River Cities Business Journal: Construction

Today's News-Herald

LAKE HAVASU CITY - Hosted by County Supervisor Buster Johnson, R-Dist. 3, representatives from LS Power Group met with residents of Lake Havasu City at the county library Feb. 5, to hear about the Arroyo Energy Project, adjacent to the Griffith Energy plant on the I-40 Industrial Corridor.

Meanwhile, UniSource Energy is proposing a plant also in the general area of Griffith Energy in Golden Valley.

Both plants come from recent U.S. Census Bureau reports that Arizona and especially Mohave County is in an expansion mode.

“We're the fastest growing state in the nation and we need power,” said Johnson.

The Arroyo Energy Project will be natural gas fired “peaking plant,” and have four combustion turbine units generating a combined 175 megawatts (MW). With the growth proposed for Mohave County, including tens of thousands of new homes in Golden Valley and White Hills, the load growth for the county is projected at 25 MW per year. The Arroyo plant is projected to use about 160 acre feet of water each year for cooling, drawing the water from Griffith Energy's allocation, creating no additional demand on the southern portion of the Sacramento Valley Groundwater Basin.

“This project offers good peaking resources going into the future,” said Arroyo project director Dana Diller.

A peaking plant only is used when demand reaches the high point - or more - than conventional service systems can accommodate. The plants can be producing power quickly, as soon as 10 minutes according to Diller, and operated with a minimum staff. While the plant will generate about 100 construction jobs, once the plant is complete, only a few permanent staff will be on hand to operate the plant.

Cost to construct the plant is estimated at $150 million to $160 million and may be running by Summer 2008. However, Diller said Summer 2009 is a more likely start date.

The Arizona Department of Revenue estimates Arroyo will generate $7.3 million in property tax over four years and Johnson said the plant will generate an estimated economic impact to Mohave County of up to $170 million.

“LS is not asking for any corporate welfare or incentives and will use the existing infrastructure, so there is zero cost to the taxpayer,” Johnson said.

The plant will wholesale power on the open market so sale locally to major power users, such as manufacturers in the I-40 Industrial Corridor is “unlikely,” said LS Power vice president Kevin Johnson.

“There's no guarantee of lower cost power locally from this plant but look at supply and demand. If there's more power on the available market, it works to provide a downward pressure on costs to the utility,” he said.

LS Power Group owns the Griffith Energy plant however the company is negotiating with DynEnergy to become that company's largest stockholder and transfer LS Power assets - including Griffith Energy - to DynEnergy. The Arroyo plant, proposed after the merger talks were initiated, would fall under a different ownership chain.

The proposed UniSource plant - the Black Mountain Generating Station on Yuma Road in Golden Valley - also is a peaking plant.

Only Black Mountain will have half the number of gas fire turbines, generating 45 MW each.

Currently, UniSource secures power through a full needs contract with Pinnacle West, a subsidiary of Arizona Power Service, but that contract comes to an end in 2008.

“We need to have facilities in place to serve our customers,” said Joe Salkowsky, UniSource spokesman. “One of the things we're looking to develop is generating resources in Mohave County. The peaking units are part of the picture.”

Just like the proposed Arroyo plant, Black Mountain will have minimal staffing.

Salkowsky said the plant itself would be operated remotely from Kingman with a few people on hand for service and maintenance.

Estimated cost to construct Black Mountain is $60 million and UniSource hopes to have the plant online by June 2008.

“So in summertime, when demand gets high, they will be put in operation,” said Salkowsky.

Mohave County is home to two power plants. Griffith Energy sits on the I-40 Industrial Corridor and is a natural gas fired combined cycle plant with a nominal capacity of 600 MW.

The other plant is the South Point Energy Center on the Fort Mojave Indian Reservation.

South Point, owned by Calpine Corp., is a natural gas fired combined cycle plant with a nominal capacity of 530 MW.