Entergy Corp. remains on the prowl for energy-related assets to buy, a top official with the utility said last week, but it remains frustrated with the asking price for those assets. Echoing comments recently made by another utility executive, Entergy CEO Wayne Leonard said that the recent wave of generator bankruptcies may result in more realistic prices for such things as power plants.

“We continue to be in the market for assets,” Leonard said in an appearance before Merrill Lynch’s “Power & Gas Leaders” conference in New York City. “We still have not gotten to the price [level] yet that we’re looking for.

“With some of the bankruptcies now, we think that there may be a more reasonable look at some of the value of these assets than what maybe the owners…have been giving them. We still continue to see many of these owners in our bid process price it in as if the plant is going to run 95% of the time and as if the price was going to be $2.00 for gas,” the Entergy official noted.

“It just makes no sense why the people are bidding the way they do,” he said. “You’re never going to get picked if you put a take-or-pay bid into a bid solicitation where if we have to take it we have to back off of $5 or $14/MWh power and take $40/MWh power,” he pointed out. “Hopefully, the creditors will have a little more rational view when they take a look at this,” Leonard said.

Mirant Corp., NRG Energy and PG&E National Energy Group have all filed for bankruptcy protection in recent months.

Constellation Energy Group CEO Mayo Shattuck this summer said that the recent generator bankruptcies may finally start to push prices down to the point where companies such as Constellation take a closer look at bidding on power plants (see NGI, Aug. 4).

At a later point, Leonard acknowledged that in the formal auction processes for assets, “in many cases, we’ve finished last, or pretty close to last, because our point of view is just very different, I think, than others’ points of view.”

He said that in certain instances where there are assets that Entergy would really like to buy, the owners “have just refused to talk about the issues.” Leonard said that Entergy has encountered this situation in dealing with certain pipeline owners.

“Our analysis shows that they’re going to have to talk about the issues,” Leonard said. “Everybody wants to sell the junk first and the market for that is not going to bail them out of the situation that they’re in.”

Leonard said that were Entergy to purchase pipeline assets, they would be bought through Entergy-Koch, a joint venture between subsidiaries of Entergy and Koch Industries. “Up until now, we’ve had very good alignment with Koch around what the price of those pipelines should be, how the bids should be structured,” Leonard said.

“In the event that we wouldn’t have alignment and Entergy would want to do it, for example, on our own, then we would buy it…and we would contribute it to Entergy-Koch and we would develop some kind of…sharing mechanism for the trading around the pipe and other types of things that would come from putting assets into that venture.”

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