SUMMARY OF PROJECT

Over the last few years, the entire Southern California region, and in particular Orange County, has been experiencing increasing demands for electrical power, especially during the “peak” hours of the Summer periods of the year. In order to supply these increasing power demands, SDG&E issued in early 2007 a solicitation seeking more peaking generation capabilities in certain key locations in its territory, including Southern Orange County. As a result of this process, Wellhead Power Margarita (“Wellhead Margarita”) was selected by SDG&E to develop and operate the Margarita Energy Center (“the Center”) next to an SDG&E substation adjacent to Ladera Ranch. The Center will be a vital resource for meeting critical peak-period power needs in the area, and will enhance SDG&E’s system reliability. The planned start up date for the Center is June 30, 2008.

FACILITY OVERVIEW

• 46 megawatt, natural-gas-fired gas turbine engine based (the “prime mover”)
• Prime mover will be a sound attenuated aircraft engine adapted for power generation
• The project will produce enough power for approximately 30,000 homes’ peak power needs, e.g. during high-load summer afternoons and evenings
• The plant is unlikely to operate during non-peak hours.
  • A nearly identical plant located at SDG&E’s Miramar substation has historically operated less than 200 hours per year.
  • SDG&E’s ability to dispatch the unit for operation is limited to 2,000 hours per year.
• Operating times will be during peak periods of power usage, typically late morning to late evening, e.g. 11:00 a.m. to 8:00 or 9:00 p.m.

FACILITY PHYSICAL CHARACTERISTICS

• Located on SDG&E Margarita substation property (less than 2 acres), in an area that is currently used for storage.
• Site is naturally screened from nearby homes and traffic by existing earthen berms and vegetation.  Additional visual screening to be added.
• Site structure colors chosen to have structures blend-in with natural surroundings.

MAJOR FACILITY COMPONENTS

• General Electric (“GE”)  LM 6000 gas turbine, which is housed in a sound attenuated enclosure.
• State of the art pollution control via Selective Catalytic Reduction (“SCR”) Unit, utilizing CO oxidation and NOx reduction catalysts.
• Electrical substation to increase generator voltage from 13.8 kV to the SDG&E primary substation voltage of 138 kV.
• Associated ancillary equipment, e.g. control systems, water pumps, water tanks, and emissions control monitors.

PERMITTING

California Environmental Quality Act (“CEQA”).

A comprehensive environmental analysis has been conducted pursuant to the CEQA process. Orange County Planning staff has adopted a Negative Declaration for the Center.  The 30 day public comment period ended on September 4, 2007.

Orange County Site Development Permit:

Wellhead Margarita submitted a Site Development Application for the Center to the County on June 15, 2007.  Following two separate Planning Commission hearings, the Site Development Permit was unanimously approved on November 7, 2007.

DEVELOPER BACKGROUND

• Wellhead Margarita is an affiliate of Wellhead Electric Company (“Wellhead”).  Wellhead and affiliates have developed over 300 megawatts (“MW”) of generation capacity over the last 22 years.  Affiliates of Wellhead currently own and operate six gas-turbine based facilities in California totaling 220 MW of generation.