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May 19, 2004

CALIFORNIA ENERGY COMMISSION APPROVES KRCD POWER'S FRESNO AREA PEAKER PLANT

California Energy Commission members today (May 19) gave unanimous approval to the Kings River Conservation District's planned 97-megawatt peaking power generation plant in Malaga.

Commission approval launched a 30-day public review process although there has been no negative public comment or objection lodged over KRCD Power's plans aimed at improving Fresno area electrical energy reliability.

"We're ready to go and all central San Joaquin Valley power customers should be benefiting by next summer when our peaker plant goes on line," said David Orth, KRCD General Manager. "KRCD sees this project as a small but significant step toward bringing additional vitally-needed generation capacity into California."

District board members on May 11 awarded a $35.467 million contract for engineering, procurement and construction of the peaker project to BMZ, a joint venture comprised of two firms, Barton Malow of Michigan and Zachary Construction of Texas.

The project, which KRCD Power has expedited at the state's request, has moved on a fast track in response to glaring energy generation shortfalls and related system weaknesses and needs that became evident during California's 2000-01 energy shortage. By locating the gas-fired turbines within the Fresno metropolitan area, KRCD Power is pursuing the District's objective of adding value to the region's electrical energy system by easing supply constraints and improving reliability.

KRCD and the California Department of Water Resources in December 2002 signed a power purchase agreement for the plant, which will provide sufficient energy to meet the needs of some 97,000 homes during periods of peak demands.

"KRCD has done everything the state has asked us to do in securing a site for the facility in an industrial area in Malaga, obtaining all permits and lining up a qualified contractor," Orth said. "This project promises to be a great help in meeting the Governor's desire to build generation capacity." KRCD Power and California Department of Water Resources officials are working to resolve remaining issues. The District is putting finishing touches on its finance plan.

Under KRCD's agreement with the state, during a 10-year period the Department of Water Resources is to acquire all energy produced by the plant and pay its fixed and variable costs, including debt service, as long as KRCD meets strict plant availability requirements.

KRCD Power and area cities and counties are pursuing a Community Choice Aggregation (CCA) power option for customers. That larger power project currently involves studies into CCA details and development of a new base-load power plant. The Peaker could become a critical part of that program in the future.

For now, Orth says, "We view the peaker plant as important to all electrical customers concerned with the valley's power reliance problems."

KRCD Power also operates the Jeff L. Taylor Pine Flat Power Plant, now marking its 20th anniversary. This important 165-megawatt, three-unit hydroelectric facility at the base of Pine Flat Dam went on line in 1984. It immediately began to help in meeting the Valley's electrical energy needs and adding crucial value to the region's power system. Power produced at Pine Flat is distributed and used in the power-short Fresno area. (Equivalent amounts of energy are delivered elsewhere to the Department of Water Resources and the State Water Project, which buy all energy produced at Pine Flat.)

"Our work at Pine Flat convinced the Department of Water Resources that KRCD Power was the right agency to help meet the valley's energy needs," Orth said.

The Kings River Conservation District is a public agency that has effectively served agricultural, business, and community residents within 1.2 million acres in portions of Fresno, Kings and Tulare counties since 1951. KRCD is a leading resource management agency, known for its efficiency and innovation, and not just in power production. KRCD is a recognized leader in environmental resources studies and water management including flood control, on-farm water management, water quality efforts and groundwater management.

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