El Paso Corp. continued to work on its balance sheet Friday with a $240 million sale of El Paso Merchant Energy’s 50% stake in CE Generation to Calgary-based independent power producer TransAlta Corp. The sale includes a half share in 13 power plants with 820 MW of capacity and the right to a 50% interest in a geothermal development project.

MidAmerican Energy Holdings Co. will continue to own the other 50% interest in both CE Generation and the geothermal project.

CE Generation’s operating capacity includes 330 MW of California geothermal generation from the 10 units that make up the Imperial Valley plant and 490 MW combined of gas-fired cogeneration from the 240 MW Saranac plant in Plattsburgh, NY, the 200 MW Power Resources plant in Big Spring, TX, and the 50 MW Yuma plant in Yuma, AZ.

The transaction gives TransAlta a 50% share in 13 existing facilities (see table below). Power contracts are in place for all gas-fired facilities and eight of 10 geothermal facilities in the acquisition.

“These are excellent assets that immediately contribute to earnings and most of the output is backed by long-term contracts,” said TransAlta CEO Steve Snyder. “MidAmerican is a first-rate partner with proven local operational experience, to which we will add our marketing expertise.”

TransAlta will pay El Paso $205 million plus another $35 million in working capital. In addition, should TransAlta decide to participate in building the geothermal development project, it will compensate El Paso $30 million for its development work.

CE Generation has about $1 billion in non-recourse debt of which $140 million is secured by a guarantee from MidAmerican. TransAlta said it will finance the acquisition with existing credit facilities. The transaction is subject to customary closing conditions and is expected to close by the end of January.

For 2003, TransAlta expects this acquisition to contribute 5 cents/share to earnings. Including a $30 million reduction in working capital, TransAlta expects to receive $40 million to $45 Million of cash for CE Generation LLC in 2003.

TransAlta is Canada’s largest non-regulated electric generation and marketing company, with more than $7 billion in assets and 9,000 MW of capacity either in operation or under construction.

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