FirstEnergy Generation agrees to sell 545 MW West Lorain Facility to Vermillion Power

FirstEnergy Generation has agreed to sell its 545 MW West Lorain Facility and related assets to Vermillion Power, an affiliate of Starwood Energy Group Global. The deal represents a US$144 million total of investment in cash plus customary closing adjustments.

The West Lorain Facility is located on 500 acres in Lorain, Ohio near Lake Erie. The facility was constructed in 1973 as a combined-cycle electric generating system with two combustion turbines (Units 1A and 1B), two heat recovery steam generators, and a steam turbine generator.  An additional five combustion turbines were installed (Units 2–6) and placed in operation in 2001. The plant runs on fuel oil but is capable of operating on natural gas.

The sale comes after the bankruptcy filed by FirstEnergy Generation. FG has a motion with the Bankruptcy Court overseeing its chapter 11 cases for approval of auction and bid procedures that will permit other interested parties to submit competitive bids for the West Lorain Facility and related assets.  In the event that no higher or better bids are received by FG, Starwood will acquire the business, subject to the satisfaction of customary conditions to closing. The court will supervise the auction process to maximize the value of the assets being sold. 

The transaction will be subjected to customary approvals, including approval of the Federal Energy Regulatory Commission and Hart-Scott-Rodino. If approved, the companies expect to close the transaction in the first half of 2019.