This annual report has been prepared to present the status of the Pinon Pine Project, a nominal 107 MWe (gross) coal-fired integrated gasification combined-cycle (IGCC) power plant addition to Sierra Pacific Power Company`s (SPPCo) system. This project will also serve as a demonstration project cost-shared by the U.S. Department of Energy (DOE) and SPPCo under DOE`s Clean Coal Technology (CCT) Program. The goal of the CCT Program is to demonstrate advanced coal utilization technologies that are energy efficient, reliable and able to achieve substantial reductions in emissions as compared with existing coal technologies. The Pinon Pine Project will demonstrate an IGCC system utilizing the Kellogg-Rust-Westinghouse (KRW) fluidized-bed gasification process operating in an air-blown mode with in-bed desulfurization and hot gas clean-up with a western bituminous coal as the design fuel. Testing will also be performed on a high-sulfur eastern coal. The Pinon Pine Project will be constructed and operated at SPPCo`s Tracy Power Station, an existing power generation facility located on a rural 724-acre plot approximately 17 miles east of Reno, NV. This new unit will be designated as Tracy Unit No. 4. SPPCo, the project participant, has contracted with the Foster Wheeler USA Corporation (FW USA) for the overall project management, engineering, procurement and construction of the project. FW USA in turn has subcontracted with The M.W. Kellogg Company (MWK) for the engineering and procurement of key components for the Gasifier Island.