April 30, 2003

Peoples Energy Resources Corp, under the subsidiary name of COB Energy Facility, LLC ("COB"), has submitted an application for a site certificate ("ASC") to build the COB Energy Facility ("project"), a natural gas-fired, combustion turbine, combined-cycle energy facility in Klamath County near Bonanza, Oregon. The Oregon Office of Energy ("Office") has determined that the application is complete and filed it on April 30, 2003. The Office now is ready to begin the substantive review of the application.

The Office gives this notice pursuant to OAR 345-015-0190. Pursuant to ORS 469.320, COB may not construct the energy facility without the Oregon Energy Facility Siting Council ("Council") approving a site certificate.

Within a few weeks, the Office will issue public notice about an information meeting we will hold in the Bonanza area to discuss the contents of the application. We will also advertise the meeting in the Klamath Falls Herald and News. This information meeting is not the same as the public hearing that will occur once the Office issues a draft proposed order on the application. The information meeting is for discussion purposes only.

Description of the Proposed Facility. The proposed project would have a nominal generating capacity of 1150 megawatts ("MW"). The energy facility site would consist of four essentially identical combustion turbine generators, four heat recovery steam generators, and two steam turbine generators. The project would also include a nearby 51.2-acre wastewater evaporation pond and a 21.4-acre water supply reservoir. Other facilities include an administration/control room building, warehouse/maintenance building, parking area, water treatment building, raw water and demineralized water storage tanks, stormwater detention pond, switchyard, septic tank/leach field, gas metering and regulation station, and cooling towers.

Most of the structures at the energy facility site would be shorter than 100 feet. The tallest structures would be four stacks that are about 150 to 200 feet high.

The project would require an average of 5,390 gallons of water per minute and a maximum of 7,590 gallons per minute. The project has applied for a water use permit to use 16.7 cubic feet of water per second for industrial use and 0.2 cubic feet per second for irrigation of 16 acres. The source of water would be three deep wells in the Lost River Basin. The wells would be located about 2.8 miles east of the energy facility site. As part of the ASC process, the Council will make the decision on whether the Department of Water Resources should issue the water use permit for the project.

Natural gas from the existing PG&E GTN system at the Bonanza Compressor Station would serve the project. The project proposes an approximate 4.1-mile-long, 20-inch-diameter natural gas pipeline to connect the proposed energy facility site with one or both of the existing pipelines at the compressor station.

The project would deliver electric power to the regional power grid at the Bonneville Power Administration’s ("BPA") Captain Jack Substation. To do so, COB proposes to build a new 500-kV alternating current transmission line about 7.2 miles long. The transmission line would consist of about 38 transmission towers ranging in height from 100 to 165 feet.

Location of the Proposed Facility. The proposed project site is located about three miles south of the city of Bonanza on the east side of West Langell Valley road in Klamath County, Oregon. Most of the project’s components would be located at this site on 136.7 acres within a 749-acre parcel that COB would own. Access to this proposed site would be from West Langell Valley Road. Additional related or supporting facilities would bring the proposed total acreage to 194.3.

The proposed transmission line would consist of about 38 transmission towers ranging in height from 100 to 165 feet. The proposed route would be within a 154-foot wide corridor. The proposed route first crosses West Langell Valley Road, then crosses over the north end of Bryant Mountain and then runs south along the western flank of Bryant Mountain to the Captain Jack Substation. The project would need to acquire a new right-of-way for the transmission line corridor to the Captain Jack Substation. Negotiation of easements for the right-of-way is a private matter between COB and the property owners and is not part of the Council review. However, the 7.2-mile-long electric transmission line would be a related or supporting facility under the Council’s jurisdiction.

COB proposes to build a 20-inch-diameter natural gas pipeline about 4.1 miles long to connect the proposed energy facility site with one or both of the existing pipelines at the compressor station. The pipeline is proposed to run along the right-of-way of existing Klamath County roads from the compressor station to the proposed energy facility site. The 4.1-mile-long pipeline would be a related or supporting facility under the Council’s jurisdiction.

The project would pump water from the proposed well site through a 20-inch pipe. The water pipeline would run across the southern end of "Dead Indian Hill," through land the applicant will own to a water supply reservoir occupying about 21.4 acres and sized to hold about 64 million gallons. The water supply reservoir would be located just northwest of the energy facility site. A 24-inch pipe would carry water about 2,300 feet from the water supply reservoir to the energy facility. The 2,300-foot-long pipeline and the water storage pond would be related or supporting facilities under the Council’s jurisdiction.

Wastewater from the project would be discharged as a solids stream and a wastewater stream into a 51.2-acre wastewater evaporation pond located just southeast of the energy facility site. Evaporation from the pond would leave a solid sludge that would be removed for disposal in a licensed landfill. A 4-inch pipeline would carry wastewater from the energy facility to the evaporation pond. A 2-inch pipeline would do the same for the solids stream. Each pipeline is about 2,000 feet long. No off-site wastewater discharge is proposed.

