Calpine Corporation has agreed to sell its 550-megawatt natural gas-fired Ontelaunee Energy Center in Pennsylvania to LS Power Equity Partners for $225 million as part of an on-going policy of divestures to reduce debt.
The Ontelaunee sale is the third of four planned power plant sales, which the company announced in June 2005. Since launching its strategic initiative in May 2005, Calpine has completed or announced more than $2 billion of asset sales. Calpine expects to complete the sale in September, pending regulatory approval.
As part of the transaction, Calpine will continue to operate the plant on behalf of LS Power for five years, and provide turbine maintenance and parts services for ten years. Furthermore, Calpine Energy Services, the trading and risk management subsidiary for Calpine, will supply a variety of energy services, including power marketing, and scheduling of power and fuel for a six-month term.
By divesting of non-strategic assets like Ontelaunee, we continue to de-lever our balance sheet and re-focus resources on Calpine’s core power markets, stated Calpine executive vice president and CFO Bob Kelly. At the same time, by providing LS Power a broad range of operational and power services for Ontelaunee, Calpine has a great opportunity to expand our energy services business units.