Calpine affiliate in dispute with Chevron over cogen steam sales

Pasadena Cogeneration LP requested on Dec. 9 that the Federal Energy Regulatory Commission grant Pasadena’s 787 MW topping-cycle cogeneration facility located in Harris County, Texas, a temporary waiver of a 5% operating standard and an efficiency standard for the 2014 and 2015 calendar years.

Pasadena is currently attempting to work with its steam host, Chevron Phillips Chemical Co. LP, to resolve a dispute regarding Chevron’s contractual obligations to purchase steam produced by the facility. As a result of this dispute and reduced steam purchases by Chevron, the facility is unable to satisfy the Operating and Efficiency Standards in the 2014 calendar year and, depending on when the dispute is resolved, potentially in the 2015 calendar year.

This is the first instance in which Pasadena has sought waiver of the Operating and Efficiency Standards, the need for the requested waiver results from factors beyond Pasadena’s control, the requested waiver is limited in duration, and Pasadena has taken concrete steps to address its dispute with Chevron in order to permit the facility to comply with the Operating and Efficiency Standards in the 2016 calendar year, the company noted.

The facility is a qualifying cogeneration facility (QF) under the Public Utility Regulatory Policies Act of 1978 that supplies electricity to Chevron and through the Electric Reliability Council of Texas. Steam from the facility is sold to Chevron for use at its Houston Chemical Complex to produce polyethylene, polypropylene and K-Resin pellets that are used in the manufacturing of various consumer products.

Earlier this year, Chevron reduced its purchases of steam from the facility, based on its position that it is not obligated under its contract to purchase steam in an amount equal to at least 5% of the total energy output of the facility. Pasadena said it is currently engaged in discussions with Chevron to attempt to resolve this dispute, and to the extent that such discussions are unsuccessful, will proceed with dispute resolution procedures under the contract.

A company contact is: Sarah G. Novosel, Senior Vice President, Government Affairs, and Managing Counsel, Calpine Corp., 875 15th Street NW, Suite 700, Washington, DC 20005, (202) 777-7623, snovosel@calpine.com

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.