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NV Energy touts value of planned Ariz. power plant purchase

will spend $100million to acquire, integrate and invest in an Arizona power plant now owned byCalpine Corp., thecompany told Nevada regulators.

Plansfor NV Energy to buy the SouthPoint Energy Center in Mohave Valley, Ariz., were in April. At the time,the purchase price was not disclosed. But in a recent to the Public UtilitiesCommission of Nevada, the company said it would pay $75.6 million to buy thefacility, spend $3.6 million on integration and invest an estimated $20.8million more on South Point.

Thenatural gas-fired, combined-cycle plant on the Fort Mojave Indian Reservationhas an operating capacity of 586 MW. The planned acquisition will help addresslong-term reliability needs of customers and provide NV Energy with sufficientresources as the company reducesits coal-fired generation.

Detailsabout the cost of the acquisition came in Sierra Pacific Power Co.'s triennial integrated resourceplan filed with the PUC. Sierra Pacific Power is one of two utilitysubsidiaries of NV Energy. The other is Nevada Power Co. Both do business as NV Energy.

Theplan is for Nevada Power to buy South Point and then lease a 30% share toSierra Power. Nevada Power in mid-August plans to ask the Nevada PUC to approvethe acquisition. If approved by the PUC and FERC in a timely manner, NevadaPower expects to complete the acquisition and obtain ownership by Dec. 31.

NVEnergy and South Point Energy Center LLC have already asked FERC to approve thesale by Oct. 1. In that application,the companies said the sale presents a "unique value" to NV Energycustomers. (EC16-130)

Theopportunity to buy combined-cycle capacity at an "extremely attractiveprice" will save NV Energy's native load customers hundreds of millions ofdollars when compared to the cost of building a similar facility, theapplication said.

NVEnergy previously estimated the cost of a newly constructed 576-MWcombined-cycle facility at about $711 million. "Here, NV Energy isacquiring a comparable amount of capacity at a small fraction of that cost …even including future capital expenditures for improvements and repairs,"the FERC application said.

Inthe Nevada filing, the company said South Point is already interconnected tothe Nevada Power transmission system at the Mead and McCullough substations.The proposed asset purchase includes rights on long-term transmission agreementssecuring the delivery of plant capacity into the companies' balancing authorityarea, or BAA.

Further,since South Point is located beyond the companies' BAA, transmission will haveto be purchased to bring the output of the plant into the BAA. The net presentvalue of that transmission over the remaining life of the facility is $111.9million. That brings the effective total cost of the acquisition to $420 perkW, a price touted as an "excellent value" for the companies andtheir customers. "It is an appropriate addition to the portfolio ofresources necessary to maintain reliable and cost effective service tocustomers," the company said. (Docket 16-07001)