Construction halted at Nevada power plant

Friday, Sept. 20, 2002 | 11:03 a.m.

SUN STAFF AND WIRE REPORTS

Duke Energy Corp. has stopped construction at its Moapa power plant 50 miles northeast of Las Vegas, citing a reduced demand for electricity.

About 750 laborers, subcontractors for Duke affiliate Duke/Fluor Daniel, are out of work as a result of the shutdown, a spokeswoman for Duke said today.

The construction site on the plant, known as the Moapa Energy Facility, is being secured, said Diana Vavrek, a company spokeswoman, adding that the procedure will enable the company to start up construction quickly when market conditions change.

The $600 million, 1,200-megawatt plant, Duke's first in Nevada, is about half completed, Vavrek said. The plant, capable of providing energy for 1.1 million homes a day on average, was scheduled to begin operations in April. Half the plant was to open then, with the rest of it opening two months later. No new startup date has been projected.

About a quarter of the electricity produced at the plant would be made available to Nevada Power Co., while the rest would be sold on the wholesale market.

She said the major reason for the shutdown is that a general economic slowdown has reduced demand for electricity in the western United States. In addition, additional supply has come on line keeping demand down.

"We will continue to evaluate the market and construction will resume when conditions are favorable," Vavrek said.

The company slowed construction efforts in August by eliminating weekend and overtime work at the site. About 1,000 laborers were working at the plant at when the slowdown was announced.

Charlotte, N.C.-based Duke, the nation's second-largest utility owner, sharply lowered its earnings forecast for the rest of the year and 2003 today, citing continued weakness in its wholesale power market in North America. Its shares tumbled.

The company said it was stopping construction of two western U.S. power plants in in addition to the Moapa plant until market conditions improve. Also deferred are the Grays Harbor Energy Facility in Satsop, Wash., and the Deming Energy Facility in Deming, N.M.

The company is projecting earnings of $1.95 to $2.05 for 2002, far below Wall Street's consensus estimate of $2.46 a share. It also warned that its 2003 earnings may be flat or lower than 2002. Analysts surveyed by Thomson First Call had been expecting Duke to earn $2.61 a share in 2003.

If the North American merchant energy market does not improve in 2003, earnings may be lower than 2002 ongoing earnings, the company said.

Duke Energy's shares fell 7.2 percent, or $1.55 a share, to $19.87 in morning trading on the New York Stock Exchange.

The company said it cut capital spending for 2002 from the $6.8 billion indicated in July to $6.2 billion, excluding the acquisition of Westcoast Energy, a Vancouver, British Columbia-based natural gas distributor. Capital expenditures for 2003 have been reduced to approximately $3.5 billion.