Gas-fired megawatts were in play last week as the parent ofArizona Public Service and part-owner of the Palo Verde NuclearGenerating Station pledged to put a massive 2,120 MW naturalgas-fired plant beside its nuclear facility; Texas Utilities putsix gas-fired generating plants (3,116 MW) on the market; andCalpine Corp. announced a new 800 MW cogen plant in Baytown, TX,and completed the purchase of another 500 MW development project inCalifornia. (See separate story)

Pinnacle West Capital Corp., the holding company for ArizonaPublic Service and 30% owner of the Palo Verde nuke, announced itwas making the leap into natural gas in a big way, developing oneof the largest gas-fired electric generating facilities alongsideits Palo Verde switchyard.

The company’s new unregulated generating subsidiary, PinnacleWest Energy, will operate the 2,120 MW plant as a wholesalemerchant plant, said Bill Stewart, president of the company’sgeneration unit. The location was selected because the Palo Verdeswitchyard is a major transmission hub and provides access toenergy markets in Arizona, California and across the Southwest, aregion that has seen significant growth. Four major transmissionlines converge at the Palo Verde Switchyard, two going west toCalifornia, one north to Utah and one east to New Mexicoconnections. When fully operational, the plant could use up to 360MMcf/d – about 90 MMcf/d for each of four units. It will beconnected to El Paso Natural Gas.

The state-of-the-art, combined cycle plant will be built inphases, coming on line in 530-MW increments beginning in 2003, withthe final unit anticipated to be operational in 2007. Land has beenacquired and environmental permit applications are being preparedand submitted for the project. Construction contracts will be on afixed-price basis and total approximately $1 billion. Work on thefirst unit is expected to begin in late 2000.

Pinnacle West, along with Calpine Corp. of San Jose, CA, alreadyis involved in a project to build a 530 MW natural gas-firedcombined cycle unit at the existing West Phoenix Power Station.Pinnacle West also will build a 130 MW combined cycle unit at WestPhoenix. Nor is the company abandoning its nuclear interests. Italso is looking to acquire a larger ownership share of the PaloVerde plant, which it operates.

Meanwhile, TXU Electric said the six plants it is offering forsale have a combined 3,116 MW of capacity or about 15% of TXU’soverall capacity in Texas. The plants consist of 14 gas-firedunits, three diesel generators and all associated generatingassets, including land, lakes, water rights, air permits, emissionallowances and fuel transportation contracts. Bidders may offerfor an individual plant or any combination of plants. The plantsare scattered and include Mountain Creek and Parkdale in Dallas,North Main in Fort Worth, Lake Creek and Tradinghouse near Waco andRivercrest outside of Mount Pleasant.

“Texas is recognized as a very attractive market in which tooperate when competition begins, and many entities are expressinginterest in owning generating facilities in the state, TXU said. Aspokesman said the utility expected to get a good price sincegas-fired generators are in demand.

Ellen Beswick

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