Calpine Exercises Right of First Refusal to Acquire PG&E's Lake County Geothermal Power Plants
Company Evaluating Acquisition of PG&E's Sonoma Geothermal Power Plants
SAN JOSE, CA — Dec. 1, 1998 — San Jose, CA-based Calpine Corporation, a leading independent power company and the nation's second largest producer of geothermal energy, today announced that it has exercised its right of first refusal to acquire Pacific Gas and Electric Company's (PG&E) Lake County geothermal power plants — totaling 150 megawatts — for $73.8 million, plus a $1.5 million break-up fee to be paid to the winning bidder under the terms of the recent auction.
Calpine owns and operates the steam field operations currently supplying the Lake County plants. Consistent with the company's long-term strategy of uniting geothermal power plant and steam field operations at The Geysers, this acquisition will optimize geothermal energy production to lower costs and help extend the life of the geothermal resource.
Calpine also holds the right of first refusal to acquire the PG&E Sonoma County geothermal power plants through its Thermal Power Company affiliate, which owns a 25 percent interest in a 550 megawatt Sonoma County steam field operation with Unocal Corporation and its NEC affiliate. Under the terms of the steam sales agreements with PG&E, Calpine and Unocal have 90 days to execute their right to purchase the Sonoma County plants by matching the winning bid in PG&E's auction.
"The acquisition of PG&E's Lake County power plants enhances our leadership position as a low-cost geothermal power producer," stated Calpine's Vice President-Western Region Jake Rudisill. "By combining steam field and power plant operations, Calpine will minimize production costs to better compete in California's newly deregulated power market."
Calpine expects to complete the acquisition during the second quarter of 1999. The acquisition is subject to approvals by the California Public Utilities Commission and the Federal Energy Regulatory Commission. As required by California's restructuring law, PG&E will operate the plants for two years following the sale.
Calpine has been a major participant in The Geysers since its acquisition of Geysers Geothermal Company from Freeport-McMoRan in 1990. This purchase included two power plants and three steam fields as well as the Santa Rosa geothermal office. Additional acquisitions have included a portion of the Aidlin Power Plant, a 25% interest in what is now the Unocal/Calpine steam fields and its recent acquisition of the SMUDGEO power plant. Altogether, Calpine owns net interest in almost 500 megawatts of geothermal steam fields and power plants at The Geysers.
Calpine is a leading power company dedicated to providing customers with low-cost electricity and thermal energy. Calpine has 5,500 megawatts of capacity in operation, under construction or in development in 11 states. Calpine was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information on Calpine, please visit its website at http://www.calpine.com.
The matters discussed in this news release may be considered "forward-looking" statements within the meaning of Section 27A of the Securities and Exchange Act of 1993, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include declarations regarding the intent, belief or current expectations of 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; actual results could differ materially from those indicated by such forward-looking statements. Among the important factors that could cause results to differ materially from those indicated by such forward-looking statements are: (i) that the information is of a preliminary nature and may be subject to further adjustments, (ii) risks associated with power plant acquisitions, (iii) changes in government regulation, (iv) general operating risks, (v) the dependence on third parties, (vi) the dependence on senior management and (vii) other risks identified from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.
Calpine Contact:
Katherine Potter, Media Relations, (408) 995-5115 ext. 1168
Rick Barraza, Investor Relations, (408) 995-5115 ext. 1125
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