Bloomberg News

Arizona Wildfire Threatens 40% of El Paso’s Power Supply

June 08, 2011

(Updates with Palo Verde power price in third paragraph, evacuation orders in sixth, area affected in ninth.)

June 8 (Bloomberg) -- El Paso Electric Co., supplier of power to an oil refinery and the U.S. Army’s Fort Bliss, said it’s seeking alternative power supplies should an Arizona wildfire cut electrical lines from Palo Verde, the nation’s largest nuclear generating plant.

Within three days, the Wallow fire may reach high-voltage links that deliver 40 percent of the power used by 371,000 homes and businesses in western Texas and southeastern New Mexico, Teresa Souza, a spokeswoman for the El Paso, Texas-based utility owner, said today in an interview. The blaze, which started May 29, has scorched an area more than 20 times the size of Manhattan.

Power at the Palo Verde switchyard, a Southwest benchmark, gained $2.78, or 7.7 percent, to $38.83 a megawatt-hour on the Intercontinental Exchange, the highest price since May 4.

Yesterday, the utility said it would begin cutting power temporarily to parts of its service area as a “last resort” to avoid a wider blackout.

“The fire is still raging, so there is still a threat,” Souza said. “We’re looking at options to get power from other areas.”

Evacuations

Residents of all the areas south of U.S. 260 and east of Greer, Arizona, have been ordered to evacuate by the sheriff of Apache County, according to the website of the incident command for the fire. None of the blaze is contained, the report filed at 8 a.m. today showed. Evacuations have begun in Springerville, Arizona, near El Paso’s lines, the site showed.

Fire damage to the lines from Palo Verde in Arizona may knock out 633 megawatts of supply, the utility owner said yesterday. That’s enough for about a half-million average U.S. homes, according to statistics from the Energy Department in Washington.

“We’re not concerned,” Gary Hanson, a spokesman for Western Refining Inc.’s El Paso refinery, said today in an interview. The utility “has a number of contingency plans,” he said. Refinery capacity is 128,000 barrels a day, according to Bloomberg data.

The Wallow fire has raged over 600 square miles south and west of Alpine, Arizona. No one has been injured by the blaze, which has destroyed 10 structures and damaged one.

The Apache County Sheriff’s Office has ordered evacuation of at least four towns.

The fire hasn’t yet interrupted the power grid, Rachel Sherrard, a spokeswoman for the Western Electricity Coordinating Council, said today in an interview. The group, which includes El Paso Electric, oversees the high-voltage power system for all or part of 14 states and parts of Canada and Mexico.

--With assistance from Aaron Clark in New York and Mark Chediak in San Francisco. Editors: Richard Stubbe, David Marino

To contact the reporters on this story: Amanda J. Crawford in New York, acrawford24@bloomberg.net; Mario Parker in Chicago at mparker22@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net.

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.


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