Award-Winning Klamath Cogeneration Plant Officially Generating

KLAMATH FALLS, OR - -- The first new power plant built in the Northwest in several years officially entered into commercial operation July 29, initiating deliveries of much-needed power to the Pacific Northwest and California.

The City of Klamath Falls and PacifiCorp Power Marketing, Inc. (PPM), the non-regulated affiliate of Portland-based PacifiCorp (NYSE:PPW), developed the 484-megawatt natural gas-fired, advanced combined-cycle cogeneration facility as a merchant plant to serve the energy-starved Western U.S. power grid. The plant sits less than 30 miles from one of the most actively traded electricity markets at the California-Oregon border.

Construction of the plant began in June 1999, with start up this May and significant test power flowing into the grid the last two months. The City of Klamath Falls is the owner of the plant and previously sponsored the issuance of $309 million in project revenue bonds that made the plant possible.

"The citizens of Klamath Falls are the big winners today," said Mayor Todd Kellstrom. "This is one of those rare times when regular folks benefit from smart decisions made long before this current energy crunch."

Under contract with the City of Klamath Falls, PPM manages, operates and fuels the Klamath Cogeneration Plant and markets the plant's output. "The Klamath Cogeneration Plant is the first plant in the Northwest to come online specifically to sell electricity as a merchant plant," said Terry Hudgens, PPM's chief executive officer. "We've had great success selling the plant's clean, affordable energy -- proving that Klamath was built at just the right time and in just the right place."

PPM owns half the plant's output, which it continues to market to wholesale customers throughout the West. PPM also serves as broker for the City of Klamath Falls' share of the output. A large portion of the output has already been sold in long-term contracts to entities across the Pacific Northwest and California.

The Klamath Cogeneration Plant has enjoyed strong support from conservation groups for its efficiency, cogeneration process and for setting the global standard for the most carbon dioxide mitigation ever for a fossil-fueled power plant. It was a model for Oregon legislation that now governs the carbon dioxide emissions of four other fossil-fuel power plants in the state that are now in permitting or under construction.

The plant has already received recognition at both national and state levels winning Oregon Governor Kitzhaber's 2000 Community and Economic Development award and Power Magazine's - Power Plant of the Year, 2001 award.

PPM is also involved as power marketer in other environmentally responsible electric generating plants, including the FPL Energy's Stateline Wind Generating Plant under construction on the Washington-Oregon border near Walla Walla.