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Reliant, Pinnacle West Explore JV Opportunity

Reliant, Pinnacle West Explore JV Opportunity

Pinnacle West Energy and Houston-based Reliant Energy Power Generation, Inc. announced a preliminary agreement last week to jointly develop power plant projects in the Southwest totaling more than 2,500 MW of generation in Arizona and Nevada. A definitive development agreement on plant construction and operation is expected to be signed within 120 days.

The shared projects include the previously announced 1,060 MW Units 1 and 2 of the Redhawk Power Plant in Arizona and more than 1,500 MW in two power projects near Las Vegas and in northern Nevada. The Las Vegas projects are in the extreme early stages of development, Reliant said.

Under the agreement, the two companies each will own half interest in the projects, a total of five generating units each capable of producing more than 500 MW. In exchange for a 50% share of its first two Redhawk units, Pinnacle West Energy will get half shares of Reliant's three Nevada units.

The two Redhawk units are expected to begin commercial operations in summer 2002. Pinnacle West Energy is continuing with development of Redhawk Units 3 and 4 and the previously announced West Phoenix Units 4 and 5.

Richard Wheatly, a Reliant spokesman said this move fits right in to Reliant's generation strategy. The Southwest is one of the company's five core areas, along with the Northeast, which Reliant gained a presence in thanks to its 21 power plant purchase with Sithe Energy (see NGI, Feb. 28), the West, the Midcontinent and Florida.

Pinnacle West Energy President Bill Stewart said the agreement between Reliant and Pinnacle West Energy is the result of "common strategic interests in the generation business in the Southwest. We intend to offer competitively priced electricity in growing Southwest markets by producing low-cost energy that is accessible to key transmission hubs," Stewart said. The agreement represents Pinnacle West Energy's first generating assets under development outside of Arizona.

If the deal goes through, it will give Pinnacle West Capital Corp. subsidiaries Arizona Public Service and Pinnacle West Energy about 7,000 MW of generating capacity in Arizona, Nevada and New Mexico upon completion of the projects.

John Norris

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