California Energy Commission Approves Magnolia Power Project Licensing.

News Editors/Business Editors

BURBANK, Calif.--(BUSINESS WIRE)--March 5, 2003

The California Energy Commission (CEC) today approved state licensing for the Southern California Public Power Authority's (SCPPA) Magnolia Power Project (MPP) in Burbank, which is scheduled to begin generating electricity for six Southern California cities by summer 2005.

Burbank Mayor David Laurell said he heartily welcomed today's CEC decision as state recognition that MPP will more than meet all environmental and good-neighbor standards as it operates within the community it serves.

"With this CEC action, the 310-megawatt (MW) MPP becomes the first major, new power plant to be licensed by both the CEC and the South Coast Air Quality Management District in a Southern California urban area directly served by the new generating unit," Mayor Laurell said.

"Through this project, Burbank has joined with Anaheim, Glendale, Pasadena, Cerritos and Colton to provide clean, highly efficient electric generation within the local region where the electricity is needed," Mayor Laurell added.

Project Director and Burbank Water and Power (BWP) General Manager Ron Davis said, "Today's landmark CEC decision completes a nearly two-year licensing review period and now will allow construction of a reliable and cost-effective combined-cycle generating unit."

Along with state licensing, Davis said the six cities recently completed MPP participation agreements with SCPPA, a joint powers agency serving as the project owner and financing agent. With the $234-million project's generating capacity fully committed, SCPPA plans to acquire funding through bond sales this month so construction work can begin in June.

According to SCPPA Executive Director Bill Carnahan, MPP represents the first time a group of Southern California public power cities has jointly developed new, locally available electric generation that will serve as a major energy resource for decades and will reduce energy delivery over long-distance transmission lines.

"By joining together to build a unit larger than any one city could independently support," he said, "these six cities can take advantage of the unit's economy-of-scale and higher efficiency rating, which will result in MPP using one-third less natural gas fuel than older units burn for each kilowatt-hour of energy produced. This, in turn, will result in lower overall operating costs.

"At a time when Californians face long-term electricity market uncertainty, MPP also will help insulate these cities from future energy market volatility and supply shortages," Carnahan said.

As part of the new unit's design, MPP will be capable of providing up to 310 MW of electrical capacity when needed at times of high power demand, with each participant's share based upon its entitlement allocation. As host city, Burbank will have a 31 percent entitlement share while Anaheim (38 percent), Glendale (17 percent), Pasadena (6 percent), Cerritos (4 percent) and Colton (4 percent) comprise the remaining shares. All of these cities, except Cerritos, currently operate municipal utilities.

"Although the project concept was conceived in 1999 by BWP prior to the state's electricity crisis," Davis said, "its steady, public power-sponsored development through periods of California energy market instability will now pay dividends in operation of a cost-based electrical resource not susceptible to changing market prices.

"As the recent energy crisis has taught us, marketers profit at times of energy price volatility. However, MPP's operation will give the six cities supply certainty, no matter how market conditions change," Davis added.

The project will include installation of a General Electric Company state-of-the-art combustion turbine-generator and heat-recovery steam-generator in a building to be located on the northeast corner of the Burbank utility's 23-acre property.

In addition, MPP will install state-of-the-art air emissions control equipment to comply with all applicable regulations. In fact, MPP emission rates for nitrogen oxides will be 50 times lower than those of the older natural gas-fueled generating units it replaces.

Because the site has been used as a generating station since 1941, much of the infrastructure already is in place for natural gas fuel and reclaimed cooling water delivery, and for electrical transmission through Burbank's existing utility system.

"In addition," Davis said, "the project is designed to use reclaimed wastewater for all of its power plant water needs to limit the need to tap into Burbank's domestic water supply. All of this reclaimed wastewater will be evaporated on site to eliminate any need for discharge into the Los Angeles River.

"Since BWP will serve as both the construction manager and operating agent, we will ensure that community impacts for noise, street traffic and other construction activities are minimized. We will focus on remaining a good neighbor in the local community which MPP will serve," Davis said.

Once MPP financing is complete in March, the construction contractor, Kvaerner E&C, will begin mobilizing its workforce for the start of site work in June. Through 2003, the majority of work will consist of building foundations for major equipment components to be installed during 2004. By early 2005, work will turn to start-up operations and unit testing before commercial operation begins by that summer.

Based upon the project schedule, MPP will be available for both base-load generation and peaking capacity in time to serve the summer high electrical demand period in 2005.

Throughout the construction period, MPP will provide updated information to the public on its SCPPA website homepage at www.scppa.org.