[LETTERHEAD OF MAGMA POWER COMPANY]


NEWS RELEASE
FOR IMMEDIATE RELEASE:                                 CONTACT: Thomas Davies
                                                                Andrea Bergofin
                                                                Kekst & Company 
                                                                (212) 593-2655
                                                                (619) 622-7800
 

                  MAGMA BOARD REJECTS CALIFORNIA ENERGY OFFER/
                     AUTHORIZES EXPLORATION OF ALTERNATIVES
 
  San Diego, CA October 31, 1994 -- Magma Power Company's (Nasdaq NNM: MGMA)
board of directors today announced it has unanimously determined that
California Energy Company's revised unsolicitated tender offer to purchase
approximately 51 percent of Magma Power's outstanding common stock is not in
the best interests of Magma stockholders. Accordingly, Magma's board today
recommended that Magma stockholders reject the revised offer and not tender
their shares to California Energy.
 
  In rejecting the revised offer, Magma's board considered a variety of
factors, including the revised offer's conditional nature, the terms of
California Energy's financing, and the opinion of its independent financial
advisor, Goldman, Sachs & Co., that the consideration offered in the revised
offer was inadequate.
 
  Magma said that its board has authorized Magma management and its financial
advisor to explore all available alternatives to further the best interests of
Magma stockholders, including remaining independent, conducting discussions
with interested parties, including California Energy, concerning possible
business combinations, strategic partnerships or equity investments,
recapitalizing or restructuring the company and similar transactions.
 
  Magma will file a formal response with the Securities and Exchange Commission
today and mail the response and a letter from the company to its stockholders.
 
  Magma Power Company is a leader in the geothermal industry. The company
currently operates seven geothermal power plants in Southern California on
geothermal leaseholds and fee interests held by the company, and holds
additional geothermal leasehold and fee interests in other parts of California
and Nevada. Magma is also currently constructing a power plant in the
Philippines with a total capacity of 231 MW.