Despite the current shattering low prices of natural gas nationwide, Blackstone Group is making a giant leap of faith by purchasing three gas fired plants in Texas. The plants are being sold by retail electricity provider, Direct Energy, who initially purchased the plants to protect itself against the price increases in the domestic power market of the day.
Direct Energy bought the three plants for $331 million and is selling them to Blackstone for double the price. This investment will cost Blackstone Group $685 million. Reports have however surfaced that the investment firm is hoping that the state’s electricity prices remain very low.
Fears abound among state regulators that Texas’ increasing population could erode the electricity supply. As a result the Public Utilities Commission is considering paying power plants to keep excess energy. Currently, power plants are only paid for the power that they supply. This will be an incentive for energy companies to build more power plants.
