Hoping to continue 1997’s over-book-value bidding on fossil-fuel plants, Pacific Gas and Electric will auction four more natural gas-fired power plants and one geothermal power plant later this year. The plants collectively represent $850 million in book value, 4,712 MW of capacity and a total natural gas load (on the four gas-fired plants) of 273 MMcf/d.

More robust bidding, following sales in the New England states and California could continue the trend toward more divestiture of generating plants by investor-owned utilities and growth in the merchant (non-utility) power sector. PG&E sold three gas-fired power plants late last year for $501 million. Southern California Edison sold 10 of its 12 gas-fired power plants for $1.15 billion and intends to sell another two this year; and San Diego Gas and Electric is getting out of the generation segment entirely, selling two fossil plants and a 20% interest in San Onofre Nuclear Generating Plant along the southern California coast.

Assuming state regulatory approvals move forward with the latest auction, which PG&E applied for Jan. 15, potential bidders will be invited to provide “nonbinding indications of interest” starting March 16 through May 4. After that, a selected bidders’ group will be invited to make formal offers by July 2.

There will be no restrictions on the number of plants a bidder can go after, so one large buyer could take all of them as happened late last fall when Duke Energy Power Services Inc. successfully bid $501 million for three PG&E plants. Duke is not precluded from bidding on the remaining plants, according to a PG&E spokesperson.

The plants, and their capacities, going on sale now are:

  • Pittsburg (CA), 2,022 MW (burns 156 MMcf/d of gas)
  • The Geysers geothermal plant, 1,224 MW
  • Contra Costa, 680 MW (58 MMcf/d)
  • Hunters Point (San Francisco), 423 MW (39 MMcf/d)
  • Potrero (San Francisco), 363 MW (20 MMcf/d)

Under the state electric restructuring law, California’s three major investor-owned electric utilities were encouraged to shed much of their fossil fuel generating plants. PG&E plans to sell 98% of its fossil plants and the other two electric utilities will shed all of their fossil fuel generating capability in the state. For the time being, PG&E and Edison plan to hold on to their nuclear and hydro-electric plants.

While PG&E, the utility, cuts back on generating assets, its parent, PG&E Corp., is adding to its nonutility generating plants through a subsidiary, US Generating Corp., which purchased plants last year in New England and has proposals to build new natural gas-fired merchant plants in California and other states.

Richard Nemec, Los Angeles

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