(By Balaseshan) Sempra Energy (NYSE: SRE) said its subsidiary Sempra U.S. Gas & Power has agreed to sell one 625-megawatt block of its 1,250 MW Mesquite Power natural gas-fired power plant to the Salt River Project (SRP) Agricultural Improvement and Power District for $371 million.
The SRP Board of Directors approved a management proposal to acquire 100% ownership of the 625 MW block and a 50% undivided interest in the infrastructure facilities shared by the two blocks at their November meeting.
The agreement is subject to approvals from the Federal Energy Regulatory Commission and other regulatory agencies. The companies anticipate receiving these approvals in the first quarter of 2013.
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"This strategic sale comes at the right time for Sempra U.S. Gas and Power as we continue to reduce our exposure to the merchant power markets, while also allowing us to put greater emphasis on growing our southeast natural gas portfolio. This transaction will enable us to redeploy capital to expand our growing presence in the natural gas sector," said Jeffrey Martin, president and CEO of Sempra U.S. Gas & Power.
SRP, which is the largest supplier of raw water to the greater-Phoenix metropolitan area, has acquired one of Mesquite Power's two 625 MW power blocks. Each block is comprised of two gas turbines and a steam turbine. As part of the transaction, SRP also will become the operator of both Mesquite units.
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Sempra U.S. Gas & Power, LLC is a developer of renewable energy and natural gas solutions. The company operates solar, wind and natural gas power plants that generate enough electricity for nearly 1 million homes, along with natural gas storage and pipelines and distribution utilities.
SRE is trading up 0.66% at $71.58 on Wednesday. The stock has been trading between $54.46 and $72.87 for the past 52 weeks.