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Sempra Energy Looks to Sell, or Refinance Texas Power Assets

Historic high fossil fuel commodity prices have prompted San Diego, CA-based Sempra Energy to consider selling or refinancing all of its Texas power generation assets, including two large coal-fired plants. With continued favorable market conditions, Sempra said it would complete the transactions next year. At stake are more than 2,000 MW and hundreds of millions of dollars.

In play are the 305 MW Twin Oaks plant in Robertson County, TX, and the 632 MW Coleto Creek plant in Goliad County which Sempra co-owns in a joint venture with the private investment firm, Carlyle/Riverstone. Natural gas and oil-fired plants held with the joint venture Topaz Power Group, Austin, TX, would also be included in the transactions, Sempra said.

"We have stated in the past that any of our assets are for sale at the right price, and it appears that the market interest in Texas generation -- specifically coal-fired power plants -- is especially high at this time," said Mark Snell, president of Sempra's merchant energy unit, Sempra Global. The California company's share of any cash proceeds would be used to repay debt associated with the assets and to help fund the Sempra's other capital projects, such a liquefied natural gas (LNG) terminals, interstate gas pipelines and gas storage facilities, Snell said.

Sempra said it has retained Goldman Sachs to lead the marketing process for the coal-fired plants, and Greenhill & Co. to handle the other Texas generation assets.

The Twin Oaks coal-fired plant, which Sempra purchased from Texas-New Mexico Power Co. three years ago, is slated to be tripled in size with a 600 MW expansion that the energy holding company announced last July, and Snell said the company is still assessing whether to sell or retain its interest in the expansion.

In July 2004, Sempra Generation and Carlyle/Riverstone formed Topaz Power Group, acquiring Coleto Creek and eight other plants from American Electric Power. All but four of the Topaz plants have been sold or closed, Sempra said. The remaining ones are the Barney M. Davis plant, near Corpus Christi (697 MW), La Palma in San Benito (255 MW), and Laredo Power Station in Laredo, TX (178 MW). Another plant -- 182 MW Bates Power Station in Palmview, TX, will be closed the end of this month when its contract with the state expires, Sempra said.

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