BG Group has announced that it has signed a Sale and Purchase Agreement for the purchase of the Lake Road power plant, an 805MW gas and oil fired combined cycle facility located in Dayville, Connecticut, USA for US$685 million. Closing is expected to occur in the first quarter of 2007, shortly after receiving Federal Energy Regulatory Commission (FERC) and Hart-Scott Rodino approvals.
The Lake Road plant supplies power into the ISO New England (ISO-NE), a well established and liquid power market. It is a modern three-unit facility with the potential for further expansion. Lake Road is BG's second power plant purchase in the region. In October 2006 BG acquired the 170MW combined cycle Dighton power plant in Bristol County, Massachusetts. BG views the ISO-NE as an attractive market given the newly implemented Forward Capacity Market and the rapidly tightening reserve margins in the region.
Martin Houston, Executive Vice President and Managing Director of BG North America, Caribbean and Global LNG said:
"The acquisition of Lake Road represents an important step in the implementation of our integrated US strategy. Lake Road and Dighton have the potential to offer BG attractive returns and will be readily integrated into our growing US gas business."