Sierra Pacific Resources announced that higher fuel and powercosts are expected to cause a dip in corporate earnings. Thecompany blamed it’s two Nevada utility subsidiaries, Nevada Power,and Sierra Pacific Power for the estimated $70-80 million in overbudget fuel expenses. “Similar to other electric utilities in theWest, we have confronted an unprecedented and extremely volatileenergy market over the last several months,” said Mark Ruelle,senior vice president for Sierra Pacific Resources. “As a result,we’ve been forced to pay significantly more for fuel and purchasedpower than we had budgeted at the same time that above-normaltemperatures increased the demand for electricity, particularly insouthern Nevada. “We expect fuel and purchased power expenses tohave a negative impact on second quarter earnings and an ongoingnegative earnings impact for the remainder of the year,” Ruelleadded.

Conectiv Energy Supply signed a letter of intent to acquire a30-acre plot of land from Bethlehem Steel within the BethlehemCommerce Center in Pennsylvania for the construction of a 500 MWgas-fired power plant. Conectiv will build the $300 milliongenerating plant on the site and have it operational as early as2002. Although the plant will initially be a 500 MW plant, it sitson a piece of land adequate for an 1100 MW generating facility.

Hanover Compressor completed its acquisition of Stewart &Stevenson Services’s natural gas compressor leasing business, anestablished market leader in the Powder River Basin of Wyoming, for$60 million in cash and notes. Under terms of the agreement,Hanover will purchase gas compression equipment and related supportfrom Stewart & Stevenson, and Stewart & Stevenson willrefer subsequent compression leasing business to Hanover. “Theacquisition of Stewart & Stevenson’s PAMCO ServicesInternational (PSI) unit is another step in our strategic plan toextend Hanover’s leadership of the compression rental servicesmarket,” said Hanover CEO Michael J. McGhan. “This acquisition addsoutstanding personnel and equipment to Hanover’s existingoperations and establishes for our Company a major base ofoperations in the rapidly growing Powder River Basin of Wyoming,one of the major coal-bed methane-producing regions of the U.S.”

Dynegy and NRG Energy completed a 100 MW expansion of the RockyRoad Power Plant, a gas-fired peaking facility in East Dundee, IL.The installation of an additional 100 MW turbine increases thefacility’s generating capacity to a nominal 350 MW. “The expansionof the Rocky Road Power Plant, which was in direct response to openmarket forces, pricing signals during the last two summers andcritical wholesale market demand in the Midwest, will enable us toprovide solutions to a constrained electrical system,” said DynegyCOO Steve Bergstrom. The first phase of the plant began commercialoperation on June 30, 1999. NRG acquired a 50% interest inDecember, making it the third asset alliance between the twocompanies. The expansion of the Rocky Road plant is the second ofDynegy’s three new generation projects coming on line this summer,totaling 1,055 MW of gross capacity. It began commercial operationat the Calcasieu project near Lake Charles, LA, on May 31, and isscheduled to start up the Rockingham plant in Rockingham County,NC, this month.

Houston-based El Paso Energy Partners LP last week said it willpay $170 million in partnership preference units to buy two gasstorage subsidiaries of Crystal Gas Storage Inc., a division ofparent El Paso Energy Corp. El Paso Energy Partners, which is 35%owned by El Paso Energy Corp., said the preference units will beused to pay for two natural gas storage facilities in Hattiesburg,MS, and they will be non-voting. The units will accrue dividends atan annual rate of 10%, and will not require payment of cashdistributions until 2010. The deal is expected to close in thethird quarter. Crystal Gas was acquired in October 1999 by El PasoEnergy Corp.

Unocal Corp.’s Spirit Energy 76 unit has reached an agreementwith Mad Dog field owners that creates a 15.6% working interest forUnocal for an expanded area covering the entire Mad Dog field inthe deepwater Gulf of Mexico. Before the revised equitydistribution, Unocal held a 25% working interest in the original 2® block unit, covering Green Canyon blocks 825, 826 and thesouthern half of block 782. The agreement also expands Mad Dogfield to include Green Canyon blocks 738, 739, 781, 783, 827 andthe northern half of block 782. Additional appraisal drilling isplanned. BP Amoco is operator. Unocal announced its initial oildiscovery there on April 12, 1999, calling Mad Dog a discovery thatcould represent a “trend opening” discovery for the deepwater foldbelt subsalt play where the company has significant interests.Unocal is headquartered in Sugar Land, TX.

Maine Natural Gas (MNG), a joint venture between the CMP Groupand Energy East, has signed a multi-year contract with theUniversity of Maine to supply natural gas delivery services to theUniversity of Southern Maine campus. The university located inGorham, would be supplied by the transmission jointly owned byMaritimes and Northeast Pipeline, and Portland Natural GasTransmission System. Construction of the low-pressure distributionsystem should be complete and operational by early fall. MNGrecently signed a multi-year deal to supply natural gas to theBrunswick Naval Air Station and is currently building a lateralfeed to a new 540 MW plant which is being built in Westbrook byCalpine (see Daily GPI, June 27). CMP Group and Energy Eastannounced the merging of their two companies last year. TheSecurities and Exchange Commission is the only remaining approvalnecessary to complete the merger.

DFD California Operations, a Duke/Fluor Daniel (D/FD) affiliatehas been granted a five year contract by Duke Energy North America(DENA) to supply plant services for four power generationfacilities around California. The four plants, located in Morro Bayin San Luis Obispo County, Moss Landing in Monterey County, Oaklandin Alameda County, and South Bay in San Diego County, have acombined capacity of 3,351 MW. DFD California Operations will takeon the day-to-day operations of the plants, providing maintenanceand outage management. Morro Bay, Moss Landing and Oakland werepreviously owned and operated by Pacific Gas & Electric, whileSouth Bay used to be operated by San Diego Gas & Electric.

Reliant Energy’s Shelby County, IL, peaking power plant hasstarted commercial operation. The 340 MW natural gas-fired facilitymarks Reliant’s first power generation project to be built inIllinois. The facility which is located about 180 miles south ofChicago began construction in late February. The plant will operateon its five current turbines until they are ultimately replaced byeight General Electric LM 6000 natural gas turbines. The plant isexpected to operate a maximum of four months during the summer eachyear.

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