Salt River Project (SRP) will purchase one block of the Mesquite Generating Station located in Arlington, Ariz., about 40 miles west of Phoenix. The natural gas-fired power plant, owned by San Diego-based Sempra U.S. Gas & Power, includes two 625-MW combined-cycle generating blocks. SRP is purchasing one of the blocks for $371 million and under the terms of the agreement, will operate the entire facility.
“We studied the market very carefully and determined that this purchase would provide an economic benefit to SRP and its customers,” said SRP general manager Mark Bonsall. “While recent load growth has been fairly modest, more substantial growth is expected and this plant will position us well in the long term to meet our customer’s needs at a reasonable cost.”
The agreement is subject to approvals from the Federal Energy Regulatory Commission and the U.S. Department of Energy. The companies anticipate receiving these approvals in early 2013.
According to Bonsall, SRP will save money by purchasing an existing power plant now rather than building a new and much more expensive facility in the future.
As part of the purchase agreement, Sempra and SRP will form a joint operating entity called Mesquite Power Operations LLC that will hold the plant permits.
The Mesquite Generating Station has been in operation since 2003 in Arlington. More than 30 people are employed at the plant and SRP anticipates hiring the existing staff while making minimal changes to accommodate normal SRP operational procedures.
SRP is the third-largest public power utility in the nation, serving more than 950,000 electric customers.
Sempra U.S. Gas & Power, LLC is a developer of renewable energy and natural gas solutions. The company operates solar, wind and natural gas power plants, along with natural gas storage and pipelines, and distribution utilities. Sempra U.S. Gas & Power is a subsidiary of Sempra Energy (NYSE: SRE), a Fortune 500 energy services holding company.