National Grid has sold Ravenswood power plant, which produces 20 per cent of New York's electricity, for $2.9bn (£1.5bn), significantly more than had been expected.
The utility company put the plant up for sale earlier this year, following a pledge that it would dispose of Ravenswood once it completed the purchase of KeySpan, the New York utility company. Clearance for the Grid's $7.3bn takeover of KeySpan was conditional on the disposal.
However, while National Grid was a forced seller, analysts said it had managed to extract a decent price from TransCanada, the energy company buying Ravenswood. The power plant is particularly valuable because the lack of available land in New York City inhibits new builds of electricity-generating stations. Demand for power from the city is increasing rapidly.
Angelos Anastasiou, an energy analyst at Pali International, said: "National Grid appears to have achieved yet another good disposal."
Steve Holliday, National Grid's chief executive, said: "Not only have we quickly delivered on our obligations to the New York Public Service Commission to sell Ravenswood, but we have also delivered value for our shareholders."
The company said Ravenswood had been valued at $1.2bn in KeySpan's most recent audited accounts, though Citibank has since valued the plant as being worth between $2.5bn and $3bn. The deal is likely to net National Grid around $2bn after tax charges.
Iain Turner, an analyst at Deutsche Bank, had expected Ravenswood to fetch $2.4bn, while the consensus forecast was for $2.2bn. "[National Grid] plans to invest £12bn between now and 2012, so this cash represents a useful contribution to this year's financing requirement," he added.Reuse content