BAKERSFIELD, Calif. -- PG&E Corporation’s National Energy Group broke ground Wednesday for construction of the La Paloma Generating Plant, a 1,048-megawatt electric generating facility. The plant, which is planned for commercial operation in the summer of 2001, will be the largest ever built in California specifically to compete in the state’s wholesale competitive power market.

“Today’s groundbreaking marks a further step in the execution of our strategy to build a strong electric generating capability in key competitive energy markets, including Southern California and the Southwest,” said Thomas G. Boren, executive vice president of PG&E Corporation and president and CEO of the Corporation’s National Energy Group. “La Paloma and the additional plants we are developing in this region will provide much-needed sources of clean, cost-competitiveimages/news/newsd create a solid foundation for our National Energy Group to serve the growing wholesale markets in this region.”

Boren said the images/news/newsactively working to develop new facilities near San Diego and Phoenix, together representing an additional 1,500 megawatts of capacity scheduled to come on line in 2002 and 2003.

Power from the La Paloma facility and, eventually, other National Energy Group plants in the region will be sold to wholesale power customers through the Company’s energy commodities trading operations, which are among the most active in the nation. Wholesale customers, which include traditional utilities, municipal utility districts, electric cooperatives and power traders, will in turn sell the power to retail consumers.

According to PG&E Corporation, the facility will not only meet market demands for new power, it will achieve unprecedented levels of environmental performance. The plant’s four highly efficient, natural gas-fueled combined-cycle turbines are designed to minimize environmental impacts. The plant design utilizes the best emission control technology available, including selective catalytic reduction for NOX control, making La Paloma Generating one of the cleanest fossil-fueled generating stations ever built.

In addition, as part of its environmental mitigation program for the facility, PG&E Corporation has permanently set aside 270 acres of land for conservation.

Approved for construction by the California Energy Commission in October 1999, the La Paloma Generating Plant is being built on an old oil field site approximately 40 miles west of Bakersfield near McKittrick in western Kern County.

The project is expected to generate $42 million in economic benefits to the county over the next decade. More than 700 jobs will be created during the construimages/news/newse project, and when complete, the La Paloma Generating Plant will employ about 40 people on a full-time basis.

“This project adds tremendous economic value to our community, not just during construction, but over the long term,” said Ken Peterson, chairman of the Kern County Board of Supervisors. “Throughout the siting of the project, PG&E Corporation demonstrated a commitment to working with the local community to achieve our common objectives for economic development and environmental stewardship.”

During the groundbreaking ceremony, PG&E Corporation presented the McKittrick School District with a check for $91,500. The funds will be used for landscaping and other facility improvements at the school, as well as acquisition of new instructional materials. PG&E Corporation also will finance the purchase of a new fire engine for the Kern County Fire Department by advancing payment of property taxes for the plant. The new truck will be based in Taft and will serve the western side of the county, including McKittrick.

“We are tremendously grateful to the many individuals, at both the state and local levels, who worked with us during the siting of this project,” Boren said. “We have built a partnership that ultimately will produce a clean, efficient power plant that will generate much needed electric supplies as well as economic value to the local community.”

ABB ALSTROM POWER Inc. is the turnkey contractor for the project, responsible for design and engineering work, procurement of equipment, management of subcontractors, and the actual construction of the facility. Other major prime contractors are Par Electric, W.M. Lyles Co. and Resources Conservation Company.

With revenues of almost $20 billion, $33 billion in assets and operations in 21 states, PG&E Corporation markets energy services and products throughout North America through its National Energy Group. The Corporation has ownership and management interest in more than 30 power plants. The Corporation’s electric utility, Pacific Gas and Electric Company, serves customers in Northern California.