The Union Power Station serves wholesale customers throughout the states of Arkansas
and Louisiana, as well as portions of Mississippi and Texas. In addition, the plant is designed
to produce power for sale in the surrounding states of Oklahoma, Missouri and Illinois.
Construction of the Union Power Station began in the spring of 2001. The first phase of the
Union facility was scheduled to begin commercial operation in the autumn of 2002 and the
rest of the facility was expected to be fully operational by the summer of 2003.
The Gila River Power Station was designed to produce electricity for sale throughout
Arizona, but it was also expected to sell excess energy to wholesale customers in California,
Nevada and New Mexico. Initial construction and site preparation for the project began in May
- The project was expected to begin full commercial operation in the summer of 2003.
The projects are located in two separate and distinct power markets with minimal price
correlation. The structural differences, such as in climate, weather patterns, customer demo-
graphics and load profiles, tend to minimise the possibility of similar adverse price trends
affecting both plants at the same time. The project partnership has a comprehensive energy
management plan for fuel purchase, power sales and risk management that uses the experi-
ence and business contacts of qualified third parties, while retaining oversight and ultimate
responsibility in the hands of the project sponsors.
The project’s power sales use a portfolio sales approach, negotiating contracts with a
variety of terms and pricing structures. The fuel supply strategy is closely coordinated with
the power sales strategy to manage the spark spread.
The original engineering, procurement and construction (EPC) contractor was the
National Energy Production Corporation (NEPCO), a subsidiary of Enron. After Enron
declared bankruptcy, the sponsors first helped bring stability to NEPCO to prevent it from
being drawn into the Enron bankruptcy filing and later replaced NEPCO with a new EPC con-
tractor, SNC–Lavalin of Canada.
Background
Sponsor profiles
TECO Power Services Corporation (TPS) is a wholly owned subsidiary of TECO Energy,
Inc., a diversified energy-related holding company headquartered in Tampa, Florida. Other
TECO Energy businesses include Tampa Electric, Peoples Gas System, TECO Transport,
TECO Coal, TECO Coalbed Methane, TECO Propane Ventures and TECO Solutions. TPS
builds, owns and operates electricity generation facilities with an emphasis on high-growth
areas in North America. Announced domestic projects call for TPS to serve customers in 18
states, spanning the southern half of the United States. TECO Energy as a whole has net own-
ership interests in nearly 11,000 MW of generating capacity, either operating, in construction
or in the advanced stages of development around the world. TPS’s independent power oper-
ations have been a part of TECO’s effort to evolve from a predominantly regulated energy
company to one that operates primarily in deregulated, competitive markets.
Headquartered in Dallas, Texas, Panda Energy International, Inc. is a privately held, non-
regulated electricity generation company primarily focused on the development, ownership
and operation of state-of-the-art, environmentally clean, low-cost power plants. At the time
of the project financing in 2001, the company had plants in Roanoke Rapids, North Carolina,
and Brandywine, Maryland, and it had an ownership interest in three 1,000 MW plants that
it had developed in Texas (in Guadalupe County, Paris and Odessa). Panda also had plants in
POWER PLANT