California PUC approves contract for NRG Energy’s 500-MW Carlsbad project

The California Public Utilities Commission (CPUC) on May 21 approved the San Diego Gas & Electric (SDG&E) Power Purchase and Tolling Agreement for NRG Energy‘s (NYSE: NRG) Carlsbad Energy Center.

The 500-MW, five-unit natural gas peaking plant would help ensure reliability in southern California following the closure of the San Onofre Nuclear Generating Station in 2013 and the impending retirement of the Encina Generating Station due to California’s Once-Through-Cooling ban, NRG noted in a May 21 statement. The plant has originally been intended for six units and 600 MW, but that was slimmed down during recent commission deliberations.

“We appreciate the CPUC’s vote of confidence that the Carlsbad Energy Center is the best approach to have the appropriate, flexible capacity online by 2017 to enable California to reach its greenhouse gas reduction goals through building additional renewable generation while preserving the reliability of the grid,” said John Chillemi, president of NRG Energy’s West region. “We appreciate the CAISO’s recognition of the project’s contribution to the grid and SDG&E’s continued support of the project and the benefits it will bring to all of southern California. And we appreciate the City of Carlsbad’s focus on the environmental benefits of the project to build a smaller, more efficient plant that complies with the State’s once-through-cooling policies, and enables the demolition of Encina and development of the underlying coastline property.”

The Carlsbad Energy Center is expected to come online in conjunction with the retirement of the Encina station at the end of 2017. Once the new units are online, NRG expects to begin the process of demolishing the retired Encina plant.

The Carlsbad Energy Center is being developed by NRG Energy and is part of the Right of First Offer Agreement between NRG Energy and ‘yieldco’ affiliate NRG Yield.

The Sierra Club said in a May 21 statement that the CPUC supported President Michael Picker’s proposal in a 4-to-1 vote to partially replace the shuttered San Onofre Nuclear Generating Station (SONGS) with this 500-MW gas plant. This came despite the fact that a CPUC Administrative Judge determined that clean energy could potentially make up the needed power, the club noted.   

Matt Vespa, with the Sierra Club’s My Generation Campaign, said: “This decision is just more of the same from the CPUC. What they did today will lock San Diego into paying for a multi-billion dollar gas plant, a proposal that was drafted behind closed doors. By allowing this gas plant to be built, we are stifling San Diego’s clean energy potential, job growth, and ambitious efforts to reduce pollution that exacerbates health issues and climate change. With Governor [Jerry] Brown touting California’s ambitious new greenhouse gas goals to the international community, back at home the CPUC continues to direct billions of dollars toward outdated energy sources and undermine our state’s clean energy future.”

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.