Reliant to Buy 21 Power Plants on East Coast

Reliant Energy Inc., a Texas utility company that’s expanding worldwide, agreed to buy 21 power plants in the northeastern U.S. from a company that’s majority-owned by Paris-based Vivendi for $2.1 billion.

Sithe Energies Inc., Vivendi’s U.S. power generation unit, owns the plants. Vivendi put all of Sithe’s 51 North American plants up for sale in October as part of a strategy to concentrate on faster-growing businesses such as media, telecommunications and the Internet.

The purchase would push Houston-based Reliant, owner of Texas’ second-largest utility, into Maryland, New Jersey and Pennsylvania, markets where electricity prices are above the U.S. average. Reliant is paying 31% more than Sithe did when it bought the plants from GPU Inc. for $1.6 billion in November.

“The summer of ’99 was the second hot summer in a row, and power prices in the market peaked,” said Barry Abramson, a PaineWebber Inc. analyst.

Sithe will have a $450-million gain on the sale. Vivendi said it’s in talks to sell Sithe’s other U.S. and Canadian plants. Analysts value the 51 plants at more than $4 billion.

Reliant is buying plants that produce 4,276 megawatts, enough to light 4.3 million homes, and half of that output is produced with coal, the cheapest fossil fuel for generation. Sixteen of the plants are in Pennsylvania, four are in New Jersey and one is in Maryland.

This year, Vivendi put its utilities units into a separate division, including the firm’s $15.7-billion debt to prepare for an initial public offering and to free its phone and Internet businesses to expand. The division includes the world’s largest water firm as well as trash and power-plant development businesses.

Reliant, formerly Houston Industries Inc., owns HL&P;, an electric utility with 1.6 million customers in the Houston area, and natural gas utilities with 2.8 million customers in Texas, Louisiana, Arkansas, Mississippi, Oklahoma and Minnesota.

Vivendi owns 60% of Sithe, Marubeni Corp. of Japan owns 30% and Sithe’s management owns the rest.