Arizona Public Service will pay Southern California Edison $294 million for its 48 percent share of the two newer units at the 2,250 MW Four Corners Power Plant on the Navajo Nation in New Mexico. The utility plans to close the other three, more polluting units. APS also plans to invest $290 million on emissions controls for the remaining units. APS currently owns 15 percent of the two units.

In the deal APS would lose 560 MW of power from the shutdown but gain 740 MW from Southern California Edison.

Southern California Edison has said it would end its interest in the plant when the lease expires in 2016 to comply with California laws that prevent the state's utility providers from investing in most coal-fired power plants.

APS said that decision, along with proposed pollution controls, led to the purchase agreement. The sale is subject to approval from state and federal regulators. The plan also hinges on a lease extension from the Navajo Nation and a new fuel contract with mine operator BHP Billiton.

The Four Corners plant is among the largest single sources of nitrogen oxide emissions in the United States. The U.S. Environmental Protection Agency recently announced it would mandate upgrades for the 45-year-old plant.

Rather than comply at the three older units, APS wants to permanently close them and install in pollution controls at the newer units that were built in 1969 and 1970. APS said closing the three units would mean a 36 percent decline in nitrogen oxide emissions, a 61 percent decrease in mercury and 43 percent fewer particulates.

The utility company intends to file its plan with the Arizona Corporation Commission in mid-November and then with the Federal Energy Regulatory Commission. If APS gets all necessary approvals, it would close on the Southern California Edison shares by the end of 2012.

The units' other four owners -- Public Service Company of New Mexico, Salt River Project, El Paso Electric and Tucson Electric Power -- could seek a part of Southern California Edison's shares.

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