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PG&E Signs Deals on 4 New Power Plants

The utility says the additional generating capacity is needed to meet growing demand in Northern California.

April 05, 2006|From Times Wire Services

Pacific Gas & Electric Co. said Tuesday that it signed long-term power contracts that would result in construction of four gas-fired power plants in California, resulting in an additional 1,780 megawatts of electricity by 2010.

One of the new plants will be owned by PG&E Co. and the rest will be owned by others with contracts to provide power to PG&E, the company said. In all, the plants will cost more than $1.5 billion to build.

Construction of two more gas-fired power plants accounting for an additional 520 megawatts of generation is expected to be announced in the next week or so, said Tom King, chief executive of PG&E, a subsidiary of PG&E Corp.

The utility said it needed the additional power, which will come online starting in 2009, to meet growing demand from a rising population in the Northern California territory that it serves.

"These new power plants will help ensure sufficient electricity supplies," King said.

King did not say during a conference call Tuesday how rates would be affected.

The utility-owned plant would be one of the first new gas-fired power plants built by PG&E since a state deregulation law passed in 1996, which required the state's investor-owned utilities to sell half of their gas-fired plants to stimulate competition in the electricity industry. The deregulation unraveled as prices for wholesale power soared, leading to rolling blackouts and sending PG&E into a three-year bankruptcy in April 2001.

The PG&E plant will be built in Colusa County and will generate 660 megawatts. One megawatt serves 750 typical California homes.

San Jose-based Calpine Corp., which is operating under Bankruptcy Court protection, would build a 600-megawatt plant in Hayward.

The other contracts are for the output of a 400-megawatt plant planned by private equity fund Energy Investors Fund for Firebaugh, and a 120-megawatt plant also to be located in Firebaugh, which is near Fresno. The second Firebaugh plant will be owned by Starwood Power and operated by United Technologies Corp.'s CalPeak Power, PG&E said.

The utility continues to negotiate for so-called small electricity contracts with several providers and is also working on commissioning another power plant that it will own and operate, King said. It's also seeking regulatory approval for a plan to acquire and complete an unfinished power plant owned by Mirant Corp.

Shares of PG&E rose 77 cents Tuesday to $40.12.

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