PG&E Corporation Pursues Power Project In Eastern Oregon

Facility Will Be The Company’s First Merchant Plant in the Pacific Northwest

PORTLAND, OR – PG&E Corporation (NYSE-PCG) today announced that its National Energy Group is moving forward with plans to build a 550-megawatt power plant in Eastern Oregon. The new facility, projected to begin operation in 2003, will enable the National Energy Group to capture opportunities in the increasingly competitive Pacific Northwest electric industry.

"The Umatilla project will produce clean, cost-competitive electricity to serve the rapidly expanding market in the Pacific Northwest," said Thomas B. King, President and COO of the PG&E National Energy Group West Region. "Through our natural gas transmission system, which crosses Idaho, Washington and Oregon, and the Hermiston Generating Plant, we already have a significant presence in the region’s wholesale energy market. We plan to grow that presence as part of our overall strategy to develop generation and gas transmission infrastructure in major western markets."

The Umatilla plant would be capable of generating 550 megawatts of electricity, roughly enough power for half a million homes. In addition to this project, the PG&E National Energy Group began construction this summer on the 1,000-megawatt La Paloma Generating Plant near Bakersfield, California. The company has another 1,500 megawatts under development in two projects located near San Diego, California, and Phoenix, Arizona, for a total of 3,000 megawatts currently under development in the West. The company also recently announced plans for a 212-mile natural gas pipeline from Arizona to Baja California, Mexico. The pipeline is to be built in partnership with Sempra Energy International and Proxima Gas S.A. de C.V.

The Umatilla Project will be fueled by clean-burning natural gas. The plant will consist of two 275-megawatt units and will be equipped with advanced-technology pollution control equipment. It will meet every federal, state and local regulation for air emissions, including Oregon’s groundbreaking rules for carbon dioxide offsets.

Lead developer for the Umatilla project will be Roger Garratt, who successfully developed the La Paloma Generating Plant.

King said that by locating the Umatilla project adjacent to the existing 474-megawatt Hermiston Generating Plant, which is co-owned by the PG&E National Energy Group and PacifiCorp, the company will be able to capture significant operating efficiencies. As a result, he said, it will be one of the most cost-effective plants under development in the West today.

The Umatilla plant will be connected to the PG&E National Energy Group’s natural gas pipeline system, Gas Transmission Northwest (GTN), providing incremental demand of 84,000 decatherms per day on that system.

Company officials said the Umatilla project will be the PG&E National Energy Group’s first merchant power plant in the Pacific Northwest. Generation from a merchant plant is sold into the wholesale power market on a competitive basis to a variety of potential purchasers, including traditional utilities, municipal and public power agencies, electric cooperatives, power traders and large industrial users. Merchant power plants have become more common over the past few years, as deregulation has increased competition among generation suppliers.

"Development of a merchant power plant adjacent to our pipeline system in Oregon is an excellent example of our strategy to optimize our strong asset position in the Pacific Northwest," King said. "With the passage of deregulation legislation in Oregon last year, we believe the market there is ready for development of competitive electric generation."

The PG&E National Energy Group expects to apply to the Oregon Energy Facility Siting Council this fall for a license to build the plant. The company expects to begin construction by late 2001 and have the plant ready for commercial operation in 2003.

PG&E Corporation, with revenues of more than $20 billion and operations in 21 states, markets energy services and products throughout North America. The Corporation has ownership and management interest in more than 30 power plants across the United States, including the Hermiston Power Plant in Oregon. PG&E Corporation’s businesses also include Pacific Gas and Electric Company, the Northern and Central California utility that deliver natural gas and electricity to one in every 20 Americans.


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