SAN DIEGO, March 30, 2007 – San Diego Gas & Electric (SDG&E) has contracted with LSP South Bay LLC to provide the San Diego region with a reliable source of energy through 2009 from the South Bay Power Plant in Chula Vista, Calif. 

        “This is a short-term energy contract – a kind of ‘insurance policy’ – that will allow SDG&E to maintain a reliable energy supply for its customers in the San Diego region,” said Michael R. Niggli, SDG&E’s chief operating officer.  “This contract helps us bridge the gap until new resources come online.”

        The two-and-a-half-year agreement, which runs through Dec. 31, 2009, will secure all of the capacity from the South Bay Power Plant for the region and gives the utility more flexibility as to when and how the plant’s power is used.  SDG&E recently signed a similar short-term agreement for energy generated by the NRG-owned Cabrillo Power Plant in Carlsbad, Calif.

        “The South Bay Power Plant is an important resource that helps ensure system reliability in San Diego County,” said Jason Hochberg, LS Power’s president.  “This agreement ensures that the local utility will be able to call on South Bay at any time to meet the community’s energy needs through 2009.”
 
        The 704-megawatt South Bay plant has been operating under a contract between LS Power and the California Independent System Operator, which maintains the state’s power grid.  That contract renewed every 12 months.  The responsibility to make sure there are adequate resources to meet local power needs was transferred to California’s load-serving entities, including SDG&E, at the end of 2006.  This new agreement between SDG&E and LS Power will help provide some of the resource adequacy needs of the region.

        This agreement will not change the way the plant is used, which is primarily during peak demand times and for reliability purposes.  It also will have no affect on LS Power’s existing lease with the Port.

        The new agreement is consistent with SDG&E’s Long-Term Resource Plan, which is a blueprint for ensuring the region has a balanced portfolio of demand-reduction and energy-efficiency programs, renewable energy, local power plants and additional transmission lines to meet the future energy needs of the San Diego region.

        Hochberg emphasized that this agreement relates only to the near-term operations of the South Bay Power Plant.

        LS Power has filed an application with the California Energy Commission to build the South Bay Replacement Project.  This new agreement between LSP South Bay and SDG&E is not related to that application.

        “Regardless of the long-term future of the South Bay plant, which is the subject of ongoing dialogue with local officials, this agreement demonstrates that the facility will provide an important source of power to SDG&E for the next three years,” Hochberg said.

        Founded in 1990, the LS Power Group is a fully-integrated power plant owner, developer and manager.  For information on the LS Power Group, please go to www.lspower.com.  On September 15, 2006, the LS Power Group and Dynegy Inc. announced a merger transaction involving certain assets of the LS Power Group and Dynegy, Inc.’s assets.  For more information on the transaction, please go to www.dynegy.com.

        SDG&E is a full-service energy utility that serves 3.4 million consumers through 1.4 million electric meters and more than 830,000 natural gas meters.  Its service area spans 4,100 square miles and includes more than 125 communities from Southern Orange County to the Mexican border.  SDG&E is a regulated subsidiary of Sempra Energy (NYSE:SRE).  Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company.  To learn more, go to www.sdge.com.

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