Sierra Club says it will appeal a rejection on 500-MW Carlsbad project

On Nov. 6, the California Public Utilities Commission (CPUC) denied the Sierra Club’s application for rehearing of the commission’s May 2015 decision approving a contract for an approximately $2.2 billion, 500-MW gas-fired plant in Carlsbad.

The club noted in a Nov. 9 statement that the commission’s approval of Carlsbad was strongly opposed by consumer and environmental groups, and came after the Administrative Law Judge in the proceeding had proposed to reject Carlsbad because San Diego Gas & Electric (SDG&E) contracted with the gas plant before evaluating clean energy alternatives.

Matt Vespa, Senior Attorney for the Sierra Club’s My Generation campaign, said: “The action by the CPUC to deny rehearing only reaffirms a flawed decision that improperly kept clean energy from competing to meet San Diego’s energy needs. The Sierra Club intends to appeal the decision in the next thirty days.”

Vespa added: “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gas goals to the international community, back at home the CPUC continues to direct billions of dollars toward outdated energy sources and undermine our state’s clean energy future.”

The California Public Utilities Commission (CPUC) on May 21 approved a 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, at the time.

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.

Said the Sierra Club in its June 29 rehearing reguest filed with the commission: “In approving a multi-billion dollar ratepayer investment in the Carlsbad gas plant prior to a competitive assessment of clean energy alternatives, the Commission fell far short of its statutory duty to ensure ‘reasonable rates and to protect the environment.’ As originally proposed, Carlsbad would result in 845,000 tons of CO2 per year. The Commission’s approval of Carlsbad binds the state to a significant new long-term fossil fuel commitment at a time when the state has reaffirmed that ‘climate change poses an ever-growing threat to the well-being, public health, natural resources, economy, and the environment of California’ and set an aggressive target of reducing greenhouse gas pollution to 40 percent below 1990 levels by 2030.”

Said NRG’s subsidiary in a July 14 response: “The Filing Parties allege that the Commission failed to proceed in the manner required by law based on their assertions that the Decision did not follow the need determination in Decision 14-03-004, and improperly relied on the upcoming retirement of the Encina Power Station (‘Encina’) as a factor supporting approval of the power purchase tolling agreement for the Carlsbad Energy Center (‘PPTA’), which the Filing Parties insist is a subject that is outside the scope of this proceeding. The Filing Parties’ arguments are without merit. As explained below, the Decision’s approval of the PPTA is consistent with Decision 14-03-004 and the need determination adopted therein. Decision 14-03-004 authorized San Diego Gas and Electric Company (‘SDG&E’) to procure up to 800 megawatts (‘MW’) of local capacity resources due to the retirement of the San Onofre Nuclear Generating Station (‘SONGS’), and found that procurement needs may become critical as early as 2018. The Decision reasonably interprets Decision 14-03-004 as concluding that the need could arise as early as 2018 upon Encina’s retirement. The record in this proceeding supports the Decision’s findings, and confirms that significant replacement capacity is needed to ensure reliability in 2018 after Encina retires. The Decision also reasonably interprets Decision 14-03-004 as finding that supplies are sufficient only while Encina is still operating.”

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.