UPDATE 1-Dominion says high interest in sale of 3 power plants

Scott DiSavino

* Seeks buyers for three US Midwest, New England plants

* Dominion to shut Kewaunee reactor in Wisconsin next year

* Glut of natural gas from shale depressing power prices

NEW YORK, Oct 25 (Reuters) - Potential buyers have shown high interest in the three merchant power plants Dominion Resources Inc is offering for sale in the U.S. Midwest and Northeast, the company said on Thursday.

On the company's third-quarter earnings call, Dominion said the three plants are the 1,536-megawatt (MW) Brayton Point coal, natural gas and oil-fired facility in Massachusetts; the 1,158-MW Kincaid coal plant in Illinois; and the company's stake in the 1,424-MW Elwood gas plant in Illinois.

Earlier in the week, Dominion said it would shut the 566-MW Kewaunee nuclear power plant in Wisconsin next year after it had failed to find a buyer.

A glut of natural gas primarily from increases in shale production has depressed power prices to levels not seen in a decade, making it tough for generators to earn enough money to keep some power plants such as Kewaunee running.

The company said on the call it would not compare the expected sale of the three fossil plants to its inability to find a buyer for Kewaunee because Kewaunee was a relatively small reactor in the Midwest power grid, which has no capacity market.

Generators make money in the capacity market just to keep their plants available for reliability reasons - like an insurance policy - even if they are not needed to operate.

The three merchant plants are either located in or sell their capacity to the PJM and New England grids, which have capacity markets.

PJM is the biggest U.S. power grid, serving more than 60 million people in 13 Mid-Atlantic and Midwest states and the District of Columbia.