Sempra Energy Continues to Expand Generation Portfolio Through Acquisitions and New Construction

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). In a time when many in the industry are taking a wait and see approach towards expanding their generation portfolios, one of the companies taking a more aggressive approach is Sempra Energy (San Diego, California) (NYSE:SRE). The company is finalizing plans to acquire 1,950 megawatts (MW) of existing generating capacity and additional units currently idled that have the potential of generating 1,863 MW of capacity. New construction seems to be on the horizon for the company, as well, with over 8,000 MW of new generation in various stages of development.

Earlier this year, Sempra Energy Partners (SEP), a subsidiary of Sempra Energy with Carlyle/Riverstone (Washington, DC), an energy and power-focused private equity fund, announced a 50/50 joint venture, as well as a purchase and sales agreement with American Electric Power Company (Columbus, Ohio) (NYSE:AEP) to acquire ten power plants in Texas. The deal is expected to close in July of 2004 and involves plants fueled by coal, natural gas, oil, and hydroelectric sources. Assets include six active power plants and four inactive plants. Sempra Energy Resources, the electric generation unit of Sempra Energy, will provide asset-management services for the joint venture, as well as operation of the plants.

Click on the image to the right to view the Sempra Energy Generation Portfolio Map.

These plants will increase the company's generating capacity in the Lone Star State by complementing its existing 305 MW coal-fired Twin Oaks Power Plant acquired from Texas-New Mexico Power (Fort Worth, Texas) in 2002.

In addition to plant acquisitions, Sempra has also been moving forward with constructing new generating units. Sempra has 2,600 MW of total operating capacity from five power plants capable of generating 3,245 MW. Of these five plants, Sempra owns 100% of three plants and jointly owns the 480 MW El Dorado Energy Power Station with Reliant Energy Incorporated (NYSE:RRI) (Houston, Texas) and the 550MW Elk Hills Power Station with Occidental Energy Ventures Corporation, a subsidiary of Occidental Petroleum Corporation (NYSE:OXY)(Los Angeles, California).

Click on the image at right to view the Sempra Energy Generation Portfolio Tables.

There are no signs of slowing expansion, as they have an additional ten projects representing 8,490 MW of new capacity, in various stages of development. If all these projects were to move forward, it would represent a capital expenditure of over $7 billion. Included in this mix are nine new power plants and one plant addition, all of which are projects that would be fueled by natural gas or coal. The projects are scheduled for construction kick off at various times, beginning in 2004, with commercial operation ranging from 2006 through 2012.

The entire industry has been in a lull over the past two years, with over 200,000 MW of projects having been cancelled or delayed. Light seems to be shining at the end of the tunnel for power plant developers, and Sempra appears to be poised as one of the leaders in the industry to meet future energy demands.