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Las Cruces Sun-News: PNM, Shell reach deal on merchant contracts

The Associated Press
Article Launched: 01/19/2008 02:04:32 PM MST

ALBUQUERQUE—Public Service Company of New Mexico has reached a deal with Shell Energy North America to sell some of its wholesale power, natural gas, and gas and electricity transmission contracts for $5.8 million.

The deal announced Friday is expected to close on March 31. It’s the first step in an agreement made in a 2002 electricity case, under which PNM consented to separate itself from all unregulated operations, said company spokesman Frederick Bermudez.

“We will continue to execute our strategy of establishing clear separation of our regulated and unregulated electric operations,” said Jeff Sterba, chairman president and chief executive of PNM Resources, which owns the regulated utility.

By Jan. 1, 2010, PNM must separate itself from all remaining merchant assets, which are the 190-megawatt Luna Energy Facility near Deming and the 72-megawatt Lordsburg Generating Station.

Sterba said PNM could sell the two plants or move them to another PNM Resources subsidiary. Another option would be to ask the state Public Regulation Commission to reclassify the Luna and Lordsburg plants to serve retail customers, he said.

Sterba also said PNM’s 10 percent ownership of Palo Verde Nuclear Generating

Station Unit 3, which is not paid for by rate payers, can remain within the regulated utility, and its power can be sold through specific agreements.
PNM Resources provides electricity to about 835,000 homes and businesses in New Mexico and Texas, and natural gas to nearly 490,000 customers in New Mexico.

The company reached an agreement this past week to sell its regulated natural gas operations to Continental Energy Systems, a Michigan-based utility holding company, for $620 million. That deal, which must be approved by state and federal agencies, is expected to close by the end of this year.

http://www.lcsun-news.com/ci_8020619

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