Sempra Energy and Carlyle/Riverstone Complete Acquisition of Cleto Creek Power in Texas

San Diego, CA and New York, NY - Sempra Energy Partners, a subsidiary of Sempra Energy (NYSE:SRE), and Carlyle/Riverstone, an energy and power-focused private equity fund, today completed the acquisition of Coleto Creek Power Station, a 632-megawatt (MW) coal-fired power plant previously owned by American Electric Power (AEP) in Goliad County, Texas.

The $430 million purchase and sales agreement, which includes nine other Texas power plants fueled by natural gas, oil and hydroelectric sources, was first announced March 15, 2004. The new partners each will own 50 percent of the joint venture.

The joint-venture partners announced that they have entered into power-purchase agreements, representing more than 90 percent of the output of Coleto Creek Power LP. The partners will finance the acquisition on a non-recourse basis through a consortium of financial institutions that will be led by CitiGroup, JP Morgan Chase and Goldman Sachs.

The partners also announced they have entered into an agreement with the Calhoun County Navigation District to sell one of the inactive power plants involved in the transaction, the 254-MW E. S. Joslin Power Station in Calhoun County, Texas. The Calhoun County Navigation District, a political subdivision of the state of Texas, operates the Port of Port Lavaca/Point Comfort. Terms of the sale were not disclosed.

Coleto Creek Power and the eight other Texas power plants retained by
Sempra Energy Partners and Carlyle/Riverstone will comprise the newly formed “Topaz Power Partners.” Blue topaz is Texas’ official gemstone.

This transaction demonstrates our capability to identify, evaluate and invest in a range of valuable energy-related assets within the framework of a strategic partnership,” said Donald E. Felsinger, president and chief operating officer of Sempra Energy. We are leveraging the strengths of our competitive energy businesses to maximize the value of this acquisition. The power-purchase agreements already in place for Coleto Creek Power ensure that the plant will provide solid returns into the future.”

Sempra Energy Resources, the electric-generation unit of Sempra Energy, will provide asset-management services for the joint venture, including overseeing the operation of the plants. Sempra Energy Solutions, Sempra Energy’s retail marketing unit, has contracted with several commercial and industrial customers for long-term power-sales arrangements representing 122 MW of Coleto Creek Power’s output. Sempra Energy Solutions will market the remaining merchant power from the plants on a day-ahead basis.

"Carlyle/Riverstone is proud to be working in partnership with Sempra Energy in this enterprise," said Michael Hoffman, managing director of Carlyle/Riverstone. "We expect that this first acquisition by Topaz Power will produce significant value on its own, and we look forward to growing this enterprise through additional acquisitions and business-development initiatives in the Texas market."

The transaction is the result of AEP’s auction of the company’s Texas power plants and represents a total generating capacity of 3,813 MW. The purchase consists of six active power plants capable of generating 1,950 MW and four currently inactive power plants capable of producing 1,863 MW.

Built in 1980, Coleto Creek Power is among the top-performing baseload coal-fired power-generating units in Texas. The plant, which burns low-sulfur coal, has a long record of environmental achievements. In 1993, Coleto Creek Power received the U.S. Environmental Protection Agency's Environmental Excellence Award.

In addition to Coleto Creek Power, the other five operating power plants included in the acquisition are: the 697-MW Barney M. Davis natural gas and oil-fueled plant near Corpus Christi; the 6-MW Eagle Pass Hydro Power Station on the Rio Grande River near Eagle Pass; the 182-MW J.L. Bates Power Station, a natural gas- and oil-fueled plant in Hidalgo County; La Palma Power Station, a 255-MW natural gas- and oil-fueled generating facility in San Benito; and Laredo Power Station, a 178-MW natural gas-fueled power plant in Laredo.

The agreement also provided for the acquisition of four currently inactive power plants, including the E.S. Joslin Power Station. Sempra Energy and Carlyle/Riverstone will continue evaluating strategic alternatives for these units going forward.

The 232 AEP employees currently working at the plants now will be employed by the Sempra Energy-Carlyle/Riverstone joint venture.

Sempra Energy Resources owns another Texas power plant, the coal-fired, 305-MW Twin Oaks Power plant, which was acquired from Texas-New Mexico Power Co. in November 2002.

Riverstone Holdings and The Carlyle Group are the co-general partners of the Carlyle/Riverstone Global Energy and Power Fund II. Riverstone, a New York-based energy and power focused private equity firm founded in 2000, has approximately $1.5 billion under management. Riverstone conducts buyout and growth capital investments in the midstream, upstream, power, and oilfield service sectors of the energy industry.

To date, the firm has committed approximately $875 million to 10 investments across each of these four sectors. The Carlyle Group is a global private equity firm with more than $18 billion under management. Carlyle invests in buyouts, venture, real estate, and leveraged finance in North America, Europe, and Asia. Since 1987, the firm has invested $10.8 billion of equity in 317 transactions.

The Carlyle Group employs more than 500 people in 14 countries. Visit www.carlyle.com for additional information.

Sempra Energy Partners, a subsidiary of Sempra Energy, was formed in 2003 to team with financial and energy partners to acquire energy assets such as power plants, pipelines and related energy facilities. Sempra Energy Resources develops and operates power plants and energy infrastructure for the competitive market. Sempra Energy Solutions offers commercial and industrial businesses outsourcing services that help them drive efficiencies in the ever-changing energy environment.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2003 revenues of $7.9 billion. The Sempra Energy companies’ nearly 13,000 employees serve more than 10 million customers in the United States, Europe, Canada, Mexico, South America and Asia.

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