Dynegy Inc. and NRG Energy Inc. on Thursday won the California Energy Commission's approval to build two generators at an El Segundo power plant.
The 630-megawatt expansion will replace two gas turbines that the companies shut down because they were too costly to operate, said David Byford, a Dynegy spokesman.
The project will take four years to complete once construction begins, he said.
"Before we begin construction, we would need to enter a long-term contract," Byford said.
Houston-based Dynegy and Minneapolis-based NRG, which co-own the plants through their West Coast Power venture, will seek long-term sales agreements with nearby utilities. That may include Rosemead, Calif.-based Southern California Edison, a unit of Edison International, and Sempra Energy's San Diego Gas & Electric.
The El Segundo plant's units 3 and 4, which generate a combined 670 megawatts, will continue operating. The owners signed an accord with the state's grid operator last month that pays additional money to the owners because the plant is needed to prevent blackouts in the Los Angeles area.