Constellation Energy sells Texas NG plant

Quail Run sale to HPDEC details Constellation Energy's divestiture of a West Texas natural gas plant in ERCOT, with financing via municipal bonds, aligning generation assets closer to major retail and wholesale customers.

Constellation Energy announced it has signed an agreement to sell the 550-megawatt Quail Run natural gas plant in west Texas to High Plains Diversified Energy Corporation HPDEC for $185.3 million. The agreement is contingent upon HPDEC obtaining financing through the sale of municipal bonds.

Constellation Energy acquired Quail Run, located near Odessa, Texas in May 2010 as part of a two-plant agreement, which included the 550-megawatt Colorado Bend natural gas plant near Wharton, Texas, in ERCOT's Electricity Reliability Council of Texas Houston zone. HPDEC is a municipal utility formed by the West Texas Municipal Power Agency. HPDEC has as its development partner Republic Power Partners.

“Quail Run is a modern, efficient, well-managed asset however, its location in ERCOT's west zone is far from our retail and wholesale customers and growth opportunities,” said Kathleen W. Hyle, senior vice president, Constellation Energy, and chief operating officer, Constellation Energy Resources. “The strategic value in this transaction is that it presents the potential to redeploy capital to be used for the acquisition of generation closer to our major customer centers in ERCOT and competitive markets nationwide.”

Under terms of the definitive sales agreement, HPDEC will pursue financing to complete the transaction through the issuance of municipal bonds. Should HPDEC successfully secure financing, the sale would also be subject to standard terms and closing conditions.

Separately, PNM Resources Texas operations have been scaled back amid shifting market dynamics in the state.

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