CEG buys Canadian marketer of electricity

Constellation's acquisition is its third in five months

January 23, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Reporting its third acquisition in five months, Constellation Energy Group Inc. said yesterday that it purchased an Alberta-based electricity marketer to expand its energy services business into Canada for the first time.

The purchase of the electricity division of Dynegy Canada Inc., a wholly owned subsidiary of Houston-based Dynegy Inc., adds 65 customers to Constellation NewEnergy, which provides customized energy solutions and services to large commercial and industrial electricity customers across the nation.

The price of the transaction was not disclosed as part of a condition of the agreement with Dynegy, Constellation officials said.

"This acquisition continues Constellation's strategy to extend our participation along the energy value chain and expand our business into attractive North American markets," said Clem Palevich, president of Constellation NewEnergy. "Constellation NewEnergy has been providing high-quality service to our customers in the United States for more than six years, and we look forward to bringing our market experience to our new customers in Canada."

As other energy companies have struggled in the past year because of the collapse of Enron Corp., the downturn in the economy and weak capital markets, financially stronger Constellation has taken advantage of the turmoil by purchasing assets from weakened companies that are trying to raise cash to survive.

In September, it purchased NewEnergy from struggling AES Corp. in Virginia for $260 million. This month, Constellation paid $22.3 million for two natural gas and electricity consulting and energy services businesses from its Hagerstown competitor, Allegheny Energy Inc., which has warned that it will be forced into bankruptcy if it can't restructure its debt.

The Canadian acquisition comes after a difficult year for Dynegy, which has fired hundreds of workers, abandoned energy trading and sold a natural gas pipeline to cut costs in order to avoid bankruptcy.

"This firmly puts Constellation NewEnergy in the Canadian market, which is an attractive market and one we've been looking to get into," said company spokesman David Potter. "They've got a [deregulated] market so there's a very good opportunity there to serve a lot of customers."

Shares of Constellation fell 13 cents to $26.74 yesterday.

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