BGE's parent to sell plant in Hawaii

Ormat Nevada to buy geothermal power venture

April 24, 2004|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Baltimore-based Constellation Energy Group has agreed to sell a geothermal power plant in Hawaii to Ormat Nevada Inc., a developer and operator of geothermal plants, for $71 million.

In the first sale of one of its power plants since the company shifted its strategy more than two years ago, Constellation will sell its 30-megawatt Puna Geothermal Venture in Pahoa, Hawaii, to Ormat, a subsidiary of Ormat Technologies Inc. Constellation, the parent of Baltimore Gas and Electric Co., is focusing on generating and supplying power in deregulated markets across the United States.

The company decided to sell the Hawaii plant because of its geographic distance from other Constellation plants and because it uses a different type of geothermal technology - generated by an active volcano - than other Constellation-owned geothermal plants.

"We've looked at ensuring the best opportunities for synergies for the cost of operating assets in various locations," said Michael J. Wallace, president of Constellation Generation Group, a Constellation subsidiary. "We want to be very focused about being in the markets where we see the ability to match the generating assets with our [power] load serving business."

Wallace said the company has no plans to sell any other generating plants. "We are quite comfortable with the value of all the other generating assets in our portfolio" and will continue looking at potential acquisitions of plants, he said.

Ormat said it has been looking to expand its geothermal plants in the United States as part of a strategy to acquire geothermal projects, upgrade them and finance them for the long term.

The Puna, 20 miles south of Hilo on the island of Hawaii, is powered by natural heat through production wells and is a source of renewable power. Under a power purchase agreement with Hawaii Electric Light Co., Puna Geothermal has supplied about 20 percent of the island's electricity needs for the past decade.

"This is one of the best geothermal resources in the world, in terms of temperature and other characteristics," said Rany Raviv, vice president of business development for Ormat Nevada.

The company plans to expand the plant.

ORMAT runs geothermal plants in the Philippines, Kenya, Nevada, California and Guatemala, and has built or developed plants in 19 countries. In the past decade, the company says, its plants have offset an estimated 16 million tons of carbon dioxide, which is emitted into the atmosphere by burning fossil fuels.

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