In order to meet its greenhouse gas reduction targets, Southern California Edison has worked out a deal to terminate its contract to take power from the coal-fired facility of ACE Cogeneration Co., which was recently shut and will be dismantled.
A resolution approving that contract buyout is up for approval at the Feb. 26 meeting of the California Public Utilities Commission.
“This resolution approves the Termination Agreement which will amend the Power Purchase Agreement between Southern California Edison (SCE) and ACE Cogeneration Company (ACE), and authorizes SCE to recover in rates the costs of any payments made pursuant to the Termination Agreement,” said a draft version of that resolution. “This resolution also authorizes SCE to count, subject to verification by the Commission’s Energy Division, the 0.287 million metric tons (MMT) carbon dioxide equivalent of greenhouse gas emissions (GHG) reductions resulting from the Termination Agreement toward SCE’s Combined Heat and Power Procurement (CHP) GHG emissions reduction targets pursuant to the Qualifying Facilities/CHP Settlement Agreement approved by the Commission in Decision (D.)10-12-035.”
In December 2010, the commission adopted the Qualifying Facility and Combined Heat and Power Program Settlement Agreement with the issuance of D.10-12-035. The settlement resolves a number of longstanding issues regarding the contractual obligations and procurement options for facilities operating under legacy and qualifying facility contracts. Pursuant to D.10-12-035, the three large electric investor-owned utilities (IOUs_ must procure a minimum of 3,000 MW of CHP and reduce GHG emissions consistent with the California Air Resources Board (CARB) Scoping Plan, currently set at 4.8 million metric tonnes (MMT) by the end of 2020.
ACE is a 108-MW coal-fired topping cycle cogeneration facility located in Trona, Calif., that provides steam to Searles Valley Minerals for industrial processing. In 1985, SCE and ACE executed a contract now due to expire in November 2015. In August 2014, SCE and ACE executed an agreement that terminates the contract 11 months early and requires the permanent shut-down of the cogeneration facility.
“While the Termination Agreement will become effective subject to CPUC approval, ACE ceased operations on December 1, 2014,” the resolution noted. “The parties request final and non-appealable approval of the Termination Agreement by April 15, 2015, in advance of ACE’s permanent dismantling and decommissioning. SCE requests that the CPUC find that the executed agreement will count 0.287 MMT toward the GHG Target.”
The resolution added: “Under the Termination Agreement the existing ACE facility must be dismantled and decommissioned. SCE negotiated with and mutually agreed upon a termination payment for ACE as part of the agreement, which stipulates terms for the successful completion of the shutdown.”