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Dear Eric Sicre,

Western GeoPower ? Obama?s Economic Stimulus Plan ? How will it benefit us?

We are very pleased to note the  proposed extension of the U.S. Production Tax Credit announced as part of  President Barack Obama?s plan to double alternative energy production over the next three years ? a key component of his over-all economic stimulus plan.

The Production Tax Credit provides direct support to Western GeoPower?s Unit 1 geothermal project at The Geysers Field in California, now at the halfway point of our drilling program that will see a 35 MWe plant in production in 2010.

We particularly welcome the proposal to give developers the option of taking the credit in the form of a grant. This would give us more flexibility when arranging project financing. We also will be looking at the potential benefits to us of the proposed ?bonus depreciation? for new plant and equipment, and the doubling of writeoffs for capital investment.

Based on a production start date in 2010 for Unit 1, the Production Tax Credit would equate to an incentive of  US$21.40 per MWh, escalating at 2% per annum. Assuming we realize our expected generation capacity of an average of 280 GWh per year during the first ten years, this results in a credit of approximately US$60 million, a very substantial benefit.

A three-year extension of PTC eligibility also opens up the possibility that we can apply the credit both to a expansion of the Unit 1?s generation capacity on our existing leases and to other projects currently being assessed in the United States.

Aside from the immediate tax benefits to our company, President Obama?s plan to invest US$150 billion to develop alternative energy resources puts renewables, including geothermal resources, firmly in the spotlight of investor interest both in the U.S. and internationally. In short, a timely matchup with Western GeoPower?s business development strategy.

Sincerely,

Kenneth MacLeod, President and CEO

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