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November 30, 2006

MUNICIPALITIES REACH CRITICAL MILESTONE IN REGIONAL ENERGY PROGRAM San Joaquin Valley Power Authority Is Formed

A critical milestone has been reached for 13 municipalities and the Kings River Conservation District (KRCD) with the formation of the San Joaquin Valley Power Authority (Authority), a governing body that will develop and conduct electricity-related programs for the region. During the months of October and November all 13 of the municipalities governing boards took action to pass ordinances and join the Authority.

On the heels of the energy crisis in 2001, the Kings River Conservation District and 13 municipalities-Kings County and the cities of Clovis, Corcoran, Dinuba, Fresno, Kerman, Kingsburg, Lemoore, Hanford, Parlier, Reedley, Selma, and Sanger-have been working together to develop an innovative energy program, Community Choice, that will reduce costs, increase energy reliability and bring additional renewable energy resources to valley residents and businesses. "It is a testimony to the vision of our region's leaders and to the hard work and planning by staff over the last four years that we have reached this milestone," stated Dave Orth, General Manager of KRCD. "Community Choice is an opportunity for this region to take control over the planning and development of its future energy resources."

The Authority will oversee the implementation and management of the Community Choice program including the setting of electrical generation rates for customers. Transmission and distribution rates will still be set by the local utilities, PG&E and SCE, with oversight from the California Public Utility Commission (CPUC). The Authority's rates have been conservatively estimated to save customers 5 percent on their generation costs. "This equates to over $780 million over a 20-year period," stated Orth. "This is a huge economic benefit for our Valley."

The first order of business for the Authority will be to submit the Community Choice Implementation Plan to the CPUC for review and certification. This is anticipated to occur in January 2007, and is anticipated to be the first plan in the State submitted for a Community Choice program. The implementation plan will address all of the requirements set forth by the CPUC and Assembly Bill 117, the law enacting Community Choice Aggregation, including organizational structure, program implementation, resource plan, rate setting and participant rights and responsibilities. Once the plan is certified, the governing bodies of the 13 municipalities will have one more opportunity to decline participation in the program before implementation.

There will be four phases to program implementation. During Phase I, the Community Choice program will serve the participating municipalities' own electrical loads. Phase II will incorporate large commercial and industrial customers. Phase III will add medium commercial accounts, and Phase IV will include all remaining accounts including residents and small businesses. It is anticipated that all customers will be phased into the program by late 2008.

GTo meet the energy requirements of the residents, businesses and municipal facilities of the 13 municipalities, the Authority will enter into an agreement with KRCD as the energy service provider for the program. KRCD is proposing to develop, construct and operate a 500-megawatt, base-load, natural gas-fired power plant. "The cornerstone of the Community Choice program is KRCD's proposed Community Power Plant," stated Orth. "As a pubic agency without a profit motive, we can build the power plant with tax exempt financing and pass that savings onto the customer." KRCD is currently conducting pre-permitting activities for the Community Power Plant. The plant is being sited south of the Parlier Wastewater Treatment Plant on Bethel Avenue between Manning and Dinuba Avenues.

In order to meet the energy requirements prior to KRCD's Community Power Plant coming online, contracts will be entered into with third-party energy suppliers. Ultimately, upon construction of the plant, the energy supply for the program will be a combination of KRCD resources (Community Power Plant and Malaga Peaking Plant) supplemented by third-party agreements and market purchases.

California Assembly Bill 117, passed in 2002, allows cities and counties to combine the electrical loads of their constituents for bulk electricity purchases. An opt-out structure is provided for customers that choose to continue buying power directly from the investor-owned utility. For customers participating in a Community Choice program, the local utility company will continue to deliver the electricity purchased by the regional Community Choice program through its wires and will also continue to provide meter reading, billing and maintenance services. For more information about the Authority's program, visit www.communitychoice.info.

The Kings River Conservation District is a public agency that serves 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 in the areas of water, power and the environment for the Kings River service area. For more information about KRCD, visit www.krcd.org.

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