Sempra U.S. Gas & Power today announced it has entered into a definitive agreement to sell one 625-megawatt (MW) block of its 1,250 MW Mesquite Power natural gas-fired power plant to the Salt River Project (SRP) Agricultural Improvement and Power District for $371 million.
The SRP Board of Directors approved a management proposal to acquire 100 percent ownership of the 625 MW block and a 50-percent undivided interest in the infrastructure facilities shared by the two blocks at their November meeting. The agreement is subject to approvals from the Federal Energy Regulatory Commission and other regulatory agencies. The companies anticipate receiving these approvals in the first quarter of 2013.
"This strategic sale comes at the right time for Sempra U.S. Gas and Power as we continue to reduce our exposure to the merchant power markets, while also allowing us to put greater emphasis on growing our southeast natural gas portfolio," said Jeffrey W. Martin, president and CEO of Sempra U.S. Gas & Power. "This transaction will enable us to redeploy capital to expand our growing presence in the natural gas sector."
"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. "Load growth is relatively small right now, but when it returns, this plant will position us well in the long term to meet our customers' needs at a reasonable cost."
SRP, which is the largest supplier of raw water to the greater-Phoenix metropolitan area, has acquired one of Mesquite Power's two 625 MW power blocks. Each block is comprised of two gas turbines and a steam turbine. As part of the transaction, SRP also will become the operator of both Mesquite units.
Mesquite Power, which has been in operation since 2003 in Arlington, Ariz., is among the nation's cleanest and most efficient gas-fired power plants. It was the first power plant in Arizona to receive the Voluntary Protection Programs' award, the highest recognition for exemplary safety performance, in 2009. The plant recently was awarded Voluntary Protection Programs recertification for 2012 to 2015.