AES sells two units to Edison affiliate

Two electricity generators at a Huntington Beach power plant have been sold to allow another project to rise.

AES Huntington Beach LLC, part of a company that generates electricity in 28 countries, sold two of its four power units to Santa Ana-based Edison Mission Energy, a Southern California Edison affiliate, said AES Southland President Eric Pendergraft.

The sale is part of an agreement that keeps emissions within the South Coast Air Quality Management District’s limits in Los Angeles, Orange, San Bernardino and Riverside counties, Pendergraft said.

“Before they can get authority to operate, they have to provide these emission offsets in order to keep the environment whole,” he said. “By us agreeing to shut down our facility, that is enabling this new facility to go into operation.”

Edison Mission will construct a new electricity-generating facility, Walnut Creek Energy LLC, in the City of Industry. The project, a 500-megawatt advanced technology plant, is expected to create 400 construction jobs, said Edison Mission spokesman Doug McFarlan. The $500-million project has a 10-year contract to sell electricity to Southern California Edison for distribution, he said.

Although the sale was completed in May, the two units are not expected to shut down for two years while Walnut Creek is under construction. AES is leasing back the units and operating them as usual, burning natural gas and generating electricity that is sold and distributed to Southern California Edison customers, Pendergraft said.

AES Southland has 14 units in Huntington Beach, Redondo Beach and Long Beach, Pendergraft said.

“AES has units along the coast there that would either require significant additional investment in future years or [retirement],” McFarlan said. “This [transaction] turned out to be a good fit for both sides.”

Neither Pendergraft nor McFarlan would disclose how much the two units cost.

“As we evaluated the transaction, we had to balance what they’re paying us against what we expect to earn, and from our perspective, it was a good decision to move forward,” Pendergraft said.

AES plans to replace the two units with others that have newer and more efficient technology, Pendergraft said. It’s not clear yet how many units will replace the two that were sold, but this type of project would take between five and seven years to complete, he said.

“They will be more efficient, which translates to fewer emissions, more flexible and better suited to integrate renewable forms of energy, like solar and wind,” Pendergraft said.

When the time comes, AES will have to do what Edison Mission is doing — buy units from another company or retire some of its existing ones to keep the emissions within acceptable levels.

“We’re faced with the same constraints,” he said.