The billion-dollar Bechtel-Calpine alliance to develop three orfour new natural gas-fired merchant power plants, totaling 2,000MW, in northern California over the next five to six years coulddevelop into a model for upgrading energy infrastructure in the newcompetitive wholesale energy industry, according to Calpine.

The newly announced deal between the San Francisco-based,privately held international engineering firm and San Jose,CA-based Calpine, one of the nation’s most aggressive merchantpower plant developers, marks the return of Bechtel to the U.S.energy plant business, which it left early last year with the saleof its half-interest in PG&ampE Corp.’s US Generating Co. toPG&ampE. Calpine and Bechtel are applying a short-term strategy ofreplacing older, fossil-powered power plants in the northernCalifornia region which is heavily dominated by high-techbusinesses for which reliability is more important than price. Thefirst plant to be developed by the joint venture will be a 535 to800 MW unit to be located at the Dow Chemical facility. It isexpected to begin operations in 2001. Over the next several months,Calpine and Bechtel will be working with local governments,environmental and community groups to finalize the selection ofadditional sites for other new units. Longer-term, they could applythe same strategy in nine other states in which Calpine hasoperations or is developing new ones.

They are betting that they can attain a good share of the $26billion efficiency savings that are potentially available fromchanging out 90% of the nation’s 750,000 MW of power by the year2015. Currently about half of that electric generating capacity isprovided by plants that are 25 years or older, said KatherinePotter, Calpine’s corporate spokesperson.

“One of the advantages of natural gas for these new power plantsis that it is abundant, it is low cost and there is a tremendousinfrastructure of pipelines throughout North America so you cansite these new plants relatively easily,” Potter said. “Whereaswith coal, you are more limited.

Calpine, Sonat Team Up

In another alliance announced last week, Calpine and Sonat willjoin forces to build a 680 MW natural gas-fired peaking power plantnear Columbus, GA. The Cataula Power Plant is scheduled to begincommercial operation in June 2000. When complete, the Cataulafacility will connect to the Georgia Integrated TransmissionSystem, providing direct access to Georgia Power Co., the MunicipalElectric Authority of Georgia, Oglethorpe Power Corp. and the cityof Dalton. As managing partner, Sonat Energy Services will providenatural gas to fuel the plant in addition to being responsible formarketing the plant’s output capacity to wholesale customers.Calpine will provide construction management and operatingservices.

Richard Nemec, Los Anegeles

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