ALBUQUERQUE, N.M. -- The Western power market looks bright to power companies committed to building seven power plants in New Mexico by 2007, when the state plans to allow retail electricity competition. If all plants proceed as planned, they will increase the amount of electricity generated in the state by nearly 2,200 megawatts or enough for more than 2 million homes. Power companies are confident they will be able to sell the electricity produced by the new plants, despite a recent slump in wholesale power prices. The NYMEX power exchange quotes prices of about $30 per megawatt-hour in January in the Western states, but NYMEX predicts prices rising to about $50 per megawatt-hour in June when warmer weather increases demand. The wholesale power market has been volatile in the past two years. Wholesale prices shot up to $330 a megawatt-hour in California in December 2000. In December 1999, electricity sold for $30 a megawatt-hour. "These types of fluctuations don't influence the decision-making process. It's the long term perspective we consider," said Diana Vavrek, spokeswoman for Duke Energy North America. Houston-based Duke Energy North America began construction in October on a 560-megawatt natural gas-fired plant just outside Deming. The plan is expected to be operational in October 2003. The company is also applying for permits to build a 600-megawatt natural gas-fired plant near Clovis. "We're very bullish on the New Mexico area. We know the market is there," Vavrek said. Public Service Company of New Mexico broke ground in November for its Afton Generating Station near Las Cruces. The gas-fired plant is expected to produce 135 megawatts of electricity when it becomes operational in October. PNM plans to expand the plant to 225 megawatts by the end of 2003. PNM also plans to build an 80-megawatt plant just outside Lordsburg. The gas-fired plant is expected to be operational by July. PNM says power from the Lordsburg plant will meet peak demand locally but some power may be sold on the wholesale market. Denver-based Tri-State Generation and Transmission plans to build a 160-megawatt natural gas-fired plant near Lordsburg. The power is primarily for Tri-State's New Mexico customers but any surplus will be sold on the wholesale market, said Tri-State spokesman Jim Van Someren. Tri-State, which sells to 12 rural cooperatives throughout the state, plans to increase prices in March because demand has outstripped its generating capacity. Peabody Energy of St. Louis, Mo. intends to build a 300-megawatt coal-fired plant north of Grants which would be operational in 2006. "In planning for any development of this size and scope we have to look at long-term trends. We're looking at serving a portion of the (Western) region's electricity needs that we believe will have strong growth," said Beth Sutton, spokeswoman for Peabody Energy. A sixth power plant, a natural gas-fired unit that would generate 145 megawatts, is planned by Houston-based Cobisa Corp. in Sabinal in Socorro County. The company tried to build the same type of plant last year in Valencia County but ran into opposition over worries about air and water pollution. The company, which hopes to have the new plant built by 2004, said it plans to build a peaking power plant for use during daylight hours to supplement regional supplies. PNM provides a good example of the power companies that make money selling excess electricity on the wholesale market. This year from June through September, PNM's revenue from selling on the wholesale market was $428.5 million, a nearly 46 percent increase over the $294.1 million in the same period the year before. In the second quarter of this year, PNM's wholesale power revenue was $449.1 million, nearly triple the $147.8 it earned from March through June 2000. Still, one survey released in December suggests there may be too many new plants on the drawing board. The survey by RDI, a consulting unit of Platts, the energy information and research business of the McGraw-Hill Companies, said there will be a glut of power plants by 2005. "This will lead to cancellations of projects that are in the early stages of development today," says the "Outlook for Power in North America" survey by RDI. The survey said that plants already under construction, or where big investments have been made, probably will be completed.

-- Source, The Albuquerque Journal