BGE's parent closes Fla. deal

Constellation to sell to FPL half of power generated at a plant

September 01, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

Constellation Energy Group announced yesterdaya deal to sell half the power generated by an under-construction Florida plant to Florida Power & Light (FPL).

Baltimore-based Constellation, the parent of Baltimore Gas and Electric Co., has plants under construction in California, Illinois and Texas as well as Florida, and brought four other plants on line this summer.

The Florida plant, near Cocoa in Brevard County, is slated to open next summer with four 150-megawatt generating units. FPL will buy the output from one generator through mid-2003 and a second through mid-2005. Terms were not disclosed; Kevin Thornton, a Constellation spokesman, said the prices were proprietary.

Constellation had previously announced the sale of power from the other two generators to Seminole Electric Cooperative. In all, constellation owns or controls 11,400 megawatts.

Joan T. Goodman, a utilities analyst with the Pershing division of Donaldson, Lufkin & Jenrette Securities Corp., said the deal is a good one for Constellation because the Florida energy market is "mostly retail" - homeowners rather than industrial power-users.

Even under energy deregulation, Goodman said, homeowners are reluctant to switch power suppliers, making them a more stable customer base. Also, she said, since Florida is a "high-growth state," its power demands would likely continue to increase.

She said a deal to sell power from a not-yet-completed plant was standard in the industry. "Most companies don't build a plant unless at least half of the power is forward-sold," she said.

Thornton said the deals in Florida were consistent with Constellation's strategy of building a portfolio of power contracts balanced between short-term sales and arrangements lasting for several years.

"You don't want everything sold long-term, and you don't want everything sold on the spot market," he said.

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