HOUSTON — Houston-based electricity provider Direct Energy is selling three gas-fired power plants in Texas to the private equity firm Blackstone for $685 million in cash.
Direct Energy, a nationwide generation and energy services company, announced Wednesday that it would sell plants it bought from 2004 to 2006 in Bastrop, Mission and Paris. They have a total generation capacity of 1,295 megawatts.
The deal includes a three-year call option, an arrangement that allows Direct Energy to buy an equivalent amount of capacity from Blackstone at predetermined prices. The company said the option, which it only will exercise if wholesale electricity prices at the time make the power purchase attractive, helps ensure Direct Energy a reliable supply of electricity at stable prices.
“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,” said Direct Energy CEO Badar Khan in a written statement.
The deal comes after several acquisitions by Direct Energy designed to expand its reach in the marketing and retail market, including its purchase of Houston’s Bounce Energy and the marketing division of Hess for $1.3 billion in July.
The transaction is subject to regulatory review and is expected to close in the first quarter of 2014.