Power Plant Purchase Increases GP&L Reserve Electrical Capacity and Revenue Opportunities

GARLAND, February, 2003 - The electric generation capacity of Garland Power & Light increased by as much as 166 megawatts today as the City of Garland completed the purchase of the Spencer Power Plant located near Denton.

The additional power generation capacity will provide two significant benefits, say GP&L officials: revenue earnings from selling electricity on Texas' wholesale electricity market, and additional reserve generation capacity to keep power flowing to Garland residents during extreme temperatures or other emergencies.

"Garland's taxpayers and electric customers both benefit anytime you can increase electric revenues without increasing rates," said Jim Harder, director of electric utilities for the City of Garland.

The Spencer Power Plant was purchased from Pacific Gas & Electric for $2 million, a price well below the facility's face value, reports Harder. The low price is attributed to PG&E National Energy Group's, PG&E's parent company, decision to withdraw from the electric production business in Texas.

"We can expect to make back the purchase price within the next few years, due to market opportunities," continues Harder. As part of the Texas electrical grid under retail electric deregulation, GP&L regularly offers excess electrical generation capacity for sale at market prices to other utilities.

This locally based power plant will also be especially useful in reducing power transmission constraints between regions of Texas and among areas of North Texas, notes Harder. Due to these transmission constraints, the Electric Reliability Council of Texas routinely compensates electric utilities for providing additional power in their area.

Local power plants are essential for maintaining electrical reliability, as the state's grid is inadequate to carry significant voltage transmission in localized areas, during peak load conditions, such as the Dallas/Ft. Worth Metroplex. The Spencer plant's five main generation units are natural gas-fired, and use fuel oil as a backup.

Their generation capacity complements that produced by GP&L's two other local power plants, C.E. Newman in Garland and Olinger Power Plant on Lake Lavon.