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October 28, 2004

GROUND WILL BE BROKEN OCTOBER 29TH ON KRCD POWER'S FRESNO AREA PEAKING PLANT

A ceremony Friday (October 29) will officially launch construction on an important addition to the Fresno area's energy portfolio.

Kings River Conservation District (KRCD) officials will break ground on KRCD Power's 97-megawatt peaking power generation plant in Malaga that KRCD believes will quickly become a vital source of electrical energy on days when San Joaquin Valley power supplies are tight. When finished, the plant will provide sufficient energy to meet the needs of some 97,000 homes during periods of peak demands.

The groundbreaking event will begin at 2:30 p.m. at the plant site, on the south side of North Avenue between Chestnut and Maple avenues near the community of Malaga.

"We are thrilled that this project is becoming reality so KRCD Power can increase its role in adding value and reliability to the Fresno region's electrical energy supply," said David Orth, KRCD General Manager. "This is a small step but an important one that will benefit everyone in Central California."

By June 2005, the plant should be on line, just in time to assist the state's Independent System Operator, which administers California's power grid, in meeting valley energy demands on hot days.

The contractor is already at work on the site. In May 2004, KRCD directors awarded a $35.4 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 project has moved on a "fast-track" basis ever since state officials late in 2002 offered a pair of peaking generating units to KRCD to help combat energy generation shortfalls and related system weaknesses and needs that became evident during California's 2000-01 energy shortage.

KRCD and the California Department of Water Resources (DWR) in December 2002 signed a power purchase agreement for the plant. The two gas-fired units were among six sets received by the State of California under a settlement with Williams Energy. The other four units went to San Francisco.

Under KRCD's agreement with the state, DWR is to acquire all energy produced by the plant and pay its fixed and variable costs, including debt service during the first ten years of operation, as long as KRCD meets strict plant availability requirements.

The agreement contains a provision that would permit KRCD Power to fully acquire the project after six years. That could be important if KRCD Power and area cities and counties are successful in establishing a Community Choice Aggregation (CCA) power option for customers. KRCD Power is conducting studies into development of a base-load power plant that would serve cities involved in the CCA program.

KRCD Power also operates the Jeff L. Taylor Pine Flat Power Plant, now marking its 20th anniversary. This important 165-megawatt, 3-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.)

Orth said it was KRCD Power's relationship with DWR in the Pine Flat plant project that convinced the state agency that KRCD Power was best suited to put together a peaking project on a very tight time frame.

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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