Edison Puts Stake in Mohave Plant on Block
Southern California Edison said Wednesday that it is auctioning its majority interest in the giant Mohave Generating Station in Laughlin, Nev., which serves about one in seven of its household customers.
The Rosemead-based utility, a subsidiary of Edison International, is accepting bids on the coal-fired power plant as part of the continuing overhaul of the California electricity industry.
The legislation that brought competition to the retail markets of the state’s investor-owned utilities also requires them to sell or otherwise place a market value on their nonnuclear generation assets.
“The Mohave plant produces low-cost power and has access to very attractive markets in California and the rapidly growing Southwest,” said Ted Craver, Edison senior vice president and treasurer.
Edison last year completed the sale of 12 power plants that use natural gas to generate electricity, receiving $1.19 billion. The book value of those plants was $569 million; book value of the Mohave Generating Station is $150 million.
“We’ve got good interest out there” in the 1,580-megawatt Mohave plant, said Peter Lersey, Edison’s chief administrative officer for divestiture. “There’s a pretty good universe of players out there that are aggressively going after generation assets, particularly coal.”
While Southern California Edison has been unloading such assets, another Edison International subsidiary, Mission Energy, has been buying power plants, including 12 coal- and natural gas-fired facilities from Chicago-based Unicom Corp., parent of Commonwealth Edison.
Analyst Douglas Christopher of Crowell, Weedon & Co. said such moves strike him as “an inefficient use of capital” because the utilities are unloading the plants in territories they know, only to buy other plants in territories they don’t.
“You’re basically swapping power plants with other companies,” Christopher said. “We’ll see how it works out over the next 20 years.”
Edison operates the 28-year-old Mohave plant, which can produce enough electricity to supply about 1 million homes, and owns a 56% share. The utility’s share of the electricity can power about 13% of its household customers. After Edison sells its stake, the new operators would continue to sell Mohave’s power into the state’s electricity pool.
The plant’s other owners--the Los Angeles Department of Water and Power, which owns 20%, Nevada Power Co. (14%) and the Salt River Project (10%)--are also considering selling their stakes, but no decisions have been reached, Lersey said. Edison is expecting to close a deal by the end of the year.
Mohave’s owners last month settled a federal lawsuit filed by environmental groups, agreeing to push up the deadline for installing additional emissions-control equipment and to meet slightly more aggressive targets for reduction of sulfur dioxide emissions from the plant, the largest single source of sulfur dioxide pollution in the Southwest.
The settlement, which must be approved by the U.S. District Court in Las Vegas, “lifts an uncertainty that could have clouded the future of this plant,” Craver said.
Edison International shares lost 25 cents, closing at $27.69 on the New York Stock Exchange.
