GenOn Buy Puts NRG Among Largest U.S. Generating Companies
NRG Energy became one of the biggest independent power generating companies in the United States after its purchase of GenOn Energy last week. In a $1.7 billion deal, announced on July 22 by NRG and reported by The New York Times on July 23, the combined company will keep the NRG name for a new conglomerate that will have the capacity to generate 47,000 megawatts of electric power.
“This industry has needed to consolidate on some level [and] this deal creates the first player of this scale in the industry,” NRG CEO David Crane said in the July 23 Times report. GenOn will be absorbed into NRG and continue to be led by Crane. The transaction is expected to close by March 2013.
The move will allow NRG to expand its retail business, which is selling power directly to consumers. In Astoria, NRG has proposed building a new, more efficient power plant at the site it owns within the 600-acre Con Edison complex on 20th Avenue. The existing plant is more than four decades old and is currently in use only during periods of high (peak) power demands.
Overall, NRG plans to replace 31 older generators in Astoria of 600-megawatt capacity with four newer, cleaner ones with capacity of 1,040 megawatts. “We’re basically replacing a 1970s Cadillac with a 2012 Prius,” NRG Northeast Region President Lee Davis said in a May 8, 2012 New York Daily News report.
Assemblymember Aravella Simotas chairs Smart Power NY, a coalition of business, labor, environmental and community groups, as well as local and state officials supporting the NRG plan. “It’s great for the neighborhood of Western Queens,” said Simotas in the May 8 Daily News report. In July, City Council Speaker Christine Quinn and Mount Sinai Queens joined the Smart Power NY coalition. However, NRG must secure an agreement from a utility to purchase the power before it can finance the $1.5 billion needed for the project.
The merging of NRG and GenOn is part of a growing trend of concentration inside the power generating industry resulting from a decline in the price of electricity. A merger between RRI Energy and Mirant in 2010 created GenOn, and NRG itself has been involved in other transactions over the last 10 years, according to the Times.
NRG operates facilities on both the East and West Coasts and in the Gulf of Mexico and owns five power plants in New York state.pp