The deal Barrick Goldstrike Mines reached last week to leave the Sierra Pacific Power grid marks an important milestone in the state's effort to develop new energy sources.
Barrick plans to build a 115- megawatt generating plant at Tracy, near an existing Sierra Pacific plant.
When the plant fueled by natural gas comes on line in September, 2005, it will meet the mining company's needs and may provide about 8.2 megawatts of power for other Sierra Pacific customers.
(A megawatt can serve 500 to 1,000 homes, depending on the time of day.)
A state law approved in 2002 allows big electric users to leave the traditional grid to free up power for other customers.
While several big customers have left the Nevada Power Co.
grid in the Las Vegas area, Barrick is the first to exit Sierra Pacific Power.
Equally groundbreaking, officials of the state's Public Utilities Commission said last week, Barrick is the first anywhere in the state to build new generating capacity to meet its needs.
The southern Nevada companies that left the grid simply bought power from wholesale suppliers.
Barrick's decision not only adds capacity in the fast-growing state, the addition of a generating plant makes the entire power network more reliable.
During the next 60 days, Barrick and Sierra Pacific will attempt to hammer out the details of a proposal calling for Barrick to provide 8.2 megawatts of power from the plant to Sierra Pacific.
Kay Grosulak, strategic director for Sierra Pacific, said Barrick currently accounts for about 10 percent of the load on the utility's system.
That's power Sierra Pacific now can sell, and the cash-strapped utility won't have to struggle to finance a new generating plant.
"It's a brand-new plant.
It's more efficient than our plants," Grosulak said.
Barrick stands to save $2.9 million if signs a contract to sell power to Sierra Pacific.
The savings would be lopped off a $10.75 million fee Barrick will pay to Sierra Pacific as the price of leaving the grid.
Sierra Pacific, in turn, will use the money for the benefit of its customers.
The PUC still needs to approve the deal, probably in early June.
