HOUSTON (Reuters) - Dominion Resources Inc D.N will enter the nation's largest competitive electric market with the purchase of Texas-based Cirro Energy, the company said on Wednesday.
With the acquisition, Dominion Retail will provide energy and energy services to 1.7 million customers in 12 states, the company said. No terms of the transaction were disclosed.
Richardson, Texas-based Cirro has 52,600 residential and commercial customers in the state which opened its electric market to competition in 2002.
A number of Texas power retailers lost money in the second quarter after volatile natural gas prices and transmission congestion costs cut retailers’ margins.
The frequent jump in real-time prices has been blamed for financial collapse of several small, undercapitalized retailers this year.
Several other retailers have been acquired. New Mexico-based PNM Resources PNM.N said on Tuesday it was considering a sale of its Texas retail unit, First Choice Power.
“The financial strength of Dominion, one of the nation’s largest integrated energy companies, will ensure both Cirro’s ability to build upon our reputation as a leading Texas retail electric provider and enhance our ability to grow and compete in the Texas market,” said Cirro Chief Executive Tim Rogers in a statement.
“We know there has been some instability in the Texas market,” said Dominion spokesman Dan Donovan. “We hope to add some stability to the market.”
Cirro has an excellent track record and “good prospects for growth,” said Richard Zelenko, vice president of Dominion Retail.
The Texas market serves 21 million customers, about 85 percent of the state’s electric use, according to the independent grid operator.
Cirro, founded in 2001 by veterans of the telecommunications industry, will become a subsidiary of Dominion Retail and maintain its operations in Texas, Dominion said.
Dominion, with $15 billion in revenue, owns a large vertically integrated utility serving Virginia and north Carolina.
Reporting by Eileen O’Grady; Editing by Christian Wiessner
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