American Electric Power subsidiary Texas Central Co. (TCC) in February completed the sale of its 7.8 percent share of Oklaunion Power Station to the City of Brownsville, Texas (Public Utilities Board Brownsville) for $42.75 million plus adjustments.
The price is equal to $792/kW and offers a relatively rare data point for gauging the value of baseload coal-fired generation. Oklaunion consists of one coal-fired steam-generating unit fueled with Powder River Basin coal from Wyoming. The plant’s substation includes a DC tie interchange system that connects the ERCOT system (which covers most of Texas) to the SPP system (serving the Southwest) via a 435 kV line owned by Southwestern Public Service Co. Coal for the plant is hauled by the Burlington Northern Santa Fe Railway.
The coal plant’s purchase price compares with $757/kW, which FPL paid last December for the 1,033 MW Point Beach nuclear station in Wisconsin. And last July Entergy paid $476/kW for the 789 MW Palisades station in Michigan.
A sample of gas-fired power plant sales showed asset values ranging from $397/kW (paid by Kelson Energy for 580 MW of intermediate load gas capacity in Missouri) to $176/kW (paid by Westar Energy for 300 MW of peaking capacity in Oklahoma).
(See “The Price Is Right,” Power Engineering, February 2007.)
Oklaunion Power Station is a 21-year-old, 692 MW coal-fired plant near the Oklahoma border in Vernon, Texas. AEP said the plant had a 78 percent capacity factor in 2002.
Two AEP subsidiaries and two other companies jointly own the plant. AEP Texas North Co. owns 54.7 percent of the facility and AEP Public Service Company of Oklahoma owns 15.6 percent. With its purchase, Brownsville now owns 18 percent. Oklahoma Municipal Power Authority also owns 11.7 percent.
AEP announced plans in December 2002 to sell all of the TCC-owned generation assets to determine their market value for calculating stranded costs under Texas restructuring legislation. In June 2004, Brownsville exercised its right of first refusal for the TCC share of Oklaunion. Closing was delayed by litigation related to the municipality’s right-of-first-refusal.
-David Wagman