Power plant asset value pricing point ... a view from the Midwest

| About: WEC Energy (WEC)
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Wisconsin Energy (NYSE:WEC) announced the sale of a gas-fired peaking power plant in Chicago.

WEC was paid $37 million for the 308-MW facility, and its contracts.  This represents approximately $120/KW ... but WEC announced in its 8-K (WEC 8-K) that it would report a slight gain from the sale, meaning the plant is being sold at slightly better than WEC's investment (construction) cost in the plant.

Though not specified, I would guess that the plant's capacity is fully contracted-for (or close, at least).  This would mean the plant's capacity and energy is not likely sold into the spot market, allowing for more value (as a percentage of construction value).

See also our previous articles on pricing points for power plant valuation:

  1. EEI Value Views
  2. Bull and Bear Views
  3. PEG's Plant Sale