Pinnacle West Energy and Houston-based Reliant Energy PowerGeneration, Inc. announced a preliminary agreement last week tojointly develop power plant projects in the Southwest totaling morethan 2,500 MW of generation in Arizona and Nevada. A definitivedevelopment agreement on plant construction and operation isexpected to be signed within 120 days.

The shared projects include the previously announced 1,060 MWUnits 1 and 2 of the Redhawk Power Plant in Arizona and more than1,500 MW in two power projects near Las Vegas and in northernNevada. The Las Vegas projects are in the extreme early stages ofdevelopment, Reliant said.

Under the agreement, the two companies each will own halfinterest in the projects, a total of five generating units eachcapable of producing more than 500 MW. In exchange for a 50% shareof its first two Redhawk units, Pinnacle West Energy will get halfshares of Reliant’s three Nevada units.

The two Redhawk units are expected to begin commercialoperations in summer 2002. Pinnacle West Energy is continuing withdevelopment of Redhawk Units 3 and 4 and the previously announcedWest Phoenix Units 4 and 5.

Richard Wheatly, a Reliant spokesman said this move fits rightin to Reliant’s generation strategy. The Southwest is one of thecompany’s five core areas, along with the Northeast, which Reliantgained a presence in thanks to its 21 power plant purchase withSithe Energy (see NGI, Feb. 28), the West, the Midcontinent andFlorida.

Pinnacle West Energy President Bill Stewart said the agreementbetween Reliant and Pinnacle West Energy is the result of “commonstrategic interests in the generation business in the Southwest. Weintend to offer competitively priced electricity in growingSouthwest markets by producing low-cost energy that is accessibleto key transmission hubs,” Stewart said. The agreement representsPinnacle West Energy’s first generating assets under developmentoutside of Arizona.

If the deal goes through, it will give Pinnacle West CapitalCorp. subsidiaries Arizona Public Service and Pinnacle West Energyabout 7,000 MW of generating capacity in Arizona, Nevada and NewMexico upon completion of the projects.

John Norris

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.