PacifiCorp's $221 million purchase of an existing coal-fired generating plant in Arizona will not affect power rates for Utah customers.
PacifiCorp, which owns Utah Power & Light, made the purchase in mid-August after four failed attempts to merge with Pinnacle West, owners of Arizona Public Service.The purchase agreement gives PacifiCorp ownership of a 350-megawatt generating plant in Cholla, Ariz., near the New Mexico border. Arizona Public Service, which agreed to sell the largest of four generating units at the site, will manage operations of the plant for PacifiCorp.
Bob Dally, a PacifiCorp spokesman, told the Utah Committee of Consumer Services that the purchase agreement contains four elements that affect existing generation and transmission facilities, construction of new facilities and reciprocal supply agreements.
The agreement allows PacifiCorp to require APS to construct new combustion terminals (similar in nature to jet engines) to supply 150 megawatts for use in meeting peak demand loads. It also allows PacifiCorp to participate on a 50-50 basis up to an additional 600 megawatts. Because of the expense in operating the combustion terminals, they are used only to supplement peak load demands. Dally said the natural gas-fire terminals turn on and off with relative ease.
PacifiCorp is also granting APS access to transmission lines through Utah and Colorado that connect with a major transmission terminal in Borah, Idaho. APS will have the option to ship excess power into PacifiCorp territory during its winter off-peak season while drawing from PacifiCorp territory during APS's high-demand summer season. This access will be offset by allowing PacifiCorp similar access to APS lines that have terminals that would allow PacifiCorp access to Southern California power markets.
PacifiCorp has also agreed to spend $19 million on a joint project with several other companies for a major transmission line between Las Vegas and Phoenix. And there are plans for PacifiCorp to build a line from central Utah into the Las Vegas area.
Initially, APS will purchase back half the 350 megawatts from the Cholla plant during summer months over the first five years. After five years, APS will have the option to repurchase the entire 350 watts during summer months. The two companies have also agreed to a straight-up seasonal 100-megawatt capacity exchange. During the summer, PacifiCorp will ship 100 megawatts to APS. In the winter APS will supply PacifiCorp with the same amount. The exchange will be an hour-for-hour trade with no money involved.
Commissioner James Byrne said the Utah Public Service Commission will review a report on the transaction supplied by PacifiCorp before deciding whether formal hearings or filings on the transaction will be required.
UP&L is scheduled for a major rate case early in 1991 and the APS transaction is likely to be part of those considerations. Dally said the company will, in keeping with an agreement made in 1989 when UP&L merged with PacifiCorp, request a rate reduction. The amount of that reduction will be determined by the PSC as a result of the rate hearing.