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Constellation to Sell 550 MW Gas-Fired Plant in West Texas

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December 31, 2010

Constellation Energy yesterday announced it has signed an agreement to sell the 550-megawatt Quail Run natural gas plant in west Texas to High Plains Diversified Energy Corporation (HPDEC) for $185.3 million. The agreement is contingent upon HPDEC obtaining financing through the sale of municipal bonds.

"Quail Run is a modern, efficient, well-managed asset; however, its location in ERCOT's west zone is far from our retail and wholesale customers and growth opportunities," said Kathleen W. Hyle, senior vice president, Constellation Energy, and chief operating officer, Constellation Energy Resources. "The strategic value in this transaction is that it presents the potential to redeploy capital to be used for the acquisition of generation closer to our major customer centers in ERCOT and competitive markets nationwide."

Quail Run is located in Ector County, near Odessa. It was acquired by Constellation in May 2010 as part of a two-plant agreement, which also included the 550-megawatt Colorado Bend natural gas plant near Wharton, Texas, in ERCOT's Houston zone. The original purchase price for the two plants, acquired from Navasota Holdings, was $365 million.

HPDEC is a municipal utility formed by the West Texas Municipal Power Agency. HPDEC has as its development partner Republic Power Partners.

Under terms of the definitive sales agreement, HPDEC will pursue financing to complete the transaction through the issuance of municipal bonds. Should HPDEC successfully secure financing, the sale would also be subject to standard terms and closing conditions.

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