MIRANT SIGNS AGREEMENT TO SELL COYOTE SPRINGS 2 POWER PLANT TO AVISTA

Energy Info Source ^ | 28 July 2004

[MeneMeneTekelUpharsin]

Excerpt...

Second, Avista and Mirant Corp., co-owners of the Coyote Springs 2 gas- fired generating facility, have signed a non-binding letter of intent for Avista to purchase Mirant's half interest in the facility. If the transaction is successful, Avista will own the entire facility and an additional 140 megawatts of generating capacity to serve its customers' future energy needs.

"Our decision to seek to acquire full ownership of the plant is driven by a potentially attractive price, together with Avista's familiarity and experience with the facility," said Ely. "These factors outweigh other considerations such as the concentration of more energy coming from a single generating resource. The company has agreed with Mirant to keep the specifics of the negotiations confidential until the purchase agreement is finalized. Any agreement would require approval by Mirant's bankruptcy court and the Federal Energy Regulatory Commission (FERC) and could close later this year or early in 2005."

Additional factors in the Coyote Springs 2 purchasing decision include the opportunity for full ownership and control, the plant's close proximity to Avista's service area, and the fact that the company's long-term resource plan includes the acquisition or construction of additional gas-fired resources to complement our long-term portfolio.

The Coyote Springs 2 transformer, which was returned to the manufacturer for warranty-covered repairs earlier this year, is scheduled to arrive this week at a port in Houston following completion of the work. It will be loaded on a railcar shortly after arrival for shipment to the facility at Boardman, Ore. It is expected that the transformer will be installed and the generating facility will be back in operation some time this September. A new back-up transformer is being manufactured by a different vendor and will be delivered to the facility later this year.

[MeneMeneTekelUpharsin]

This is a non-binding agreement at the time. It will be of great interest to see what the final purchase price is.

To follow events involving Mirant, one source of information is the SO message board (we had to go somewhere) :-D:

Click here for "Mirant" message board.

[Robert357]

Very interesting, I had heard that AVISTA was hurting financially and am surprised by the purchase.

[Ernest_at_the_Beach]

Where is this plant located?

Any implications for California?

[Robert357]

The plant is located in northeastern Oregon near the Columbia River. It is not far from the northern terminus to the AC and DC interties to California.

AVISTA is a Spokane, Washington headquarted electric and gas utility that serves mostly Washington and parts of Idaho. Historically the utility was called Washington Water Power, until it decided it needed to become "modern."

AVISTA's main claim to fame is that as a utility it said it no longer wanted an assured rate of return and then proclaimed itself as a "growth" company. Actually, it has been responsible for spinning off a number of high tech companies including electronic meters, fuel cells, etc.

Last I heard, they were hurting financially, but the link seems to indicate that they have one heck of a line of credit even thought their hydro resources are hurting this year.

[MeneMeneTekelUpharsin]

Last I heard, they were hurting financially, but the link seems to indicate that they have one heck of a line of credit even thought their hydro resources are hurting this year.

It is becoming obvious in the IPP industry that banks and vulture investors have tried, and are trying, to force companies into positions where they can get debt for equity swaps and take over for pennies on the dollar. Then, suddenly, the assets will be worth billions (i.e. Kmart). However, in Mirant's case, a shareholder's committee exists which is VERY astute and is battling to make sure an equitable solution for ALL concerned is found. The case goes on...