Dynegy Inc. last week announced plans to develop its firstmerchant power plant to serve the growing electricity market inFlorida.

The 500 MW natural gas-fired peaking facility — to be known asthe Palmetto Power Project — will be located in Osceola County,about 30 miles southeast of Orlando. It plans to sell power in thewholesale market to public utilities, electric cooperatives andmunicipalities throughout the Sunshine State, and is targeted tostart up in the summer of 2002, said the Houston-based energymarketer.

Dynegy may pursue other power facilities in Florida later, butfor now it is focusing its attention on the Palmetto project. “Thisis clearly the one that has the most meat to it at this point intime,” said Rick Bowen, executive vice president of projectdevelopment for Dynegy Marketing and Trade.

“Obviously the growth is what’s attracting a lot of people tothe Florida market,” he said. Ironically, Dynegy is drawn to themarket “because some of the things that make projects difficultthere are the kinds of things we do really well,” Bowen said. “Overthe years we’ve learned how to maximize our positions inmarketplaces where there’s tight gas and gas constraints. We kindof like the opportunities of places that are a little moredifficult. It has the tendency to run a lot of the other developersoff.”

Dynegy’s Palmetto facility will include three advancedtechnology combustion turbines operating in simple-cycle. It hascontracted for gas supplies to be delivered by Florida GasTransmission (FGT), the sole pipeline in the Florida market.

FERC approval of new gas pipeline projects — such as theBuccaneer Natural Gas Pipeline and Gulfstream Natural Gas SystemL.L.C.— are needed to fully develop the Florida power market,Bowen believes. “It’s certainly going to help because that’s whatyou need is competition among the pipes. Right now there’s limitedaccess, and that’s making it difficult for some developers to godown there.”

Also, he said the fact that transportation capacity in Floridais controlled by one pipeline — which often can demand and getlong-term firm contracts — makes it difficult for developers ofpeaking facilities, which hinge on the availability ofinterruptible service. “And in Florida right now that’s about allyou can build because utilities are opposed to combined-cycleplants.”

Bowen said Dynegy chose Orlando for the site of the Palmettoproject “because there’s a significant tie-in point there” withFlorida Power & Light and Florida Power Corp., which willenable the facility to tap into either grid. Dynegy doesn’t haveany customers yet, he noted. “As usual for Dynegy, we’re justselling into the open marketplace.”

Dynegy, whose merger with Illinova Corp. is due to close inearly January, has announced five or six new power projects duringthis year alone, according to Bowen. It currently has 34 powerplants totaling more than 7,000 gross MW that are either operatingor under construction in the United States. This includes therecently announced 100 MW expansion of the Rocky Road Power Plant,a gas-fired peaking facility in East Dundee, IL; the CalcasieuGeneration Project, a 155 MW gas-fired peaking plant near LakeCharles, LA; and an 800 MW gas-fired generation facility inRockingham County, NC.

Susan Parker

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