PNM Resources, which sold its natural gas operations to Continental Energy Systems just days ago, on Friday said its New Mexico utility PNM will sell its wholesale power, natural gas and transmission contracts to Shell Energy North America (US) LP for $5.8 million.
The contracts being sold accounted for less than 4% of PNM’s Wholesale segment gross margin in 2006, according to the company. The sales price is based on an assumed closing date of March 31, and it will be subject to adjustment.
PNM announced a swap with Continental last Tuesday that would build Continental’s gas operations and allow PNM to concentrate on the electric utilities in New Mexico and Texas (see Daily GPI, Jan. 16). PNM had previously announced the planned sale of a portion of the utility’s electricity and gas wholesale energy portfolio as the first step toward separating the merchant business from the PNM utility, as required by New Mexico regulatory rules.
By Jan. 1, 2010, PNM has to separate from the utility its remaining merchant assets, which are the 190 MW Luna Energy Facility and the 72 MW Lordsburg Generating Station. CEO Jeff Sterba said the company could sell those assets or move them into a separate subsidiary. PNM also could request to reclassify Luna and Lordsburg as jurisdictional plants to serve retail customers, which would require regulatory approval.
“We will continue to execute our strategy of establishing clear separation of our regulated and unregulated electric operations,” Sterba said. PNM’s 10% ownership share of Palo Verde Nuclear Generating Station Unit 3 may remain within the PNM utility and its power may be sold through tolling agreements, he said.
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