GDF to Buy FirstLight Power as Part of U.S. Expansion

By Tara Patel

Sept. 2 (Bloomberg) -- GDF Suez SA, the world's second- biggest utility, agreed to buy U.S. hydroelectricity producer FirstLight Power Enterprises Inc. from Energy Capital Partners, making it the third-largest supplier to businesses in the U.S.

FirstLight has 15 power plants, plus one under construction, with a total generating capacity of 1,538 megawatts in Massachusetts and Connecticut, the Paris-based company said today in a statement. Le Figaro newspaper said today GDF Suez paid 1.3 billion euros ($1.9 billion), citing unidentified bankers. GDF Suez Spokesman Jerome Chambin declined to give a price.

The purchase will increase GDF Suez's power-generating capacity in North America by 25 percent, adding to the 6,193 megawatts it already has, made up mostly of natural gas-fired power plants in the eastern U.S. It also has 200 megawatts of wind turbines in eastern Canada, acquired in its purchase of Ventus Energy Inc. last year, and trades liquefied natural gas through terminals in Boston and Florida.

``The strategy behind the acquisition is a good one in that it gives them generating capacity in a different form from the mostly natural gas-fired plants they already have in the U.S.,'' Thierry Bros, an analyst at Societe Generale said by telephone.

U.S. Expansion

GDF Suez shares fell as much as 1.8 percent to 39.30 euros and were trading down 0.6 percent at 39.76 euros at 1:21 p.m. in Paris. They have dropped 5.5 percent since they began trading July 22 following the merger of Gaz de France SA and Suez SA.

``FirstLight will complement GDF Suez's LNG and gas business in North America,'' the statement said, adding that the acquisition will ``strengthen the group's existing power generating assets and retail activities in New England and eastern Canada.''

FirstLight is owned by Energy Capital Partners, a private equity company with offices in Short Hills, New Jersey. The fund paid $1.34 billion in cash and debt for the generation business of Northeast Utilities and its affiliates in November, 2006, which became FirstLight Power.

FirstLight, which is based in Hartford, Connecticut, operates conventional hydro stations with a generating capacity of 216 megawatts on the Shetucket and Housatonic Rivers in Connecticut and the Connecticut River in Massachusetts, according to the company's Web site.

Hydro Power

The company also has a 1,080 megawatt pumped storage hydroelectric station in Northfield, Massachusetts as well as another 29 megawatts in New Milford, Connecticut, the web site said. It has a 146-megawatt coal-fired plant in Holyoke, Massachusetts.

Its total generation capacity is enough power for about 1.2 million average U.S. homes, based on an estimate by the Energy Department in Washington.

``FirstLight has various expansion opportunities within its portfolio and reinforces GDF Suez's power generation position in the New England market,'' the company said in a statement, adding FirstLight's assets have ``diversity'' in type and location and will complement GDF Suez's U.S. gas business.

Among GDF Suez's biggest natural gas-fired power plants in the U.S. is the Chehalis 520-megawatt plant in Washington State, the 304-megawatt Bellingham installation in Massachusetts and the Eniss and Wise County plants in Texas, which have a total output of 1,089 megawatts, company documents indicate. The gas-fired Hot Springs plant in Arkansas generates 746 megawatts.

GDF Suez yesterday reported first-half profit rose 14 percent to 3.38 billion euros on higher power and natural gas prices. The results were the first for the newly-created company, which began trading July 22 following a merger process that lasted nearly 2 1/2 years.

To contact the reporter on this story: Tara Patel in Paris at Tpatel2@bloomberg.net