at a time when the national economy is getting back on its feet and demand for electricity is sure to grow.
Over the long haul, Constellation has been a very good performer. One analyst notes that the company’s shares are 69%-owned by professional investors and that over the past 10 years Constellation’s EPS growth rate is more than 26%.
Constellation shares are off nearly 3% following this morning’s announcement, but came within pennies of a new 52-week high before turning south.
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