Tolling Agreement With SDG&E to Provide for Completion of Otay Mesa Energy Center
SAN JOSE, Calif., Jun 9, 2004 /PRNewswire-FirstCall via COMTEX/ -- Calpine Corporation
(NYSE: CPN) announced that the California Public Utilities Commission (CPUC)
has approved a tolling agreement between Calpine and San Diego Gas and
Electric (SDG&E) that provides for the delivery of up to 600 megawatts of
capacity for ten years beginning in 2008. Power delivered under the contract
will originate from Calpine's Otay Mesa Energy Center currently under
construction in San Diego County.
"Today's CPUC decision marks an important milestone for California," said
Curt Hildebrand, Calpine's Vice President of Marketing and Sales. "This was
the first successful competitive bidding process employed by a California
utility to provide for its customers' long term power and reliability needs.
As a result, San Diego utility customers now have the security of knowing
where their power will be coming from, the assurance that it will be
environmentally superior compared to today's sources, and that it comes at a
reasonable and predictable cost."
Under the terms of the Calpine agreement, the natural gas-fired Otay Mesa
Energy Center will be in commercial operation no later that January 1, 2008.
SDG&E is responsible for fuel delivery and the facility must meet strict
performance and environmental requirements under the contract. In return,
Calpine will receive a $9.75 per kilowatt-month capacity fee as well as an
operations and maintenance fee. The commercial terms of the Otay Mesa
contract were voluntarily disclosed by Calpine, the only bidder in the SDG&E
process to do so.
"California needs an open, fair, and transparent electricity market where
companies compete to drive down costs for the ratepayers. Calpine commends
SDG&E for conducting this bid process to ensure that the public gets the most
reliable power, at the very best price," Hildebrand added. "In revealing the
financial terms of our successful bid, Calpine has provided the public another
level of checks and balances to ensure that they are getting urgently needed
new generation capacity at a reasonable cost."
Today's CPUC decision validates the concept of fair and open competition
in the electricity marketplace and proves that private investment in new power
plants can succeed and reduce the cost of electricity for ratepayers while
assuring a clean, reliable supply of power to meet California's growing needs.
Moreover, a fair and open market shifts the financial risks of increased power
costs and large capital investments away from ratepayers, and puts them where
they are best positioned: on private investors.
With CPUC approval of the agreement, the contract remains contingent upon
Commission approval of needed regional transmission improvements proposed by
SDG&E as well as a number of other matters currently before the CPUC.
Calpine, California's Power Company
Calpine has made an unprecedented $5 billion investment in California's
energy infrastructure through the construction and operation of the State's
newest, cleanest, and most efficient fleet of power projects and California's
second-largest natural gas operation. As well, Calpine is the State's single
largest producer of power from renewable resources, the first company to
license and construct a major California power project in more than a decade,
and is responsible for the first baseload generation built in the San
Francisco Bay Area in more than 30 years. Since July 2001, Calpine has added
almost 2,500 megawatts of new capacity in California -- an accomplishment
unmatched by any other company in the energy industry.
Three projects now under construction will bring Calpine's California
portfolio to more than 5,800 megawatts, enough electricity to power almost
6 million homes. In addition, the company has permitted another six
California projects in anticipation of the continued growth in demand for
clean, cost-effective generation in the state as well as the implementation of
sound state energy policy.
Calpine Corporation, celebrating its 20th year in power, is a leading
North American power company dedicated to providing electric power to
customers from clean, efficient, natural gas-fired and geothermal power
plants. The company generates power at plants it owns or leases in 21 states
in the United States, three provinces in Canada and in the United Kingdom.
Calpine also owns or controls approximately one trillion cubic feet equivalent
of proved natural gas reserves in the United States and Canada. The company
is listed on the S&P 500 and was named FORTUNE's 2004 Most Admired Energy
Company. The company was founded in 1984 and is publicly traded on the New
York Stock Exchange.
This news release discusses certain matters that may be considered
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, including statements regarding the intent, belief or
current expectations of Calpine Corporation ("the Company") and its
management. Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve a number of
risks and uncertainties that could materially affect actual results such as,
but not limited to, (i) the timing and extent of deregulation of energy
markets and the rules and regulations adopted on a transitional basis with
respect thereto; (ii) the timing and extent of changes in commodity prices for
energy, particularly natural gas and electricity; (iii) commercial operations
of new plants that may be delayed or prevented because of various development
and construction risks, such as a failure to obtain the necessary permits to
operate, failure of third-party contractors to perform their contractual
obligations or failure to obtain financing on acceptable terms; (iv)
unscheduled outages of operating plants; (v) a competitor's development of
lower cost generating gas-fired power plants; (vi) risks associated with
marketing and selling power from power plants in the newly-competitive energy
market; and (vii) other risks identified from time-to-time in the Company's
reports and registration statements filed with the SEC, including the risk
factors identified in its Annual Report on Form 10-K for the year ended
December 31, 2003 and in its Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004, which can also be found on the Company's website at
www.calpine.com. All information set forth in this news release is as of
today's date, and the Company undertakes no duty to update this information.
SOURCE Calpine Corporation
Kent Robertson, +1-408-621-1447
or Rick Barraza,
+1-408-995-5115, ext. 1125
both of Calpine Corporation