Pinnacle West Energy and Houston-based Reliant Energy PowerGeneration, Inc. announced yesterday an agreement to jointlydevelop power plant projects in the Southwest totaling more than2,500 MW of generation in Arizona and Nevada, Pinnacle West Energyannounced today.

The shared projects include the previously announced 1,060 MWUnits 1 and 2 of the Redhawk Power Plant in Arizona and more than1,500 MW in two power projects near Las Vegas and in northernNevada. The agreement represents Pinnacle West Energy’s firstgenerating assets under development outside of Arizona.

Pinnacle West Energy President Bill Stewart said the agreementbetween Reliant and Pinnacle West Energy is the result of “commonstrategic interests in the generation business in the Southwest.”

Under the agreement, the two companies each will own halfinterest in the projects, a total of five generating units eachcapable of producing more than 500 MW. In exchange for a 50% shareof its first two Redhawk units, Pinnacle West Energy will get halfshares of Reliant’s three Nevada units.

The two Redhawk units are expected to begin commercialoperations in summer 2002. Pinnacle West Energy is continuing withdevelopment of Redhawk Units 3 and 4 and the previously announcedWest Phoenix Units 4 and 5.

“We intend to offer competitively priced electricity in growingSouthwest markets by producing low-cost energy that is accessibleto key transmission hubs,” Stewart said. “These projects are partof our overall growth strategy that will keep us near the top ofwestern power producers.”

A definitive development agreement on plant construction andoperation is to be signed within 120 days. It will give PinnacleWest Capital Corp. subsidiaries Arizona Public Service and PinnacleWest Energy about 7,000 MW of generating capacity in Arizona,Nevada and New Mexico upon completion of the projects.

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