TVA scoops up Enron-era gas plant on cheap

Feb 19, 2008 (Chattanooga Times/Free Press - McClatchy-Tribune Information Services via COMTEX) -- ENRNQ | news | PowerRating | PR Charts -- Six years after the collapse of energy giant Enron Corp., TVA has agreed to buy another one of Enron's former gas-fired plants for only a fraction of what was spent to build the facility.

In its fourth purchase of a gas-fired power plant site in the past two years, TVA announced last week it will pay $55 million to Duke Energy Corp., to acquire a 480-megawatt, natural gas-fired plant in Brownsville, Tenn. The plant is similar to another Enron-built gas plant TVA bought in December 2006 in Gleason, Tenn., for $23 million.

TVA is buying or building more gas-fired generation to help the federal utility lessen its reliance upon other power producers, officials said.

TVA estimates it will spend $1.4 billion this year to buy power from other utilities and independent power producers. TVA's strategic plan calls for TVA to cut that amount by nearly two thirds.

"The acquisition of the Brownsville combustion turbine plant is another step in TVA's efforts to meet its customer needs with clean, cost-effective generation," said Ron Hall, general manager of TVA's combustion turbines and distributed resources group.

Enron is estimated to have spent about $200 million to build each of the two plants shortly before the energy company filed for bankruptcy in late 2001.

Built in 1999, the Brownsville plant was acquired in March 2001 by Cinergy, which merged with Duke Energy Corp. in April 2006. Phillip Grigsby, senior vice president of the Midwest generation portfolio for Duke, said the plant is being sold to TVA because it "is no longer a strategic fit for us." Duke's remaining gas-fired plants that generate electricity for other utilities are in the Midwest, Mr. Grigsby said.

The simple-cycle, gas-fired plant is used to meet peak energy demands and will be the third gas-fired power plant for TVA in Haywood County, Tenn.

In December, TVA awarded a contract to URS Corp., for up to $180 million to build a combined-cycle gas fired power plant next to TVA's Lagoon Creek turbine plant, which also is a simple-cycle plant.

"We have natural gas pipelines, TVA transmission lines and plenty of water so our location is good for these facilities," said John Ing, executive director of the Brownsville Chamber of Commerce.

Jack Simmons, president of the Tennessee Valley Public Power Association, said TVA distributors may help TVA finance the ultimate purchase of the Brownsville plant, which is expected to close in the second quarter. A total of 147 TVA distributors have formed the Seven States Power Corp. to jointly own new generation with the Tennessee Valley Authority, Mr. Simmons said.

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