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August 24, 2004

SIGNING OF PURCHASE POWER AGREEMENT CLEARS PATH FOR CONSTRUCTION OF PEAKING PLANT IN GREATER FRESNO AREA.

Authorities from the California Department of Water Resources (DWR) and the Governor's office signed an amended and restated 10-year purchase power agreement on August 18, clearing the path for the Kings River Conservation District (KRCD) to finance and construct a 97-megawatt peaking power plant in the City of Malaga just south of Fresno. (One megawatt supplies energy to approximately 1,000 residents.)

The amended contract assures that the State's ratepayers and DWR will immediately benefit from the production of low-cost, highly reliable peaking capacity supplied by KRCD Power. "This project promises to be a great help in meeting the Governor's desire to build generation capacity, and we are pleased that he looks at this as part of his energy solution," said KRCD General Manager David Orth.

KRCD has a record of energy generation success at the Jeff L. Taylor Pine Flat Power Plant that spans nearly two decades. "We're anxious to get started on this new plant so we can begin providing electricity to as many as 97,000 valley homes as soon as possible," said Orth. "KRCD sees this project as a small but significant step toward bringing additional vitally needed generation capacity into the Greater Fresno Area." All of the new generation will be used to provide energy during the most critical use times in the valley-the hottest and coldest days of the year.

"This action clears the way to complete project financing through the sale of approximately $60 million of revenue certificates of participation in early October," said Jack Sinor, KRCD's project manager and the District's Assistant General Manager and Chief Engineer. Plans call for the plant to go on line and begin boosting the valley's power reliability in early Summer 2005.

District board members on May 11 awarded a $35.467 million contract for engineering, procurement and construction of the peaking project to BMZ, a joint venture comprised of two firms, Barton Malow of Michigan and Zachary Construction of Texas. "The contractor is beginning preliminary work in order to be ready to begin construction as soon as financing is completed in early October 2004," said Sinor. The peaking plant will include two, state-of-the-art, gas-fired turbine generators. "This will be a highly efficient plant with high reliability," stated Sinor.

Under KRCD's agreement with the State, during the10-year period DWR 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.

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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