Coal, Executive Insight, Generation

KFX Inc. subsidiary selected as technology partner in DOE program

MENTOR, Ohio, Oct. 31, 2001— KFx Inc.’s majority-owned subsidiary, Pegasus Technologies, Inc., is pleased to announce that they have been selected by Tampa Electric as the Neural Network system provider for the Department of Energy project awarded to its Big Bend Electric Generating Station.

The DOE’s funding will be from its “Power Plant Improvement Initiative”, a congressionally directed effort.

In a statement released by the DOE, Secretary of Energy Spencer Abraham said, “The President has pledged a new effort to work with the power industry to apply our best technology to use our vast coal reserves cleanly and economically. The projects we are announcing today will give us a ‘jump-start’ on the President’s clean coal commitment.”

This project is one of 8 “showcase” projects selected from 24 proposals submitted to the DOE earlier this year. The intent of this project is to test and demonstrate a edge, artificial intelligence based, sootblowing system in conjunction with state-of-the-art controls and instrumentation, to reduce NOx and PM emissions while concurrently optimizing the operation of a utility boiler.

“We are very pleased to be working alongside Tampa Electric and doing applied Research and Development,” said Neel Parikh, Head of Research and Development at Pegasus. “This demonstration project signifies our ongoing efforts to pursue development of edge technologies that help power plants generate low-cost electricity through better plant performance while meeting stringent environmental regulations.”

Darryl Scott, Big Bend General Manager noted, “We are extremely pleased with the DOE’s decision to make this award and look forward to demonstrating the promising capabilities of Neural Network control. Based upon our history with the DOE we are confident that the project objectives can be met in a timely and successful manner.”

This award is the culmination of months of discussions between Pegasus and Tampa Electric, and is further to their award earlier this year at Big Bend, Unit 2.

About Tampa Electric

Tampa Electric is the principal subsidiary of TECO Energy, Inc., a diversified energy-related holding company headquartered in Tampa. Tampa Electric has supplied the Tampa Bay area with electricity since 1899. Its West Central service area covers approximately 2,000 square miles, serving more than 550,000 residential and commercial customers with reliable power and value-added services. In addition to Tampa Electric Company, TECO Energy’s principal businesses include Peoples Gas System, TECO Power Services, TECO Transport, TECO Coal, TECO Coalbed Methane, TECO Propane Ventures and TECO Solutions.

About Pegasus / KFX

Pegasus Technologies, Inc. is the industry leader in neural network based smart applications for the power generation market. The suite of combustion optimization applications from Pegasus reduces emissions and increases efficiency of fossil-fueled electric generating units. The Pegasus Technologies web site address is www.pegasustec.com . Pegasus Technologies is majority-owned by KFx Inc. KFx provides total fuel solutions for the power industry. Its patented K-Fuel® process converts low heating value coal into clean, high-energy fuel. KFx’s web site address is www.kfx.com .