FOR IMMEDIATE RELEASE

Contact:
For California Energy

David L. Sokol - Chairman and Chief Executive Officer     (402) 330-8900
Mark H. Harnett, MacKenzie Partners                       (212) 929-5500

Contact:
For Magma Power

Thomas Davies, Kekst & Co.                                (212) 593-2655
Andrea Bergofin, Kekst & Co.

                    CALIFORNIA ENERGY AND MAGMA POWER REACH
                       MERGER AGREEMENT AT $39 PER SHARE

     Omaha, Nebraska and San Diego, California, December 5, 1994 - California
Energy Company, Inc. (NYSE, PSE, LSE: CE) and Magma Power Company (NASDAQ: MGMA)
today announced that they have entered into a definitive merger agreement which
provides for Magma shareholders to receive a price of $39 net per share in a
combination of $28.50 in cash and $10.50 in market value of California Energy
common stock, or approximately $950 million in aggregate value on a fully
diluted basis.

     Pursuant to the terms of the agreement, California Energy will commence no 
later than Friday, December 9 a cash tender offer for a majority of Magma's 
common stock at $39 per share in cash. The tender offer will remain open for 20 
days, and if over-subscribed, will be pro-rated. As soon as practicable 
thereafter, California Energy will complete the acquisition of all remaining

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shares in a second step merger transaction by issuing for each Magma share a
combination of cash and California Energy common shares totalling $39, or, at
its option, approximately $38.50 per share in cash. If California Energy stock
is to be received in the merger, the number of shares to be issued will be
increased or decreased by up to 13.5% based on the difference between $16.50 and
the average daily closing price of California Energy during the fifteen trading
days ending on the fifth business day prior to the consummation of the merger.

     California Energy's tender offer is subject to valid tender of shares 
representing a majority of the voting power of Magma, funding of financing, and 
other customary closing conditions. In addition, the merger (though not the 
tender) is conditioned, if California Energy shares are to be issued, on 
approval of California Energy's shareholders. Under the agreement, Magma has 
agreed to render Magma's shareholders rights plan inapplicable to the tender 
offer and merger and to waive applicable Nevada anti-takeover statutes. The 
Hart-Scott-Rodino antitrust waiting period has expired with respect to the 
transaction. The parties have also agreed to terminate all litigation between 
them.

     The agreement has been approved by the Boards of Directors of both 
companies. Magma Power's Board has determined, after thoroughly exploring 
alternatives in consultation with its independent financial advisors, that the 
terms of the offer and merger are fair to, and in the best interests of, its 
stockholders and recommends that stockholders tender their Magma shares into 
California Energy's tender offer.

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     Following the merger, the combined companies will have projected annual
revenues in excess of $400 million, its facilities will produce in excess of
545MW of power and will have an additional 530MW of power under construction.
The combined companies will constitute the largest independent geothermal power
company in the world with operations in the U.S., Philippines and Indonesia.

     David L. Sokol, Chairman and Chief Executive Officer of California Energy, 
said: "The combination of our two organizations creates a geothermal company 
with unparalleled technical, geological, developmental and operational skills. 
We fully believe that this merger will accelerate the achievement of our 
strategic objectives and will enhance our international expansion efforts. We 
welcome the family of talented Magma employees onto our team and we anticipate a
smooth transition."

     Paul Pankratz, Chairman of Magma, said: "We believe this transaction 
reflects Magma's inherent strengths and outstanding prospects. The combined 
company will be the largest and most technically advanced global competitor in 
the geothermal energy industry -- well positioned to capitalize on growth 
opportunities worldwide.

     Ralph Boeker, President and Chief Executive Officer of Magma, said: "Magma 
brings excellent people, technology and projects into this combination. We look 
forward to working with California Energy to ensure the success of this great 
combined company."

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     California Energy Company is an international developer, owner and operator
of geothermal and other environmentally responsible power generation facilities.
Its six existing facilities currently produce in excess of 325MW of power with
an additional 300MW under construction.

     Magma Power Company is a leader in the geothermal industry. The company 
currently operates seven geothermal plants in Southern California on geothermal 
leaseholds 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 231MW.
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