Edison to Sell Stake in Mohave Coal-Fired Plant
Southern California Edison jettisoned a public-relations headache by agreeing Thursday to sell its majority stake in the Mohave Generating Station, a giant coal-fired power plant that environmentalists contend is a prime contributor to the haze that hovers over the Grand Canyon.
AES Corp. of Arlington, Va., said it will pay $533 million for the 56% interest in the plant that is held by Edison, the Rosemead-based utility arm of Edison International. AES also agreed to buy Nevada Power Co.’s 14% stake in Mohave for $134 million, which would give AES 70% ownership in the 1,580-megawatt facility in Laughlin, Nev.
AES has become an eager shopper in the power-plant sales required by the 2-year-old restructuring of the California electricity market. With the proposed purchase of Mohave, AES would own nearly 6,000 megawatts of power generation in the Southwest, or almost as much as the Los Angeles Department of Water and Power.
Edison would continue to operate Mohave for two years as required by the law that launched the restructuring of the electricity industry in California two years ago. That legislation opened the territories of the state’s investor-owned utilities to other retail electricity marketers and required the utilities to sell their generation assets.
Mohave’s other owners--the Department of Water and Power, which owns 20%, and the Salt River Project, which owns 10%--have not agreed to sell their stakes.
Under terms of the sale, AES would take over responsibility for complying with a settlement agreement to spend $300 million to install additional pollution-control equipment at Mohave by 2005.
The enormous coal-fired plant is the single largest source of sulfur dioxide pollution in the Southwest, and critics say it is partly responsible for the haze over the Grand Canyon, about 75 miles away.
The plant has long been the target of protests from environmentalists and other groups. Just last month, a handful of Navajo Indians demonstrated in front of Edison’s headquarters, claiming the plant’s operation is draining the local ground water and hurting their traditional way of life.
Nonetheless, the Mohave plant drew interest from several bidders since Edison put its stake up for sale in November. The plant produces low-cost energy and serves rapidly growing markets in Southern California, Nevada and Arizona.
Edison would receive about $600 a kilowatt for its stake, compared with an average sale price of about $500 a kilowatt for other coal-fired plants in recent years, said Ted Craver, Edison senior vice president and treasurer.
The Mohave purchase “further solidifies our position in the Southwestern United States,” said J. Stuart Ryan, AES executive vice president. In May 1998, AES acquired three natural-gas-fired plants from Southern California Edison for about $786 million. AES operates a small power plant in Placerita Canyon, which it built 11 years ago.
AES also owns New Energy Inc., a Los Angeles-based retail electricity marketer that has been one of the most successful in the deregulating electricity industry.
Edison International’s stock rose 38 cents to close at $19.75, and AES rose 75 cents to close at $74.38 a share, both on the New York Stock Exchange.
Separately, Irvine-based Edison Mission Energy, another subsidiary of Edison International, said it has agreed to buy Citizens Power, the Boston-based electricity trading and marketing unit of Peabody Group of St. Louis, for an undisclosed price.
The purchase of Citizens Power, the eighth-largest U.S. power marketing and trading company, would allow Edison Mission Energy to get better prices for the electricity generated by its power plants, the companies said.
Edison Mission owns 13,278 megawatts of power-generation capacity in the U.S, a total that has grown dramatically in the last year because of acquisitions.
