Calpine Buys 2 Brooklyn Union Gas Units
San Jose-based power generator Calpine Corp. completed the $100-million purchase of two Brooklyn Union Gas Co. units with stakes in several power plants in New York, expanding its generating capacity to prepare for deregulation of electricity markets in the Northeast.
The power-plant developer and operator said the acquisition of Gas Energy Inc. and Gas Energy Cogeneration Inc. gives it an additional 120 megawatts of generation. Brooklyn Union, a gas distributor in New York City, is now the main unit of KeySpan Energy Corp., a holding company created in September and based there.
Calpine said the natural-gas-fired plants give it a source of low-cost power generation as it prepares to compete in the deregulating U.S. electricity market. It will focus on regions where electric prices are higher than the national average, said Katherine Potter, a Calpine spokeswoman.
The plants are efficient because they produce electricity and recapture thermal energy to cool and heat buildings, KeySpan said.
The final price was slightly below the $102 million originally announced in August, KeySpan spokesman Robert Mahony said. Brooklyn Union is selling its interests in power plant construction and operation as part of its plans to merge with Long Island Lighting Co., Mahony said.
The plants, which sell electricity and steam under long-term contracts to three utilities and four industrial customers, will also provide a base of operation for building new power plants in the high-priced energy markets of the Northeast, Calpine said. Most of the energy is under long-term contract through 2004, Calpine said.
Calpine shares rose 13 cents to close at $15; KeySpan shares rose 19 cents to $35.88. Both trade on the New York Stock Exchange.
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