Water board considers power business

Wednesday, Jan. 16, 2002 | 9:44 a.m.

The Southern Nevada Water Authority will likely soon go into the business of providing electricity.

The Water Authority board on Thursday will consider buying a 25 percent interest in the planned Silverhawk Power Plant in Apex, 20 miles north of Las Vegas. GenWest, a subsidiary of Phoenix-based Pinnacle West Capital Corp., announced that it would build the $400 million, 480-megawatt plant in August.

The cost for the authority, which supplies water to municipal systems throughout the Las Vegas Valley and Laughlin, would be no more than $115 million, according to the proposal to be presented to the board.

David Donnelly, Water Authority assistant general manager, said the point of the proposal is not to become a power company. Buying a piece of the GenWest plant will help ensure reliable electricity availability at low cost, he said.

Both issues surfaced last year when electricity shortfalls throughout the West helped spur skyrocketing power costs and occasional blackouts, including one in Las Vegas.

The investment would keep the electricity cost to about 3 cents per kilowatt/ hour, Donnelly said -- about a third of the cost of electricity for residential consumers.

The authority's budget for power is about $50 million, making the water agency the valley's single largest electricity consumer. If there is a power shortfall, buying power from the volatile markets on the grid can lead to much higher prices.

In a worst-case scenario, the power isn't there to buy at all.

The proposal before the board would ensure that the Water Authority will have about 150 megawatts available, or enough electricity to power about 75,000 homes during summer months in Southern Nevada. The plant is scheduled to go online in spring 2004.

Donnelly said that if the power isn't needed, the Water Authority also can benefit from the one-quarter plant ownership by selling the electricity on the open market.

The Water Authority board approved talks with potential power providers in August. Donnelly said negotiations for the purchase of part of another plant in Apex are continuing. That plant, planned by Mirant Corp., would generate 1,100 megawatts.

Half of the generating capacity of the Mirant plant would come on line in March 2003, and the other half would come online a year later.