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Calpine, Bechtel to Build 2,000 MW of Gas-Fired Power

Calpine, Bechtel to Build 2,000 MW of Gas-Fired Power

The billion-dollar Bechtel-Calpine alliance to develop three or four new natural gas-fired merchant power plants, totaling 2,000 MW, in northern California over the next five to six years could develop into a model for upgrading energy infrastructure in the new competitive 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 merchant power plant developers, marks the return of Bechtel to the U.S. energy plant business, which it left early last year with the sale of its half-interest in PG&ampE Corp.'s US Generating Co. to PG&ampE. Calpine and Bechtel are applying a short-term strategy of replacing older, fossil-powered power plants in the northern California region which is heavily dominated by high-tech businesses for which reliability is more important than price. The first plant to be developed by the joint venture will be a 535 to 800 MW unit to be located at the Dow Chemical facility. It is expected 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 of additional sites for other new units. Longer-term, they could apply the same strategy in nine other states in which Calpine has operations or is developing new ones.

They are betting that they can attain a good share of the $26 billion efficiency savings that are potentially available from changing out 90% of the nation's 750,000 MW of power by the year 2015. Currently about half of that electric generating capacity is provided by plants that are 25 years or older, said Katherine Potter, Calpine's corporate spokesperson.

"One of the advantages of natural gas for these new power plants is that it is abundant, it is low cost and there is a tremendous infrastructure of pipelines throughout North America so you can site these new plants relatively easily," Potter said. "Whereas with coal, you are more limited.

Calpine, Sonat Team Up

In another alliance announced last week, Calpine and Sonat will join forces to build a 680 MW natural gas-fired peaking power plant near Columbus, GA. The Cataula Power Plant is scheduled to begin commercial operation in June 2000. When complete, the Cataula facility will connect to the Georgia Integrated Transmission System, providing direct access to Georgia Power Co., the Municipal Electric Authority of Georgia, Oglethorpe Power Corp. and the city of Dalton. As managing partner, Sonat Energy Services will provide natural gas to fuel the plant in addition to being responsible for marketing the plant's output capacity to wholesale customers. Calpine will provide construction management and operating services.

Richard Nemec, Los Anegeles

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