TransCanada selling power plant bought six weeks ago

Six weeks after TransCanada Corp. closed a deal to buy a power plant in Pennsylvania, it has put it back up for sale.

The 704-megawatt Ironwood natural gas-fired power complex TransCanada bought for $657 million from Talen Energy Corp. is back on the block as the company looks for ways to finance another acquisition worth 15 times more.

It’s among a whole set of U.S. Northeast power assets the Calgary-based company has put up for sale to help pay for its US$13billion purchase of Columbia Pipeline Group Inc. It will also divest a stake in its Mexico gas business.

“This will remove the majority of merchant power from our portfolio,” Don Marchand, TransCanada’s chief financial officer, said Thursday on a conference call to discuss the Columbia acquisition, referring to plants that rely on wholesale electricity markets for their profits.

In addition to Ironwood, TransCanada plans to sell its Ravenswood gas- and oil-fired generation plant in New York, hydroelectric power assets in New England, the Kibby wind power operation in Maine and Ocean State Power gas generation facilities in Rhode Island, Marchand said.

TransCanada bought Ravenswood in 2008 for $2.9 billion.

The assets are coming available as the market for power deals is heating up, said Jeff Bodington, president of boutique investment banking firm Bodington & Co., which focuses exclusively on the North American power market.

Private equity buyers may be more willing to see an upside in the depressed merchant market than publicly traded power companies whose investors are afraid of taking on generators selling into wholesale markets, he said.