Sempra Energy’s San Diego Gas and Electric utility unit hasannounced a two-phase auction to sell its remaining 11 purchasepower contracts, which cost the utility nearly $500 million lastyear. The contracts include nine above-market qualifying facility(QF) deals totaling 207 MW; the other two contracts cover another175 MW.

Most of the contracts are long-term, with the longest runninguntil mid-2025. They represent power generated in Oregon, Arizonaand New Mexico, as well as the local San Diego area. In 1999,purchased power was $467 million, representing about 10% ofSDG&E’s overall expenses and about 25% of its energy costs. Thefigure was approaching double the $260 million it had been in 1998,according to Sempra’s unaudited consolidated income statement for1999 that was released earlier this year.

In the two-phase auction, the first phase will allow nonbindingprice bids, accompanied by the bidders’ financial standing andcreditworthiness. SDG&E has retained Morgan Stanley Dean Witterto evaluate the Phase 1 bids and select bidders to participate inthe second phase, which will involve binding bids.

Phase 1 bids are due March 28; Phase 2 will be due May 9.

Ultimately, both the California Public Utilities Commission andthe Federal Energy Regulatory Commission must approve the finalsale.

Interested bidders can get more information from Kevin Genieser,at Morgan Stanley: 212-761-7309, or e-mail:kevin.genieser@msdw.com.

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