Sempra U.S. Gas & Power said Feb. 28 that it has completed the sale of one 625-MW block of its 1,250-MW Mesquite Power natural gas-fired plant to the Salt River Project Agricultural Improvement and Power District (SRP) for $371m.
Under terms of the sales agreement, which was announced on Dec. 26, 2012, SRP acquired 100% ownership of a 625-MW power block and a 50% undivided interest in plant facilities. Sempra U.S. Gas & Power retains ownership of the remaining 625-MW power block and a 50% interest in the plant facilities.
“Salt River Project is one of Arizona’s largest utilities, and we could not be more pleased to partner with them in the ownership and operation of Mesquite Power,” said Jeffrey Martin, president and CEO of Sempra U.S. Gas & Power. “The proceeds from this transaction will be used to support our growth initiatives, while joint ownership of the facility has the added benefit of reducing our exposure to the merchant power markets.”
SRP supplies electricity to about 950,000 customers. The utility owns and operates electric irrigation and water supply systems. As part of the transaction, SRP also will become the operator of the Mesquite Power facility. Mesquite Power has been in operation since 2003 in Arlington, Ariz.
SRP had not issued any statement as of March 1 on the buy. “We studied the market very carefully and determined that this purchase would provide an economic benefit to SRP and its customers,” said SRP general manager Mark Bonsall in a Dec. 26 statement about the initial purchase agreement. “While recent load growth has been fairly modest, more substantial growth is expected and this plant will position us well in the long term to meet our customer’s needs at a reasonable cost.”
Sempra U.S. Gas & Power is a leading developer of renewable energy and natural gas solutions. The company operates solar, wind and natural gas power plants that generate enough electricity for nearly 1 million homes, along with natural gas storage, pipelines and distribution utilities. It is a subsidiary of Sempra Energy (NYSE: SRE).