News digest

Columbia: Electrica de Medellin has signed a $33m contract to build 444 km of 400 kV transmission line linking the northern and southern parts of Mexico’s grid. Completion is planned for May 2004.

Ecuador: Ecuador’s government will award state-owned generator Hidropaute the $36m contract to build the 186 MW Mazar hydroelectric project. Hidropaute will call for bids for a consultant to update the project’s design and engineering studies. It is scheduled for completion by 2007.

Mexico: Power Machines has won a three-year, $140m contract to deliver equipment for El Cajon, a hydroelectric power station in Mexico. The company has created an alliance with Mexican construction companies ICA and La Nacial, beating bids by GE and Siemens

Panama: The $213m, 120 MW Esti hydroelectric project in Panama’s Gualaca region is on schedule to start commercial operations in November. Sweden’s Skanska and France’s Alstom are building the project for AES.

USA: Exelon Generation’s 800 MW natural gas fired Mystic generating unit 8 has begun commercial operations near Boston. The company expects the 800 MW unit 9 at the Everett Massachusetts facility to begin operating in May.

USA: Constellation Energy Group expects to bring its new 850 MW high desert gas fired power plant in Southern California on line in early summer. Speculation about the status of the plant was heightened by its inclusion of the Californian Independent System Operator’s outage list in April.

USA: El Paso Merchant Energy has announced that it has executed an agreement to sell all of the common interests in East Coast Power to GS Linden power Holdings, a subsidiary of the Goldman Sachs Group, for $456m. Around $600m of non-recourse, project-level debt will remain outstanding at East Coast Power and its subsidiaries.

USA: The Federal Energy Regulatory Commission conditionally approved a request by two of the nations’s biggest utilities – AEP and Commonwealth Edison Co. to transfer control of their transmission grid assets to the PJM interconnection. The utility asset transfer is a step forward for FERC’s grid building initiative.

USA: New York has approved a new power cable running across the Hudson River that will carry

600 MW of much needed electricity into New York City from a power plant in neighbouring New Jersey state. PSEG Power Cross Hudson Corp., which filed its application for the line in October 2001, will build and operate the line and a new substation.

Asset sell-off reduces debt for Chile’s Enersis

Chilean power utility Enersis has reached an agreement to sell its Rio Maipo electricity distribution business in a bid to ease debt concerns.

The sale will mean that Enersis will only hold a 1.3 per cent stake in the distribution company, which is to be sold to CGE for $203m. The deal follows an agreement made by Enersis subsidiary Endesa to sell its 172 MW Canutillar hydroelectric plant in Chile for $174m. The facility was acquired by Sociedad Hidro electrica Guardia, owned by the Chilean Matte group, and the sale has been approved by Endesa shareholders.

Endesa and its affiliate GasAtacama Generacion have also agreed to sell the company’s transmission assets in north of Chile to Canada’s Hydro-Quebec for $110m.

The sales by the company are designed to rid Enersis of its debt by selling $800m in assets and raising $2bn.

FirstEnergy sells Emdersa

US-based FirstEnergy has announced that it has divested its ownership in Argentina’s distribution company Emdersa.

FirstEnergy said it completed the divestment by abandoning its shares of Emdersa’s parent company, GPU Argentina Holdings. It will take a $63m non-cash charge in the second quarter in relation to the deal.

Emdersa is an electric distribution holding company in Argentina formerly owned by GPU. FirstEnergy acquired it when it completed its merger with GPU in 2001.

Meanwhile, PSEG has also turned its attention away from Argentina by dropping its interest in Rio Negro distributor, Edeersa, due to the economic downturn. PSEG’s shares have been transferred to a trust fund for a five-year period after which it will be spread among Edeersa employees.

Trading exodus continues in USA

US power companies are continuing to scale down their wholesale natural gas and power trading operations in the wake of trading scandals and the collapse of Enron. In April, Tractebel North America said it would exit the speculative trading business, while Duke Energy Corp. announced that it will cease proprietary trading at its North American Merchant Energy business.

Tractebel North America said that it would continue its asset-based trading operations, and that this business would grow as its generating portfolio in the region grows. Duke also said that the move would allow it to realign its trading operations around its physical assets, which include power plants, gas transportation and gas storage.

Mexico moves to lower electricity tariffs

Mexico’s senate has approved a bill to reduce electricity prices for households. If approved, the bill will cancel out a presidential decree that has partially elimintaed subsidies on electricity tariffs in the country.

President Fox is likely to veto the proposed tariff reform, however, largely due to the large economic cost of the measures and the fact that it contravenes his plans for electricity sector reform. State power company CFE estimates that if passed into law, the reduced tariffs would cost it some $1bn in the first year alone.

President Fox has been attempting to pass electricity sector reform legislation for several years in order to attract investment. Electricity demand in the country is growing rapidly and the quality and security of power supplies is under threat, according to CFE.

NYISO installs Scada system

The New York ISO (NYISO), a corporation established to facilitate the restructuring of New York’s electric power industry, has selected technology company ABB to install a scada/energy management system.

The contract, worth $20m, will help NYISO to enhance its market operation system, making it the first energy market to meet the requirements determined by FERC’s standard market design.

Union Fenosa secures Tuxpan financing

Union Fenosa has sealed a $430m loan for a planned power station at Tuxpan, Mexico. The loan is divided into three tranches: two for 14 years and the other for 20 years; and has been arranged by a syndicate of banks.

The project consists of the construction, operation and maintenance of two combined cycle power blocks, each with a 500 MW gas turbine, which will be constructed in Tuxpanin, in the state of Veracruz.

Equipment suppliers to the plant include Mitsubishi Corporation and Mitsubishi Heavy Industries, which have secured $320m of financing from the Japan Bank for International Cooperation.