The deal also catapults the buyer, Sithe Energies Inc., from a little-known company just a few years ago to the biggest independent power producer in the country.

Sithe, based in New York, is 60 per cent owned by Paris-based Groupe Vivendi, 29 per cent by Marubeni Corp. of Japan, and 11 per cent by its management.

GPU's move out of power generation and Sithe's move into it illustrate the profound changes deregulation is bringing to the traditional electric utility industry.

Whereas utilities once held monopolies over local power generation, distribution and related services, the move to an open marketplace is forcing them to build on their strengths and exit businesses that they deem too competitive.

Under the deal, Sithe is buying 4,117 megawatts (MW) of generatingcapacity at 23 GPU power plants in Pennsylvania, New Jersey and Maryland, and 18 sites groomed for new plants.

The deal, on the heels of Sithe's purchase of Boston Edison's power plants in May, will more than double its North American generating assets to 51 plants with a capacity of 7,777 MW, enough to power a city of almost three million.

It also gives Sithe access to markets from Maryland to Maine, including the huge Pennsylvania-New Jersey-Maryland power grid, New York Power Pool, and New England Power Pool -- all regions actively restructuring their power sectors.

Sithe said it plans to spend $1 billion building up to 3,000 MW of generating capacity, all from natural gas-fired plants, at some of the development sites.

GPU said it also agreed to sell its 20 percent stake in a Seneca, Pa., hydroelectric station to FirstEnergy Corp. for $43 million. FirstEnergy, a diversified energy company based in Akron, Ohio, owns the rest of the plant.

"Today's announcement reflects our attempt to follow a newstrategy, to exit merchant generation and focus on regulated infrastructures," GPU Chairman Fred Hafer told reporters in a conference call.

The "infrastructures" Hafer referred to are the pipeline and power grid systems used to carry gas and electricity to market, and remain regulated arms of the U.S. Utility sector.

GPU subsidiaries are already doing business in these areas in Britain, Latin America and Australia.

Hafer also cited water distribution and telecommunications systems as areas of expertise GPU hopes to market worldwide.

GPU's move out of the power generation business is a step being taken by many big U.S. Utilities as they strive to climb out from under a mountain of debt attached to old, often inefficient power plants.

These debts, or "stranded costs", stem from decisions to build plants and transmission lines back when competition was nonexistent and costs could be passed on to consumers through regulated electricity rates.

While GPU is parting with its non-nuclear plants, it istrying to get rid of its reactors as well.

Last month GPU agreed to sell its Three Mile Island nuclear unit 1 in Pennsylvania to Amergen Energy Co., a joint venture of British Energy Plc and PECO Energy Co. Three Mile Island 2 has been shut since 1979 after the near meltdown of the unit, the most serious mishap ever at a U.S. Nuclear plant.

Efforts to find a buyer for GPU's other nuclear unit, at Oyster Creek, N.J., have been fruitless.

GPU officials said they expect regulatory approval of the sales announced Monday by mid-1999.