Parent of Texas Retail Electric Provider to Sell its Texas Gas-Fired Generation

Centrica plc announced that its North American subsidiary, Direct Energy, has agreed to sell its Texas gas-fired power stations to Blackstone for $685 million in cash.

The three units, located in Paris, Bastrop, and Mission, have a combined capacity of 1,295 MW.

As part of the transaction, Direct Energy has also entered into a three-year call option arrangement for an equivalent amount of capacity with Blackstone.

Badar Khan, President and CEO of Direct Energy, said, "This transaction allows us to realize value from our gas-fired fleet, while ensuring stability of price and supply in the Texas power market through the call option arrangement."

"Residential retail supply is key to our North American business, and with sufficient generation capacity in Texas, we can support our downstream business through contractual arrangements, rather than asset ownership," Khan said.

The transaction will be made through Centrica plc's affiliate, Direct Energy Power Holdings, Inc. The power plants to be sold by Direct Energy Power Holdings, Inc. are listed below:

                      Year      ERCOT   Installed 
                    Purchased   Region   Capacity
Bastrop               2004      South      540
Frontera (Mission)    2004      South      495
Paris                 2006      North      260

The transaction is subject to regulatory review and is expected to close in the first quarter of 2014

Centrica plc will return the proceeds from this sale to shareholders through an extension of its share repurchase program, which will be conducted over the course of 2014.