Sierra Pacific sales of generation capability nears competition

Sierra Pacific Power Co. has auctioned off most of its generating plants and the utility that serves Carson City likely will be out of the electrity-making business early next year.

Negotiations to sell the last remaining facility, the two-generator Fort Churchill plant, are in progress and its sale will likely be announced shortly, Sierra Pacific spokesman Bob Sagan said Wednesday.

Sierra Pacific announced last week that its large Tracy/Pinon generation facilities 20 miles east of Reno, along with small diesel-powered generators in the Carson City, Reno and Gabbs areas, will be sold for $249.8 million to WPS Power Development.

And Sierra Pacific's 50-percent share in the two-unit Valmy Power Station is being sold to NRG Energy of Minneapolis, Minn., for $273.3 million.

The divestiture of power generation capabilities was a regulatory condition of the merger of Sierra Pacific's parent company, Sierra Pacific Resources, with Nevada Power, which was completed in July 1999.

Nevada Power, which serves the Southern Nevada area, also has to sell off its generating facilities. Sagan said Nevada Power has divested its 12-percent interest in the Mojave power station and is working on selling the Clark, Sunrise, Reid Gardner and Harry Allen facilities.

When the plans to sell the generation facilities were announced in March, Sierra pacific Resources officials said they would be auctioned. Sagan said Wednesday the announced sales have indeed resulted from an auction process.

"We followed an auction format, with a number of people involved and bidding. we had to get it down to a short list," Sagan said. He said the sequential nature of the sales announcements is tied to the extensive review and qualification process for each sale.

The revenue to be realized from the sales was estimated in March at about $1 billion.

Once the generating facilities are sold, Sierra pacific will operate in its target role of providing electrical transmission and distribution services, Sagan said. Transmission is carrying power from generating plants to specific area such as communities, while distribution is transforming that power to the proper voltages and phases required by customers and delivering it to specific locations like homes and businesses.

WPS Power Development, Inc., a wholly-owned subsidiary of WPS Resources Corporation of Green Bay, Wisc., develops and owns nonregulated electric generation facilities and provides services to the electric power generation industry nationwide.

NRG Energy is a global energy company primarily engaged in the acquisition, development, construction, ownership and operation of power generation facilities. NRG owns all or a portion of 63 power generation projects and its net ownership interest in these projects exceeds 14,000 megawatts.

The small diesel generating plant at Carson City is located near Sierra Pacific's Brunswick substation south of the Carson River. It is used mainly to provide extra generating capacity during periods of peak power usage.