San Diego Gas & Electric (SDG&E) has completed the saleof its 951 MW Encina Power Plant in Carlsbad, CA, and 253 MW ofcombustion turbine facilities in San Diego County to Dynegy Inc.and NRG Energy Inc.

Dynegy and NRG Energy jointly paid $356 million in cash toacquire both the plant and 17 combustion-turbine generators, whichare used during peak loads. Dynegy will provide fuel-managementservices and market energy from the Encina plant and combustionturbines for the partnership. NRG Energy will manage the operationof the power generation assets out of its new San Diego office.

“The sale of these two San Diego power plants is enabling us tomove to a competitive marketplace for the commodity of electricitytwo-and-a-half years sooner than expected, a step that will benefitboth our shareholders and customers,” said Edwin A. Guiles,president of SDG&E. “The sale also allows us to focus more onthe future of SDG&E, on becoming a world-class energy-deliverycompany.”

SDG&E will operate and maintain the facility for the newowners for two years after the sale.

“The timing of the addition of these assets to ourpower-generation franchise enables us to capitalize on theopportunities in the California power market during the onset ofthe peak summer season,” said Chuck Watson, Dynegy CEO.

“This southern California addition to our West Coast portfoliois an integral part of our strategy to focus on building our coremarkets in order to become one of the top players,” said DavidPeterson, NRG Energy CEO.

The Encina Power Plant began operation in 1954 and was expandedthroughout the 1970s. The facility consists of fivesteam-generating units and an on-site combustion turbine.

Proceeds are being used by SDG&E to pay down the competitiontransition charge (CTC), now on customer bills. The CTC is a lineitem on the bills for all customers of the state’s investor-ownedutilities – SDG&E, Southern California Edison and Pacific Gas& Electric (PG&E) – to recover stranded costs.

SDG&E has asked the California Public Utilities Commissionfor authority to end collection of the majority of its CTC on July1, 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 turbinesincrease the number of power generation assets owned by Dynegy inCalifornia to 21. In addition to the El Segundo and Long Beachfacilities, Dynegy has gas-fired facilities in Bakersfield, Corona,Crockett, Stockton, and Taft. Encina and the combustion turbinesincrease the generating capacity of Dynegy’s California assets to3,478 MW. The capacity of Dynegy’s 31 U.S. generation assetscurrently operating or under construction is more than 6,800 grossMW.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.