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AES seeks other buyers for Huntington Beach plant output

Now that the California Department of Water Resources has terminated negotiations to buy the output of the 450 Mw AES Huntington Beach plant, the company is looking to line up other buyers.

“Our retail arm AES NewEnergy has already begun looking for contracts with end use customers,” said spokesman Aron Thomas. The California Public Utilities Commission is scheduled to vote next week on an order ending direct access in California, but companies which have signed contracts before July 1 will be exempt from the order. However, behind-the-scenes negotiations by state lawmakers is expected to preserve some form of customer choice in the state.

Thomas said the two gas-fired units are expected to come on line in August. And, he said, other market options for its output are also available to the unit of AES Corp., Arlington, Va., including spot sales, sale to other counterparties, and hedging agreements.

The water department didn’t say why it was halting talks on a long-term contract with AES, Thomas said. Recently, with gas and power prices falling, the DWR has indicated it wanted better terms than those initially agreed in contracts which had not yet been signed.

Ed Blackford, plant manager of AES Huntington Beach, said the company held to the essential terms set forth in the March 2 letter of intent signed by the parties.

“While AES remained committed to the letter of intent, DWR ultimately decided against purchasing more long-term power,” he said. DWR has since sent a letter to the California Energy Commission and the South Coast Air Quality Management District calling for the removal of permit conditions requiring sales to DWR.

AES Huntington Beach received certification from the energy commission to refurbish two retired gas-fired units under fast-track authority to get units up and operating in time for the summer power crunch. The refurbishment project included upgrading and improving the reliability of old boilers, replacing obsolete controls, and installing state-of-the-art emissions controls. Units 3 and 4 at the AES Huntington Beach generation facility were retired in 1995.