US utility NextEra Energy sells two power plants to Energy Future for $1.6 bn

The world's largest wind and solar energy producer NextEra Energy Resources LLC (NER), a subsidiary of US utility major NextEra Energy Inc, has struck a deal to sell its two gas-based power plants in Texas to Energy Future Holdings (EFH) for approximately $1.59 billion.

Luminant, a subsidiary of Dallas-based EFH, which is currently under bankruptcy protection, has received the go-ahead for the transaction from the bankruptcy court and approval for funding of the purchase through a credit facility.

The assets for sale include NextEra's 1,912-megawatt (MW) Forney plant and the 1076-MW Lamar facilities. The former began commercial operation in 2003, while the latter is in production since 2000.

NextEra Energy Resources president and CEO Armando Pimentel said: "This transaction enables us to further optimise our power generation assets and is consistent with our strategy of reducing our merchant exposure while recycling capital into our growing long-term contracted asset portfolio."

Meanwhile, EFH is on the verge of exiting from its chapter 11 bankruptcy through a $42-billion restructuring plan, which could be finalised next week.

''We sit here with settlements that substantially smooth the way toward consensual confirmation,'' a US bankruptcy court judge said earlier on Wednesday in Delaware.

The plan envisages spin-off of EFH's power generating and retailing division to its senior creditors and selling of Oncor transmission business. Despite an attempt by NextEra to acquire Oncor, it is likely to be taken over by a group of creditors and investors led by Dallas-based Hunt Consolidated Inc.

Under the current deal, an affiliate of NextEra will continue to operate both the power plants for up to one year.

The transaction is expected to close in the first quarter of 2016, subject to required regulatory approvals and customary closing conditions.

Upon closing, NER will still own and operate almost 17,000 MW of combined power generation capacity.

NextEra Energy Resources is a clean energy leader and one of the largest wholesale power generators in the US with combined capacity of around 19,800 MW, primarily in 25 states and in Canada. Its portfolio includes natural gas-based facilities in New York, Massachusetts, Pennsylvania and New Jersey as well as oil-fired plants in Maine.

The company also operates nuclear power generating facilities in Seabrook in New Hampshire, Duane Arnold in Iowa and Point Beach in Wisconsin.

Last year, NER produced clean energy to the tune of 32 million megawatt hour.

Parent company, NextEra Energy Inc is a $17-billion power utility operating approximately 44,900 MW of generating capacity, including 6,600 MW of nuclear power. Apart from NER, the company's other principal subsidiary is Florida Power & Light Co, the state's largest energy utility.

Citigroup Inc is serving as financial advisor and Hogan Lovells is legal counsel to NER in the transaction.