Covanta Energy to Provide California With 500 Megawatts of New Power

Business Wire, May 16, 2001

Business Editors, Energy Writers

FAIRFIELD, N.J.--(BUSINESS WIRE)--May 16, 2001

California Energy Commission Grants Approval to Three Mountain

Power Facility

Covanta Energy Corporation (NYSE: COV) announced that the California Energy Commission (CEC) today unanimously approved the Company's "Application for Certification" for its proposed 500-megawatt Three Mountain Power project. The decision, which was announced at a CEC business meeting in Sacramento, California, grants Covanta a license to construct and operate the natural gas-fired, combined cycle facility to be located in Burney, approximately 45 miles northeast of Redding, California. Project construction is expected to begin in the fall of 2001, with commercial operations expected to commence in late 2003 or early 2004.

"Three Mountain Power will be a vital addition to California's energy supply, adding 500 megawatts of environmentally friendly, dependable power to the grid," said Scott Mackin, President and Chief Executive Officer of Covanta Energy. "Given the urgent need for power, we're pleased that CEC has approved this project. With its state-of-the-art technology, Three Mountain Power will be among the cleanest and most efficient power plants of its kind in the nation, if not the world."

The Three Mountain Power project will also bring significant economic benefits to the Burney region. An average of 200 construction workers will build the project over two years, with an estimated construction payroll of $25 million. Three Mountain Power will also create between 20 and 25 new permanent jobs, with an annual payroll of over $1 million. To allow local residents to train and potentially compete for these jobs, Three Mountain Power is sponsoring Lassen Community College's power plant operator training class in the community. Once operational, the facility is expected to pay $2.5 million annually in property taxes.

Covanta Energy Corporation is an internationally recognized designer, developer, owner and operator of power generation projects and provider of related infrastructure services. The Company's independent power business develops, structures, owns, operates and maintains projects that generate power for sale to utilities and industrial users worldwide. Its waste-to-energy facilities convert municipal solid waste into energy for numerous communities, predominantly in the United States. The Company also offers single-source design/build/operate capabilities for water and wastewater treatment infrastructures. Additional information about Covanta can be obtained via the Internet at www.covantaenergy.com, or through the Company's automated information system at 866-COVANTA (268-2682).