The pending purchase of the Morro Bay Power Plant by NRG Energy fell through at the last minute when the sale of Dynegy, the present owner of the plant and numerous others nationwide, to the Blackstone Group was blocked by a major stockholder, who wants to sell Dynegy's assets individually.
NRG Energy had reached agreement with the Blackstone Group to buy the Morro Bay, Moss Landing, Oakland, and Casco Bay, Maine plants had the sale gone through.
There were strong indications, analysts said, that the failed sale of Dynegy will only be temporary, and NRG Energy may still be a bidder to buy some of Dynegy's plants. However, the sale of the Dynegy plants piece by piece could drag out over several years, one analyst said.
Bloomberg News reported on November 24 that analysts believe Dynegy will likely turn to selling its power plants individually after the $4.77 billion deal to sell the entire company to the Blackstone Group went awry.
Reuters news service quoted David Crane, chief executive officer of NRG Energy, as saying his company will lower the price it may offer for the California and Maine plants before agreeing to purchase them again.
Before the sale of Dynegy to the Blackstone Group collapsed, all necessary steps had been taken—including approval by the Federal Energy Regulatory Commission—except for approval by the Dynegy stockholders.
Dynegy reportedly has a debt of $4.5 billion, and interest payments consumed about 12 percent of its third-quarter sales, contributing to its sixth quarterly loss in two years. It has forecast a negative cash flow of $1.6 billion during the next five years to pay debt and keep its plants running. Dynegy has been seeking a buyer for two years, an analyst said.
Only two of the Morro Bay plant's four generating units still operate and even those produce only about six per cent of their capacity. They serve to provide reserve sources of electricity for Southern California Edison, a public utility.
NRG Energy, a Fortune 500 company and one of the two largest U.S. independent power producers along with Calpine, has been making strides into renewable energy lately, Reuters reported. The company recently received $5 million from the U.S Department of Energy to investigate geopressurized geothermal energy sources. It also is in the process of buying for $350 million renewable energy retailer Green Mountain Energy, headquartered in Austin, Tex., which offers clean electricity products, and carbon offsets to residential and commercial customers.
In addition to buying into several other solar projects, NRG Energy owns the largest photovoltaic solar project in California, a 21-megawatt installation in Blythe, and has over 1,150 megawatts of solar projects in the development pipeline.
