UPDATE 1-Energy Capital Partners enters Texas power market

* Energy Capital Partners invests in first Texas plant

* PSEG to leave Texas market with sale of last asset

(Rewrites, adds detail, HOUSTON dateline)

HOUSTON, June 24 (Reuters) - An affiliate of Energy Capital Partners II has agreed to buy a 1,000-megawatt, natural gas-fired power plant in Texas for $335 million from PSEG Power, a unit of Public Service Enterprise Group (PEG.N), PSEG said on Friday.

PSEG Power is selling its remaining Texas power plant for a second time after an earlier sale to a Lubbock-based municipal group fell through.

Odessa Power LLC is a subsidiary of Energy Capital Partners, a private equity firm that has raised $7 billion to invest in North American energy infrastructure. The purchase represents Energy Capital Partners' first direct ownership of a power plant in Texas.

However, it is not the company's only investment in Texas. Energy Capital Partners was a member of the group that acquired the former TXU Corp, Texas' largest power company, in 2009.

"We like markets that are competitive and growing," said Paul Parshley of Energy Capital Partners.

Another company controlled by Energy Capital Partners, Power Line Services, was awarded a contract Thursday from Sharyland Utilities LP to build two segments of a new 345-kilovolt transmission line being developed to accommodate growing wind generation in Texas.

The purchase price to Odessa Power LLC of $335 per kilowatt appears to match the announced sale of the same PSEG plant in January to High Plains Diversified Energy Corp.

That deal fell through after a Texas court ruled that High Plains could not issue public debt.

High Plains plan to buy the 550-MW Quail Run Energy Center near Odessa from a unit of Constellation Energy Group CEG.N for $185.5 million, or $337 per kw, was also canceled.

In March, PSEG Power completed a sale of its 1,000-MW Guadalupe power plant near San Antonio to MinnTex Holdings LLC, an entity managed by Minnesota-based Wayzata Investment Partners LLC, for about $351 per kw.

PSEG and a partner, a unit of Teco Energy, built the Odessa and Guadalupe plants during a power-plant building boom in Texas in the early 2000s.

Overbuilding led to a period of depressed wholesale power prices in the state during which PSEG bought out Teco's 50-percent stake in the plants.

The Texas power market now faces a shrinking supply outlook as stricter environmental regulation threatens to shut some older plants and few developers are moving ahead with new gas-fired power plants due to financing and low wholesale prices.

Other Texas power plants have sold for between $322 and $410 per kw, well below the price to build a new plant and a factor that developers cite in their struggle to finance new projects.

The sale of the Odessa facility to Energy Capital Partners II is not subject to financing contingencies, PSEG said. The deal is expected to close in the third quarter.

(Reporting by Eileen O'Grady; Editing by Lisa Shumaker)