LS Power Eyes Plans to Expand Generating Capacity in State

Power plant owner LS Power Equity Partners plans to invest more in California after buying five plants as part of a nearly $1.6-billion deal with Duke Energy Corp. this year, a company executive said Tuesday.

LS Power, based in East Brunswick, N.J., plans to file applications by June 30 to rebuild the South Bay Plant at Chula Vista, Calif., a project that probably will cost several hundred million dollars, Executive Vice President John King said.

LS Power may also build natural-gas-fired plants at new locations in the state, King said at an industry meeting in San Francisco.

The closely held company’s plans to invest more in California contrast with those of rivals such as Dynegy Inc., which exited the state by selling its interests in power plants to NRG Energy Inc. this year.

“We believe there’s a real opportunity out here,” said King, a former Calpine Corp. executive, at the meeting sponsored by the Power Assn. of Northern California.

Investment in new power plants has lagged in California and supplies are not keeping up with demand, the state’s Energy Commission said in a report last year. Electricity consumption is expected to grow 1.2% to 1.5% annually through 2016, the report said.

In its deal with Duke, LS Power also acquired two power plants in Arizona that provide electricity to California and two in the Northeast. The California plants are capable of generating 4,400 megawatts of electricity; the pair in Arizona can produce 1,200 megawatts. One megawatt is enough for about 750 homes.

LS Power has hired John Wood Group, an energy services company based in Aberdeen, Scotland, to manage its Western U.S. plants and sells electricity through Bear Energy, a unit of Bear Stearns Cos., King said.