PHOENIX, ARIZ. Phoenix-based Pinnacle West Capital Corporation [NYSE: PNW] and Calpine Corporation [NYSE: CPN], a San Jose, Calif.-based independent power producer, announced today plans to develop a modern 500-megawatt natural gas-fired combined cycle power plant in Phoenix. The proposed $220 million facility will be located on the site of Arizona Public Service's West Phoenix Power Station near the intersection of 43rd Avenue and Buckeye Road. APS is a subsidiary of Pinnacle West.
The joint project is the second phase of a potential 750-megawatt expansion at West Phoenix. The first phase of the expansion includes a $60 million repowering of an existing unit to create a 130-megawatt combined cycle unit. The remainder of the expansion involves repowering other existing units at the site.
Electricity from the new facilities will help meet the expanding need for environmentally sound generation in the rapidly growing Phoenix metropolitan area. Construction is scheduled to begin in mid-2000 with commercial operation of the 130-megawatt unit in mid-2001 and the 500-megawatt plant in late 2001.
In the past five years, growth in electricity needs has totaled approximately 6 percent a year across Arizona, including nearly 10 percent between 1997 and 1998. Peak demand for power in the Phoenix metropolitan area is expected to continue to increase due to both population growth and increased economic expansion.
"We are committed to meeting the growing needs of our customers as well as pursuing new opportunities in competitive generation markets," said Bill Post, Pinnacle West chief executive officer. "We believe Calpine's experience in the IPP industry will bring immediate value to the project."
Said Calpine Chief Executive Officer Peter Cartwright, "Phoenix is a strategic power market in the West. There are important synergies between Pinnacle West and Calpine that make this project beneficial to both companies and the communities and markets we serve. We look forward to our partnership with Pinnacle West."
The companies said they will install advanced pollution-control equipment at the plant that will attain the lowest achievable emissions rate. The new generating units actually will result in cleaner air for the Phoenix metropolitan area because emissions will be more than offset by reductions at other Phoenix facilities.
"Natural gas-fired combined cycle technology is highly efficient compared with today's aging gas-fired power fleet - providing tremendous opportunities to lower energy prices while safeguarding the environment," added Cartwright.
Said Bill Stewart, Generation president, "We have a strong record of low-cost, efficient plant operations. This is the right kind of plant at the right time for Phoenix and Arizona."
Pinnacle West companies own or operate nearly 8,000 megawatts of generation in Arizona and New Mexico. Calpine Corporation is a leading independent power company dedicated to providing customers with clean, reliable and competitively priced electricity. Calpine currently has 7,600 megawatts of capacity in operation, under construction or in announced development in 11 states.
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This press release contains forward-looking statements that involve risks and uncertainties, which include, but are not limited to, the ongoing restructuring of the electric industry; the outcome of the regulatory proceedings relating to the restructuring; regional economic and market conditions, which could affect customer growth and the cost of power supplies; the cost of debt and equity capital; weather variations affecting customer usage; and the strength of the real estate market. These factors and the other matters discussed above may cause future results to differ materially from historical results, or from results or outcomes currently expected or sought by the Company.