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
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.
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