US plant outage hits ScottishPower's pocket

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US plant outage hits ScottishPower's pocket By Matthew Jones in London Published: December 4 2000 11:51GMT | Last Updated: December 4 2000 12:35GMT

ScottishPower, the UK electricity group, warned on Monday that it could lose up to $170m following the failure of its Hunter power plant in Utah.

The 430MW coal-fired unit, which was transfered to ScottishPower following its acquisition of PacifiCorp last year, broke down on November 24 after a short circuit caused the generator core to overheat.

An official from the company said it expected the plant to be out of service for between four and six months while repairs were carried out. In the meantime it would have to purchase electricity from the wholesale power market at a net cost of $1m a day.

"The cost of power in the market place is abnormally high at the moment and we will seek to recover some of these costs through the industry regulator," said the official.

Rising demand for power in the western states coupled with years of under-investment in new generation plants and transmission lines has caused wholesale power prices to triple in some parts of the region.

In California the two largest utilities, Pacific Gas and Electric and Southern California Edison, have also been losing $1m a day after selling most of their generation capacity and agreeing to a retail rate freeze which is now below the wholesale price.

ScottishPower said a breakdown of this type was extremely rare, especially as the plant had only been maintained a year ago. Engineers had performed a controlled shutdown of the generator after noticing vibrations, but by that time the damage had been done.

At the start of last month the group warned that rising wholesale prices in the US would already cost PacifiCorp $165m, before the loss of Hunter. It is talking to state regulators in Oregon, Idaho, Wyoming and Utah about the possibility of raising customers' bills.

Analysts said the fact that the problem would be treated as an exceptional cost would limit the impact on the company›s share price to around 8p a share.

However, Angelos Anastasiou, analyst at Williams de Broe said: "This is not good news for Scottish and Southern because it comes at a time when the group's trading position in the UK has weakened due to falling electricity prices."

The group had been expected to make profits before tax for the full year of around £545m.

For the first half of the year ScottishPower made a profit before tax of £272m, with PacifiCorp contributing to half of the company's £2.78bn turnover.

In Monday morning trading in London the company's shares were down 3.6 per cent on the news at 489.5p a share.

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT30L3X3CGC&live=true&tagid=ZZZCWHK1B0C&subheading=energy%20%26%20utilities

-- Martin Thompson (mthom1927@aol.com), December 04, 2000


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