PG&E Unit Seeks Approval For Four Power Plant Contracts

PG&E Corp.'s (PCG) utility said Thursday it is seeking regulators' approval for four power contracts, including an agreement with Mirant Corp. (MIR) that calls for the eventual shutdown of two aging natural-gas-fired generators near San Francisco.

Under an 18-month agreement Pacific Gas & Electric Co. signed with Atlanta-based Mirant, the independent power producer will retire the two units of its 674-megawatt Contra Costa power plant in Antioch, Calif., in 2013. The 45-year-old units use river water taken from the San Joaquin-Sacramento River Delta to cool the plant's turbines, then discharge the water back into the waterway at higher temperatures in a practice called "once-through cooling." State agencies have called for the practice, which they say harms the environment by killing large numbers of fish and other marine wildlife, to be phased out.

To replace that power, PG&E, of San Francisco, signed a second contract with Mirant to buy the output from a 719-megawatt power plant Mirant is developing in Antioch, and has agreed to purchase a 586-megawatt gas-fired power plant to be built in Oakley, Calif., by privately held Radback Energy, PG&E said in a document filed with the California Public Utilities Commission. Both plants would be located near the decommissioned Mirant units and take over their transmission infrastructure, avoiding the need to build new transmission, PG&E said.

Under the fourth contract, PG&E would purchase the output from an existing 225-megawatt combined heat and power gas-fired power plant at the Midway-Sunset Oil Field near Bakersfield, Calif. The plant is co-owned by an Edison International (EIX) unit and California oil producer Aera Energy LLC, which is owned by units of Royal Dutch Shell PLC (RDSA, RDSB) and Exxon Mobil Corp. (XOM). The plant burns gas produced from the oil field to generate electricity and also steam that is used for oil recovery.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; [e-mail]