Owner

Pinnacle West Capital Corp., the holding company for ArizonaPublic Service and 30% owner of the Palo Verde Nuclear GeneratingStation, is making the leap into natural gas in a big way,developing one of the largest gas-fired electric generatingfacilities alongside its Palo Verde switchyard.

The sale of Ozark Gas Transmission to an Enogex affiliate hasbeen completed, but it remains to be seen whether the FERC willbless Enogex with the rates it seeks for an interstate pipelinecomposed of the combination of Ozark and its currentlynon-jurisdictional NOARK Pipeline.

Oral arguments by the owner of the Sears Tower, and QST Energyagainst Commonwealth Edison (ComEd) were heard yesterday by theIllinois Commerce Commission (ICC). Tower Leasing and QST arefighting ComEd’s refusal to allow installation of a cogenerationsystem at the tower that would save tenants an estimated $2 millionor more a year in energy costs. So far, ComEd has refused to allowQST to acquire or lease Edison’s distribution system inside theSears Tower, a prerequisite to installing the cogeneration (seeNGI May 5, 1997).

In a transaction making it the largest independent powerproducer in Texas, Calpine Corp. acquired the remaining 50% interest in Texas Cogeneration Co. (TCC), owner of two gas-firedpower plants in Texas City and Pasadena, TX, with 827 MW ofcapacity. Calpine of San Jose, CA, bought the remaining interest inTCC from Dominion Cogen Inc. for about $53 million, plus contingentpurchase payments beginning in 2000 that could approximate 2.9% ofproject revenue. As part of the deal, Calpine now owns a 7.5%interest in a 165 MW gas-fired cogeneration plant located inBayonne, NJ. Calpine Fuels Texas, a subsidiary of Calpine, buys gasfor the Texas plants from Enron Capital & Trade Resources(ECT). In a related transaction, Calpine Fuels Texas paid about$105 million to ECT to restructure its existing gas contracts.

Syntroleum Corp., the developer and owner of a proprietaryprocess for converting natural gas into synthetic crude oil, andSLH Corp., which owns about 31% of Syntroleum, agreed to merge in astock-for-stock deal, which has been approved by the boards of bothcompanies.

The dueling U.S. titans were continuing their battle to be thenew owner of England’s The Energy Group. Texas Utilities said itacquired 36.9 million more Energy Group shares at 840 pence/share,representing about 7.1% of The Energy Group’s issued share capital,and now holds 114.4 million shares, about 21.96% of issued sharecapital. TU had the blessing of U.S. regulators for the shareacquisition.