PHOENIX – Pinnacle West Energy, the generation subsidiary of Pinnacle West Capital Corporation (NYSE: PNW), today announced the beginning of construction of the Redhawk Power Plant, the largest of the projects among the company’s current generation expansion activities. The Dec. 19 groundbreaking marks just one of three important milestones for the company’s expansion program.
The 2,120-megawatt Redhawk Power Plant, located near the Palo Verde Nuclear Generating Station 55 miles west of Phoenix, will be the first project to actually break ground in the Palo Verde area.
"This is a major accomplishment for us, as well as for customers throughout Arizona and the West," said Bill Stewart, President of Pinnacle West Energy. "This project, along with others we have announced, will allow us to help meet increasing demands for power in Arizona and markets across the Southwest and at the same time promote a competitive market that will ultimately benefit customers. We intend to offer competitively priced electricity in these markets by producing reliable, low-cost power that is accessible to key transmission hubs."
The first two units of the four-unit combined cycle Redhawk project are scheduled to begin commercial operation in the summer of 2002.
Pinnacle West Energy’s other new generation projects – the second milestone – are on track as well. In July, the company began building the first of two new units at the West Phoenix Power Plant. The first unit, a 120-megawatt combined cycle unit, is expected to be complete by the summer of 2001, with the larger, 530-megawatt combined cycle unit scheduled for completion by the summer of 2003.
The third milestone involves today’s announcement that the company is purchasing the 72-megawatt Harry Allen power station in southern Nevada, adding a strategic link to its efforts to expand generating capacity in the West. As demand grows in the region, the company expects to add a 500-megawatt natural gas-fired, combined cycle unit to the site.
"This is a very important step in our overall growth strategy to remain one of the top power producers in the West," Stewart said. "There are tremendous opportunities to expand the capacity at this site, and it’s ideally situated to help meet the increasing demand throughout the Southwest. In southern Nevada alone, particularly Las Vegas, electricity needs are growing four times faster than the national average."
Pinnacle West Energy is purchasing the station, located about 30 miles northeast of Las Vegas, from Nevada Power Company through a public, sealed-bid auction process. The net purchase price, after adjustments for purchased power commitments, is $65.2 million. The power generated at Harry Allen will be sold under contract to Nevada Power, a subsidiary of Sierra Pacific Resources (NYSE: SPR), until March 2003. The purchase is expected to be complete in mid-2001.
The Nevada project demonstrates the company’s intention to expand its generating capabilities outside of Arizona and New Mexico. Along with Pinnacle West Energy’s other new power plants in development, this brings the company’s expansion plans to about 4,000 megawatts – or enough to meet the electricity needs of about 1,000,000 homes in the Southwest.
Pinnacle West Capital Corporation is a Phoenix-based company with consolidated assets of approximately $7 billion. Through its subsidiaries, the company generates, sells and delivers electricity and sells energy-related products and services to retail and wholesale customers in the western United States. It also develops residential, commercial and industrial real estate projects.
Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for southern Nevada; Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California; and a natural gas and water distributor in the Reno-Sparks area. Other subsidiaries include the Tuscarora Gas Pipeline Company, which owns 50 percent interest in an interstate natural gas transmission partnership; and Sierra Pacific Communications, a telecommunications company.
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This press release contains forward-looking statements that involve risks and uncertainties, which include, but are not limited to, the ongoing restructuring of the electric industry; the outcome of the regulatory proceedings relating to the restructuring; regional economic and market conditions, which could affect customer growth and the cost of power supplies; the cost of debt and equity capital; weather variations affecting customer usage; and the strength of the real estate market. These factors and the other matters discussed above may cause future results to differ materially from historical results, or from results or outcomes currently expected or sought by the Company.