Will utilities plug into joint deal?

KISSIMMEE -- Orlando Utilities Commission and the Kissimmee Utility Authority may jointly develop a new $300-$500 million power plant.

It's an unusual move: If the two Central Florida municipal utilities sign off on a deal, it would be one of very few shared projects in the state.

But it's also a logical strategy. Ben Sharma, Kissimmee Utility's project manager, says the Osceola County utility needs a power unit built by 2003 to meet the fast-growing area's surging appetite for electricity. That same year, Orlando Utilities' lease for power at an Indian River plant will expire.

Further, new power generating sites are needed to replace older, less efficient technology.

Perhaps most important, pending deregulation in the electric utilities industry is boosting out-of-the-box strategies. "We're searching for the most competitive generation possible," explains Kissimmee Utility Authority President Jim Welsh. "If we get into a deregulated market, we want to make sure we are the utilities of choice."

To be sure, both utilities have other options. Orlando or Kissimmee could go to the private sector to find a financing partner and independently build a new power plant. Either could lease extra power from another site and wait on the fallout from deregulation, which could completely redefine markets for all utility companies.

Another option, notes Welsh, is "self-billed, self-developed." In other words, build a plant independently and fund it through operating revenue or tax-exempt bonds. Bob Haven, president of Orlando Utilities, lists the same alternative.

And Orlando Utilities can afford to build a new plant: The utility recently sold its Indian River power plant to Reliant Energies for $210 million.

Says Haven, "There is certainly some money left over."

However, if each utility builds its own plant, it would probably be smaller -- larger utility plants typically are more efficient producers of electricity -- and the costs associated with development and operation costs would be higher.