Destec Power Services commences commercial operation.

HOUSTON--(BUSINESS WIRE)--June 6, 1995--Destec Energy, Inc. (NYSE:ENG), a leading independent power producer based in Houston, Texas, announced Tuesday that its power marketing subsidiary, Destec Power Services, Inc. (DPS) has commenced commercial operation in California.

DPS began operating with a 20 megawatt firm system energy sale to Sacramento Municipal Utility District (SMUD), the largest municipal utility in northern California, by accessing electrical generation under contract from The Dow Chemical Company in the San Francisco Bay Area and Chevron USA in Kern County.

The transaction marks the first sale of network transmission service by Pacific Gas and Electric Company (NYSE:PGE) to DPS and the first power delivery schedule executed by Modesto Irrigation District, which is under contract to provide such services for DPS.

In December 1994 Destec and PG&E, the nation's largest investor-owned utility, based in San Francisco, Calif., announced completion of the first comprehensive network transmission agreement between a utility and a power marketer, enabling DPS to pool resources to sell directly to the wholesale market.

The agreement provides DPS' western operations group, headquartered in Walnut Creek, Calif., with the ability to aggregate power from various sources and to market that power to wholesale customers through PG&E's transmission network. The agreement with PG&E was accepted by the Federal Energy Regulatory Commission on April 14, 1995.

Since signing the agreement with PG&E, DPS reached agreement with Modesto Irrigation District in February 1995 to provide around-the-clock scheduling and dispatching services. Under the services contract, Modesto will perform pre-scheduling, dispatching and after-the-fact accounting for DPS' transactions.

DPS also became a member of the Western Systems Power Pool, which enables it to market energy services to or purchase them from over 60 member utilities in the western system through an electronic bulletin board.

In addition, DPS has signed multi-year power marketing agreements with Destec's majority shareholder, Dow, and Chevron USA Production Company, giving DPS access to as much as 100 megawatts of excess capacity in addition to excess capacity that may be available from Destec's operating power plants in the PG&E service area.

Destec is PG&E's largest independent supplier of electricity. Destec has interests in 11 cogeneration facilities in California, representing more than 700 megawatts of generating capacity. Destec also has a major operations support facility located in Bakersfield, Calif.

Destec is a major independent power company that owns power generation and coal gasification facilities which produce, sell and market electricity, steam and synthetic fuel gas. Destec has interests in 18 operating projects with a total rated equivalent capacity of 2,460 megawatts of electricity and over three million pounds per hour of steam.

Destec currently has seven projects, representing more than 1,400 megawatts of equivalent capacity, in construction or advanced development. Destec also owns approximately 110 billion cubic feet of producing natural gas reserves and one billion tons of lignite reserves.

CONTACT: Destec Energy Inc., Houston

(Investor) Stephen A. Wiley, 713/735-4022 or

(Media) Marvin L. Brown Jr., 713/735-4215