Power Plant Owners Emerge as California’s Big Winners

11/08/2000

High energy prices in California may cause pain for consumers, but they’re generating high revenues and potential profits for those companies that own and operate power plants in the state. Analysis by Energy Insight, a daily web-based publication of Financial Times Energy, suggests that recent high energy prices are leading to significantly higher gross profits for a number of power plants compared to a year ago. These plants moved from utility to non-utility ownership over the past several years as part of California’s deregulation process.  The complete analysis plus a supporting data table are published in the August 23^rd issue of Energy Insight, available on the worldwide web at.

Analysis by Energy Insight suggests that if current trends continue, gross profits from Southern Energy’s 2,022 MW Pittsburgh generating station, for example, could exceed $105 million by the end of the year. A year ago, the plant’s estimated gross profit was $21.5 million. Of the 17 power plants analyzed, Reliant Energy’s 1,500 MW Ormond Beach station, acquired in March 1998 from Southern California Edison for $43 million, could see as little as a six-month payback under current pricing conditions. A year ago, the plant had a $17.3 million estimated gross profit. This year’s gross profit is projected to widen to $90.5 million. Through August 21, the average cost of power from the California Power Exchange has been $199.5/MWh. This alone has resulted in as much as $62 million in estimated gross profit for AES Corp.’s 1,950 MW Alamitos generating station. For all of 1999, that same plant had a gross profitability of just over $14 million. And the Alamitos station is on track to rack up almost $235 million in gross profit for all of 2000. (Source:  Energy Insight 8/23/00)

Kentucky Association of Electric Cooperatives, Inc. 4515 Bishop Lane * Louisville, KY  40218 502-451-2430 * FAX: 502-459-3209 Terms of Use