Sep. 14--PALMDALE -- City officials will seek permits to build a 500-megawatt power plant that they say would provide the city with reliable, more-affordable energy.

Palmdale officials are completing an agreement with Inland Energy Inc., a consulting company that will guide the city through a permitting process that is expected to take two years and cost as much as $5.5 million. Under an agreement that is being finalized, Inland will receive 5 percent of the operating profit of the plant.

"What we are doing is positioning ourselves to enter the (energy) marketplace as we watch how the energy crisis unfolds," said Councilman Jim Root.

The city plans to pursue permits for a plant that would operate two 165-megawatt gas-fired turbines and a steam turbine capable of generating 170 megawatts. The plant would be capable of providing energy for a city of 400,000 people.

City officials said a possible site has been identified as well as possible alternatives, however they are not disclosing those locations at this time. The plant would require 20 to 25 acres.

In the two years of going through the permitting process, city analysts could study what arrangement for using the permit would best serve Palmdale's interests.

Possibilities include forming the city's own municipal utility, such as those operating in Los Angeles, Glendale and Burbank; assigning the permit to a company; or selling the permit outright.

Building such a plant would cost about $300 million, said Tom Barnett, executive vice president of Inland.

"Building a power plant is among the most complex things that human beings do," Barnett said.

The earliest such a plant could be built is 2009, Barnett said.

"We're not talking about entering the market next week with this plant," Barnett said.

Having a reliable source of energy would aid in attracting new businesses to the region and would also help ease the statewide energy crunch, city officials said. In addition to generating power, the plant could play a role in efforts to expand the capacity of the wastewater treatment plant that serves Palmdale. The power plant would require 2.2 million gallons of water a day, and treated, disinfected sewage water could be used, said City Manager Bob Toone.

Inland Energy has been involved in the development of an 830- megawatt power plant in Victorville that began operating in 2003. The company also signed an agreement with the city of Victorville in March to pursue permitting for a 500-megawatt power plant.