Stake in Nevada power plant sold for $667 million

Thursday, May 11, 2000 | 11:19 a.m.

SUN STAFF AND WIRE REPORTS

AES Corp. plans to acquire a 70 percent stake in the 1,580-megawatt Mohave Generating Station near Laughlin for $667 million to expand in the Southwest.

Under the deal, Arlington, Va.-based AES will acquire Southern California Edison's 56 percent stake in the two-unit, coal-fired plant for more than $533 million; along with Nevada Power Co.'s 14 percent stake.

The amount to be paid to Nevada Power wasn't immediately available.

The remaining 30 percent of the plant that AES is not buying in today's deal is held by the City of Los Angeles Department of Water and Power, which owns 20 percent, and Phoenix, Ariz.-based Salt River Project, which holds 10 percent.

The plant, located on 2,500 acres along the Colorado River, some 80 miles south of Las Vegas, is the largest coal-fired plant in Nevada. The station provides power to growing markets including Las Vegas, Arizona and Southern California.

"The acquisition of Mohave further solidifies our position in the southwestern United States," said J. Stuart Ryan, AES's executive vice president. "Together with our other businesses in the Los Angeles area, we will now own nearly 6,000 megawatts of generation in one of the fastest growing regions in the country."

"Additionally, Mohave's low-cost, coal-fired generation provides a diversification of fuel supplies to our existing portfolio of gas-fired assets in the western U.S," he said.

After the acquisition, Southern California Edison, a subsidiary of Rosemead, Calif-based electricity power generator Edison International Co., will keep all 350 of its workers at the plant and continue to provide maintenance services for two years in accordance with AB 1890, California's electricity market restructuring law.

"Our workers will remain here for two years as part of California's electricity deregulation laws. After that, it's the new owners' option whether to keep them or not," said Steve Hansen, the Edison company's spokesman.

The deal, which is subject to approval by the California Public Utilities Commission and the Federal Energy Regulatory Commission, and a review by the Public Utilities Commission of Nevada, is expected to close by the fourth quarter of 2000.

The Edison company said the Mohave deal brings to 15 the number of generating assets it has sold in the past three years as part of market restructuring. It said it valued and sold 12 gas-fired California plants in 1997 and 1998 through an auction process. Last month, SCE said it sold its interests in the Four Corners coal-fired plant in New Mexico and the Palo Verde Nuclear Generating Station in Arizona to Pinnacle West Energy.

Thomas Moore, a Nevada Power spokesman, said the Mohave sale represents the first of the Nevada utility's efforts to divest its power generating assets following its merger with Sierra Pacific Resources of Reno.

"We plan to concentrate on transmission and distribution of power and providing means to get electricity into the Valley," Moore said.