The 2,000-foot-long pipelines and the evaporation pond would be related or supporting facilities under the Council’s jurisdiction. The evaporation pond would need a Water Pollution Control Facilities ("WPCF") permit from DEQ. As part of the ASC process, the Council will make the decision on whether DEQ should issue the WPCF for the project.

The project would dispose of sanitary sewage through an on-site septic tank system, for which it would also need a Water Pollution Control Facilities ("WPCF") permit from DEQ. As part of the ASC process, the Council will make the decision on whether DEQ should issue the WPCF for the project.

Removal-Fill Permit. At this time, the project does not appear to require a Removal-Fill permit from the Division of State Lands ("DSL"). If a Removal-Fill permit should be needed, the Council will make the decision on whether DSL should issue the Removal-Fill permit for the project as part of the ASC process.

Land Use. The project proposes to occupy 194.3 acres. Surface components occupying land include:

• An energy facility block of 42.5 acres
• An evaporation pond of 51.2 acres
• A water supply reservoir of 21.8 acres
• A cooling tower drift impact area of 21.2 acres
• An electric transmission line of 57.3 acres
• A water supply well system of 0.3 acres

The project proposes to use about 161 acres zoned for Exclusive Farm Use and about 33 acres zoned for Forestry. The project would require an exception from Goal 3 of the State of Oregon’s statewide planning goals. The Council’s rules for evaluating a Goal 3 exception can be found at ORS 469.504(2).

Land Use Approval. Pursuant to OAR 345-022-0030(2)(b), the Council will review the proposed facility to determine whether it complies with Klamath County’s land use and zoning ordinances as well as with state land-use laws. People who wish to comment on land use issues may direct their comments to the Office during its review of the application. For the Council to consider public comments later in the proceeding, people must make comments during the public hearing on the draft proposed order, as explained below. The Council has appointed the Klamath County Board of Commissioners to a Special Advisory Committee to assist it in its review of land use and other issues.

Anticipated Significant Impacts of Construction and Operation of the Facility. The facility must meet the State of Oregon’s standards for environmental impact.

• The project anticipates permanent impact to wildlife habitat at the proposed energy facility site, evaporation pond, water supply reservoir, water supply well system, and transmission tower locations. It also anticipates permanent impacts to wildlife habitat along proposed access roads for the proposed electric transmission line and in an area next to the power plant that would be affected by cooling tower drift. The energy facility site sits within high-density mule deer winter range. The project proposes mitigating for all permanently disturbed wildlife habitat, as is required under the Council’s rules.

• The project anticipates significant impacts from construction traffic on roads surrounding the proposed energy facility and connecting the site to Klamath Falls only if the following should occur: Damage to state highways or county roads; substantial increase in traffic hazards; normal use of the roads in the construction area is stopped or impaired for considerable periods; or an established level of service standard is not met. The project does not anticipate lowering the established level of service standard with its traffic.

• The project would use up to 7,590 gallons per minute of groundwater under a new water use permit. The primary use of water is for plant cooling. Other uses include ancillary facility needs and landscape irrigation.

• The project would remove from farm use during the lifetime of the facility about 161 acres of land zoned for Exclusive Farm Use. The project would be required to restore the 161 acres to Exclusive Farm Use quality upon retirement of the facility.

• The project anticipates that water vapor plumes from its cooling towers would deposit enough salt on land under its control to significantly affect a total of about 52 acres (including the energy facility site). The project would be required to restore those acres to Exclusive Farm Use quality upon retirement of the facility.

• The project would need to acquire a new right-of-way for the proposed transmission line corridor from the proposed energy facility to the Captain Jack substation.

• The project proposes to meet the Council’s carbon dioxide standard by providing carbon dioxide offset funds to The Climate Trust.

• The project would have to obtain an air quality permit and storm water discharge permit directly from DEQ. These are federally-delegated permits. The Council does not review federally-delegated permits.

Review Schedule for the Application. The Council, with assistance from the Office, will review the application for compliance with applicable state standards.

Copies of the Application. The public may review copies of the "Application for a Site Certificate for the COB Energy Facility" at the public libraries in Klamath Falls, Bonanza and Bly. Their addresses are:

Klamath County Library Bonanza Branch Library Bly Branch Library

126 S. 3^rd St. 31703 Highway 70 366 Elder St.

Klamath Falls, OR 97601 Bonanza, OR 97623 Bly, OR 97622

To Submit Comments or to Request Further Information. The Oregon Office of Energy contact for the project is:

Catherine Van Horn

Energy Facility Analyst

Oregon Office of Energy

625 NE Marion Street

Salem, OR 97301-3737

503.378.4041 or 800.221.8035 (toll-free in Oregon)

fax: 503.373.7806

[email protected]

You can find more information about the Oregon energy facility siting process at www.energy.state.or.us/siting/sitehm.htm.