ALBUQUERQUE, N.M. — Public Service Company of New Mexico expects to buy a 132-megawatt, natural-gas generating plant in Albuquerque’s South Valley for $40 million.
The utility signed a purchase and sale agreement for the Delta-Person Generating Station, located near Rio Bravo and Broadway boulevards, with Delta Person GP LLC and BHB Power LLC, which jointly own the facility.
PNM signed a 20-year, power purchasing agreement in 2000 to buy power from the plant, which provides electricity to meet customer demand in peak periods. The company opted to buy the facility, however, because it can lower costs, said PNM spokesperson Valerie Smith.
“By owning the plant, we’re better able to control operating costs, and as the asset depreciates over time, it becomes more cost-effective,” Smith said. “With a power purchasing agreement, it’s a fixed price with no decrease.”
In addition, when the purchasing agreement ends, the company would have to negotiate a new contract that could be more expensive.
Customer rates are not expected to increase as a result of the acquisition, said PNM Resources Chairman, President and CEO Pat Collawn.
“We are pleased that the acquisition secures a reliable power source that benefits our customers today and for the long term,” Collawn said in a prepared statement.
The Federal Energy Regulatory Commission and the New Mexico Public Regulation Commission must approve the transaction before PNM can buy the plant. The company will file for those approvals in late January.
“We don’t expect any problems, but we’ll need to make a business case that it’s the right thing to do for customers,” Smith said. “We hope to complete the acquisition by mid-2013.”