Puget Sound Set To Buy Power Plants

SEATTLE, WA -- - Puget Sound Energy could announce deals to buy electricity generating plants as soon as the third quarter, executives of the Bellevue-based utility company said this week.

Puget wants to line up new sources of electricity now because, with the expiration of existing supply contracts and with customer growth, it could find itself short of electricity to meet demand.

Eric Markell, senior vice president of energy resources, said Puget could be 400 megawatts short of demand by December 2004, and that's if water conditions are normal. The gap jumps to 600 megawatts within four years, and 1,500 megawatts (average consumption for the city of Seattle) in 20 years.

Markell, speaking at the annual shareholders meeting of parent company Puget Energy Inc., said the Pacific Northwest faces a 3,000- megawatt shortfall in seven years.

Markell said Puget plans to close some of the gap through increased spending on conservation programs to save both electricity and natural gas.

Puget hopes to save at least 150 megawatts of electricity over the next decade through conservation.

Renewable resources such as wind power will account for at least 5 percent of Puget's power resources by 2013, said Roger Garratt, manager of project development.

But Puget also wants to buy or invest in power plants that were built, half-finished or never started.

Steve Reynolds, president and chief executive of Puget Energy Inc. and its subsidiary utility Puget Sound Energy, said Puget has a short list of candidates with whom it is talking, and announcements could be made this summer.

The Tacoma area, specifically the industrial park at Frederickson southeast of the city, was one of several sites around the Northwest where developers proposed new generating projects when electricity prices were high.

Markell said the company hopes that not only will those investments in new power projects not spur an increase in customer rates, they might help reduce Puget's power costs.

Its other major subsidiary is InfrastruX, which owns utility construction companies around the country. Reynolds said InfrastruX will shift from growth by acquisition to increasing sales of operations.