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Tucson Electric Shifts From Coal to NatGas

Canadian-based Fortis Inc.'s Tucson Electric Power (TEP) utility is working to diversify away from coal with the purchase of a 413 MW share of the natural gas-fired Gila River Power Station in Gila Bend, AZ. TEP said it plans to cut its coal-fired capacity by 32% by 2018.

Under the deal, TEP and UNS Electric, a subsidiary of UniSource Energy Services, bought a 550 MW block (No. 3) from Gila River Power LLC for $219 million. TEP will control 413 MW of Block 3's output. There are four units totaling 2,200 MW at the Gila River Power Station.

In making the transaction with units of Florida-based Entegra Power, TEP said it plans to "significantly" reduce its coal-fired generation capacity in coming years.

At the end of this year, a lease expires for TEP's 200 MW of coal-fired generation from the Springerville, AZ, generating plant. By the end of 2017, TEP will begin using natural gas exclusively at a unit of its H. Wilson Sundt Generating Station in Tucson, removing 120 MW of coal-fired capacity. And in 2017, the utility plans to shut down Unit 2 at the coal-fired San Juan Generating Station in New Mexico, where TEP owns 170 MW.

Those moves will slash 490 MW of coal-fired power from TEP's portfolio, eliminating 25% of the utility's carbon dioxide emissions by 2020 "without compromising the affordability, safety or reliability of our service," said TEP CEO David Hutchens.

The Gila River plant was developed in 2001 by Tampa, FL-based TECO Power Services and Dallas-based Panda Energy International under a joint venture agreement (see Daily GPIMay 25, 2001). It was developed to sell electricity to wholesale customers throughout Arizona, with excess energy available to customers in Southern California, Nevada and New Mexico.

In addition to its shift to more gas-fired power, TEP also intends to have an additional 340 MW of renewable-based generating capacity at year-end. 

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