4 May 2007 — Calpine Corporation said its Otay Mesa Energy Center LLC (OMEC) unit obtained a $377 million credit facility to finance construction of a 596 MW combined-cycle power plant near San Diego.
Concurrent with this financing, OMEC signed a 10-year tolling agreement with San Diego Gas & Electric for the plant’s full output. Under terms of the deal, SDG&E will have the ability to dispatch power from the Otay Mesa plant to serve its energy customers, and the utility will supply natural gas to fuel the power plant. The agreement also provides SDG&E the option to purchase the plant at the end of the contract term in 2019. If SDG&E does not exercise its option, under certain circumstances, OMEC has the right to require SDG&E to purchase the plant.
The project finance facility for this indirect, stand-alone subsidiary is comprised of a construction loan that will convert to a term loan at commercial operations, expected in May 2009. The term loan will mature in April 2019. The loan facilities, jointly arranged by ING Capital LLC and BayernLB, are non-recourse to Calpine, and therefore neither Calpine nor any of its affiliates is responsible for the debt or any obligations of OMEC.
Calpine Construction Management Company, Inc. will be responsible for overseeing all aspects of construction for the plant, including management of the project’s general contractor, a joint venture between ARB, Inc. and Barton Malow Company, named Otay Mesa Power Partners. Calpine plans to re-commence construction of the plant this month, and will complete start-up, testing and commissioning by May 2009.