Tahoe power grid switches ownership from NV Energy
April 23, 2009
LAKE TAHOE ” The newly created company that purchased the electric grid serving the California side of the Lake Tahoe region expects to establish a headquarters office in the region.
California Pacific Electric Co. also expects to offer employment to the approximately 50 people who currently work for the system.
The company ” dubbed Calpeco, for short ” said last week it struck a deal to buy the Lake Tahoe-area grid from NV Energy Inc. for about $116 million. Assuming state and federal regulators give their approval, the sale is expected to be completed in 2010.
Calpeco is owned by Emerca Inc., a power company headquartered at Halifax, Nova Scotia, and Algonquin Power Income Fund of Oakville, Ontario, a suburb of Toronto.
NV Energy began shopping the power grid to potential buyers in early 2008. The Nevada utility, which has served the Lake Tahoe area for more than 100 years, said it wants to focus its attention on Nevada operations.
The grid to be purchased by Calpeco includes about 95 miles of electric distribution lines that extend across seven counties from Portola to Markleeville. Most of the grid’s 46,000 customers are on the California side of Lake Tahoe. Some 88 percent of the customers are residential; the rest are commercial users.
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The deal also includes a newly rebuilt 12-megawatt generating station at King’s Beach. That diesel-powered facility, which runs about 200 hours a year, provides emergency backup.
Ian Robertson, executive director and manager of Algonquin Power, said Calpeco has contracted to purchase power from NV Energy for the first three years after the new company buys the grid.
Algonquin Power projects that the Tahoe-area grid will generate annual profits of $8.6 million on revenues of about $30.9 million a year. That’s assuming that the California Public Utilities approves a rate increase that’s now pending. NV Energy seeks an increase of about 8.5 percent.
Nancy Tower, chief financial officer of Emera Inc., said the buyers think the power grid is in good shape and won’t need much additional investment.
Wachovia Securities acted as financial adviser to NV Energy in the transaction, while Husch Blackwell Sanders served as NV Energy’s legal counsel.