RENO, Nev. - Sierra Pacific Resources on Monday announced the sale of its Sunrise Station generating plant in southern Nevada, marking another step in the Nevada utility's move away from producing electricity to instead focus on power distribution and transmission.
Reliant Energy Power Generation Inc., a subsidiary of Houston-based Reliant Energy, agreed to buy the two generating units owned by Sierra Pacific's Nevada Power Co. and rights to electricity produced by an independent power producer at the site for $106 million, Sierra Pacific said.
As part of the deal, Nevada Power will buy back power produced at the plant near the eastern edge of Las Vegas through March 1, 2003, for $73 million, making the bottom-line sale price about $33 million.
The deal is subject to approval by state and federal regulators and should be completed by the middle of next year.
''With the sale of Sunrise Station, divestiture of our generation assets is nearly complete,'' Walter M. Higgins, president and CEO of Sierra Pacific Resources, said in a statement.
''We'll soon be able to devote all our resources to building the best energy transmission company in the West.''
The Sunrise Station announcement marks the seventh of nine power generating plants sold by the utility since October, Sierra Pacific spokesman Karl Walquist said.
Sale of the utility's interest in two remaining generating plants is expected in coming months.
''We have contracts ... that enable us to buy back power from the new owners at favorable prices until March 1, 2003,'' Walquist said. ''After that point, we'll be negotiating prices like anyone else.''
Walquist added Nevada is in no danger of experiencing power shortages, such as those in California.
''We have more generation that's available to us,'' Walquist said, adding that the demand for power in Nevada is a pittance compared with the energy consumed by its neighbor to the west.
''Their demand last week was about 34,000 megawatts,'' he said. One megawatt generally provides enough power to serve about 650 households.
In comparison, peak demand in southern Nevada this year was 4,325 megawatts on Aug. 1. In the northern part of the state, demand peaked at 1,574 megawatts on July 31.
Reno-based Sierra Pacific merged with Nevada Power in Las Vegas in 1999. In approving the merger, regulators said the new company either had to sell its generating plants or establish a separate company for power production.
The company decided to sell off its generating plants after state lawmakers in 1999 deregulated the electric industry in Nevada and opened the doors for competition.
But after deregulation in California caused electricity prices there to soar, the Nevada law was put on hold. In a settlement reached this summer with the state Public Utilities Commission, Sierra Pacific and Nevada Power agreed to seek capped incremental rate hikes to recoup their costs for fuel and purchased power to spare consumers from huge increases.
Gov. Kenny Guinn in September further postponed deregulation and created a special commission to review the issue and report to him before the 2001 Legislature convenes Feb. 5.
