GE's H System uses less fuel and produces fewer greenhouse gases and other emissions compared with other large gas turbine combined-cycle systems.

A spokesman for GE said the companies were not prepared to disclose the estimated cost or site of the proposed project at this time. The companies said they expect the new plant to enter service in the spring of 2008.

GE will build the gas turbines for the H System at its facility in Greenville, South Carolina. Japanese electronics firm Toshiba Corp. will manufacture the steam turbines.

A combined-cycle power plant based on GE's earlier-model F turbines costs about $500,000 per megawatt, according to industry sources.

Calpine and GE also announced a deal last week in which Calpine agreed to enter into a $400 million, 25-year sale/leaseback transaction for the 560 MW Fox Energy Center under construction in Kaukauna, Wisconsin.

In the latest deal, GE will purchase the project development rights from Calpine and will finance, own and operate the facility. Calpine's Energy Services group in Houston will market electricity from the facility under a long-term marketing arrangement.

Calpine will have the option to purchase the plant, following an extended period of GE ownership.

Combined-cycle systems use exhaust heat from a gas turbine to generate steam used to power a steam turbine, producing additional power without an increase in fuel consumption, saving up to an estimated $8 million a year on fuel costs.

GE's H System can reach 60 percent thermal efficiency. Today's most efficient combined-cycle systems operate in the 57-58 percent efficiency range.

GE built the first H System plant at Baglan Bay in Wales in September 2003.

Calpine controls more than 26,000 MW of capacity through interests in power plants, mostly gas-fired, in the United States, Canada and the United Kingdom.