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A new electric generating plant that Sierra Pacific Power Company is building in northern Nevada will reduce the state's reliance on volatile energy markets and increase the utility's generating capacity by nearly 50 percent, according Walter Higgins, chairman and chief executive officer of Sierra Pacific Resources.

Nevada Governor Kenny Guinn, Chairman Don Soderberg of the Public Utilities Commission of Nevada, and Higgins, who leads Sierra Pacific Power's parent company, were among the speakers at today's groundbreaking ceremony for the plant in Storey County.

The 514-megawatt, Tracy Combined Cycle Plant, located adjacent to the utility's Tracy Generating Station east of Reno, is expected to start producing electricity for northern Nevada and the Lake Tahoe area of California by June 2008.

Fueled by natural gas, the facility, expected to cost some $420 million, will be the largest generating plant built in northern Nevada since Sierra Pacific completed the second unit at the Valmy Generating Station in 1985, said Roberto Denis, corporate senior vice president of generation and energy supply for Sierra Pacific Resources.

"This new plant will have the highest thermal efficiency of any generating plant in Sierra Pacific's system, and will use about one-third less natural gas than existing generating units,"Denis said."That will result in direct savings to customers and reduce our exposure to volatile natural gas prices."

Because the plant will be air cooled, it will use significantly less water than similar facilities utilizing older technologies, he added.

Higgins told the audience at the groundbreaking event that the new plant will increase the company's northern Nevada generating capacity by nearly 50 percent, from 1,029 megawatts to 1,543 megawatts.

He noted that more than half of the electricity Sierra Pacific Power provided to its 353,000 customers in 2005 was purchased from other suppliers.“Our goal is to reduce the amount of purchased power and to increase the amount of energy generated here in Nevada,” Higgins said.

Contractors selected to build the project include: LG Constructors, a CH2M HILL subsidiary, for engineering procurement and construction services; General Electric, for combustion and steam turbine equipment; and Nooter/Eriksen, for the heat recovery steam generator.

"Over the next two years, up to 500 employees in various trades will be involved in the plant's construction and that will have a positive impact on the economy of Storey County, as well as the economies of Reno, Sparks and Fernley,"Denis said.

Storey County and the State of Nevada will also see additional tax revenues due to construction of the power plant, both from sales taxes for the equipment and property taxes related to the facilities.

Headquartered in Reno, Sierra Pacific Power Company is the principal electric utility for most of northern Nevada and the Lake Tahoe area of California, and the natural gas distribution company for the Reno-Sparks area. The company serves approximately 353,000 electric customers and 140,000 natural gas customers. It is a wholly owned subsidiary of Sierra Pacific Resources, which also is the holding company for Nevada Power Company, the electric utility for southern Nevada. Other subsidiaries of Sierra Pacific Resources include the Tuscarora Gas Pipeline Company, which owns 50 percent interest in an interstate natural gas transmission partnership.