Sempra Energy to Buy 10 Power Plants in Texas

Sempra Energy to Buy 10 Power Plants in Texas

By Craig D. Rose, The San Diego Union-Tribune -- Mar. 16

Sempra Energy is teaming with a private equity group to acquire 10 power plants in Texas from American Electric Power for $430 million.

A Sempra subsidiary will pay half the total, with the balance paid by Carlyle/Riverstone Global Energy and Power Fund, a combination of private investment companies.

The team is acquiring plants with combined generating capacity of 4,000 megawatts enough to power 4 million homes but four of the plants are inactive natural-gas or oil-fired facilities.

Texas has a glut of power plants, with about 30 percent more generating capacity than electricity demand. But Richard Vaccari, managing director of Sempra Energy Partners, the unit making the acquisition, said the company was particularly interested in acquiring the Coleto Creek Power Station, a 632-megawatt coal-fired plant near Fanin, in the southern part of the state.

With most modern plants fueled by increasingly expensive natural gas, Vaccari said, "Coal-fired plants are hard to come by and they are like gold."

He estimated that these facilities could provide power 35 percent cheaper than natural gas or oil-fired power plants. In 2002, Sempra Energy made its first acquisition in Texas by buying a 305-megawatt, coal-fired plant from Texas-New Mexico Power Co.

Sempra and its partners are considering a number of options for the other plants acquired in the deal, including continuing to mothball them, building new electricity generators on the sites, or demolishing the facilities to allow for new uses of the land, Vaccari said.

Clarence Johnson, a ratepayer advocate for the Texas Public Utility Council, noted that the Sempra acquisition gives the company a large concentration in the state's south electricity zone.

With the acquisition, Sempra now owns at least a partial interest in 16 power plants in California, Nevada, Arizona and Texas.

Ohio-based American Electric Power has been divesting power plants in Texas through auctions as the state moved to deregulate its electricity market.

Carlyle/Riverstone is a joint venture between Riverstone and The Carlyle Group with equity of $1.2 billion. The Carlyle Group has $17.5 billion under management.

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