SDG&E Sells Encina Plant to Dynegy, NRG
San Diego Gas & Electric (SDG&E) has completed the sale
of its 951 MW Encina Power Plant in Carlsbad, CA, and 253 MW of
combustion turbine facilities in San Diego County to Dynegy Inc.
and NRG Energy Inc.
Dynegy and NRG Energy jointly paid $356 million in cash to
acquire both the plant and 17 combustion-turbine generators, which
are used during peak loads. Dynegy will provide fuel-management
services and market energy from the Encina plant and combustion
turbines for the partnership. NRG Energy will manage the operation
of the power generation assets out of its new San Diego office.
"The sale of these two San Diego power plants is enabling us to
move to a competitive marketplace for the commodity of electricity
two-and-a-half years sooner than expected, a step that will benefit
both our shareholders and customers," said Edwin A. Guiles,
president of SDG&E. "The sale also allows us to focus more on
the future of SDG&E, on becoming a world-class energy-delivery
SDG&E will operate and maintain the facility for the new
owners for two years after the sale.
"The timing of the addition of these assets to our
power-generation franchise enables us to capitalize on the
opportunities in the California power market during the onset of
the peak summer season," said Chuck Watson, Dynegy CEO.
"This southern California addition to our West Coast portfolio
is an integral part of our strategy to focus on building our core
markets in order to become one of the top players," said David
Peterson, NRG Energy CEO.
The Encina Power Plant began operation in 1954 and was expanded
throughout the 1970s. The facility consists of five
steam-generating units and an on-site combustion turbine.
Proceeds are being used by SDG&E to pay down the competition
transition charge (CTC), now on customer bills. The CTC is a line
item on the bills for all customers of the state's investor-owned
utilities - SDG&E, Southern California Edison and Pacific Gas
& Electric (PG&E) - to recover stranded costs.
SDG&E has asked the California Public Utilities Commission
for authority to end collection of the majority of its CTC on July
1, in part because of proceeds from the sale of its power plants.
The sale of SDG&E's South Bay Power Plant in Chula Vista, CA,
to the San Diego Unified Port District was completed April 23.
The Encina Power Plant and associated combustion turbines
increase the number of power generation assets owned by Dynegy in
California to 21. In addition to the El Segundo and Long Beach
facilities, Dynegy has gas-fired facilities in Bakersfield, Corona,
Crockett, Stockton, and Taft. Encina and the combustion turbines
increase the generating capacity of Dynegy's California assets to
3,478 MW. The capacity of Dynegy's 31 U.S. generation assets
currently operating or under construction is more than 6,800 gross
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