California PUC to look at delay in approving contract for 262-MW Puente project

The California Public Utilities Commission at its Feb. 11 meeting is due to look at a proposed decision from Administrative Law Judge Regina M. DeAngelis and an alternate proposed decision from Commissioner Michel Peter Florio that both call for a delay in approving a power contract for the gas-fired Puente project until the California Energy Commission has completed its review of the project.

The ALJ’s Proposed Decision (PD) approves, with certain exceptions, the results of a request for offers conducted by Southern California Edison (SCE). The PD denies the NRG Ellwood refurbishment project (and the associated energy storage project), while the alternate proposed decision of Commissioner Florio approves the Ellwood project (including the energy storage contract), on the basis that SCE had demonstrated an additional need outside of a prior commission need determination.

Both the ALJ’s PD and the alternate proposed decision of Commissioner Florio defer review of the NRG Puente Project contract until completion of an environmental review by the California Energy Commission.

Said the PD’s suggested language: “Rather than approve the Puente Project today, we will complete our review of the Puente Project after the environmental review by the California Energy Commission. Additionally, we deny, without prejudice, the Ellwood contract, which was presented in this proceeding for approval although the contract was not part of the need determination in D.13-02-015. With these exceptions, SCE has reasonably complied with the requirement in D.13-02-015 to hold an RFO for the Moorpark sub-area. SCE shall, however, continue to procure via any procurement mechanisms to meet, at least, the minimum procurement amounts adopted in D.13-02-015. This proceeding remains open for further consideration of procurement in the Moorpark sub-area, including the Puente Project.”

D.13-02-015, issued in February 2013, ordered SCE to procure, via a Request for Offers (RFO), a minimum of 215 MW and a maximum of 290 MW of electrical capacity in the Moorpark sub-area of the Big Creek/Ventura local reliability area (Moorpark sub-area) to meet identified long-term local capacity requirements (LCR) by 2021. The commission found this LCR need existed, in large part, due to the expected retirement of the Ormond Beach and Mandalay once-through-cooling (OTC) generation facilities, which are both located in Oxnard, California.

For projects to be considered for this particular RFO, the projects had to meet certain minimum characteristics, including that the projects be incremental, i.e., new capacity. Other minimum requirements included that the projects qualify as Full Capacity Deliverability Status and delivery had to include the entire calendar year 2021. This decision did not specify that SCE procure any specific resources types.

This request for offers process dates back to 2013

SCE launched its LCR RFO in September 2013. In November 2014, SCE filed this application for approval of the results. The application also seeks approval of one project that did not bid into the RFO. The 11 proposed contracts are:

  • a 20-year contract for gas-fired generation (totaling 262 MW of capacity). This contract is a resource adequacy (RA) purchase agreement with NRG Energy Center Oxnard LLC for a new simple cycle peaking facility known as the Puente Power Project (NRG Puente Project).
  • another contract, also for gas-fired generation (totaling 54 MW of capacity), does not count toward SCE’s incremental procurement requirements for the Moorpark sub-area under D.13-02-015. This contract is a 10-year agreement with NRG California South LP for the existing 54-MW Ellwood Generating Station, which NRG California South will refurbish (without any change in size or capacity) to provide a remaining 30-year design life. Ellwood was included as an existing resource in the CAISO study that served as the foundation of D.13-02-015 and, in that study, it was assumed to continue operating in the need assessment. Therefore, the Ellwood contract is not an incremental resource and does not count toward SCE’s procurement requirements for the Moorpark sub-area.
  • SCE also seeks approval of an energy storage contract with NRG California South. This project is located on the site of Ellwood. The NRG Energy Storage contract is a tolling agreement for a 0.5-MW storage facility.
  • The remaining contracts include six contracts for energy efficiency (totaling 6 MW of capacity) and two contracts for renewable distributed generation (totaling 5.66 MW of capacity).

Said the proposed decision about the California Energy Commission review of the Puente project: “In this instance, the CEC’s review may enhance the Commission’s independent determination of critical safety issues and environmental justice matters and also clarify reliability risks posed by locating the new electric infrastructure on the beach in the City of Oxnard. This proceeding remains open for further consideration of this matter.”

NRG’s argument against delay for the Puente project relied on the principle of efficiency. Simply stated, NRG argued that the act of imposing any delay on a final commission decision on the NRG Puente Project would be inefficient. “Efficiency is always a fundamental concern of the Commission,” said the proposed decision. “Efficiency, however, is not always the overriding concern. This is especially so when questions about the safety of the public remain insufficiently addressed. In this instance, allowing the CEC to review the environmental impact of the NRG Puente Project prior to a final decision by the Commission may be the most efficient path to uphold the paramount goal of safety. … Moreover, since the CEC is already reviewing the proposal, the length of the delay will be measured in months, and not affect the parties’ ability to provide reliable power to the Moorpark sub area in advance of 2021.”

SCE is seeking commission approval of a 20-year contract with NRG Energy Center Oxnard for 262 MW of gas-fired generation from a new General Electric 7HA.01 gas-fired combustion turbine (CT) with a contract start date of June 1, 2020, to be located at 393 North Harbor Boulevard, Oxnard, California.

Ellwood Project involves refurbishment of existing plan, addition of energy storage

The Ellwood Project includes the refurbishment of the Ellwood plant, an existing gas-fired generation peaker plant in Goleta, Santa Barbara County. Ellwood is a combustion turbine generating unit built in 1974. Historically, Ellwood has not been a reliable resource. The project is located adjacent to a residential area.

Said the proposed decision from the ALJ: “While the project may have advantages, the project fails to conform to certain fundamental RFO requirements found in D.13-02-015 and has not been properly vetted. No need determination was made in D.13-02-015. The Commission’s consideration of the Ellwood contract in this proceeding also presents procedural concerns. Finally, the contract is of indeterminate value to ratepayers. SCE’s may resubmit the project for Commission approval should the circumstances be appropriate.”

It added about the companion energy storage project: “The ten-year, 0.5 MW energy storage contract between SCE and NRG California South LP at the Ellwood site would, most likely, have been found consistent with D.13-02-015 and approved today. However, as NRG points out, approval of the Ellwood contract is required to facilitate the addition of the new 0.5 MW energy storage facility at the Ellwood site, as the two contracts were linked together by NRG as a mutually exclusive offer. Because the Ellwood contract is not approved today, we necessarily reject the 0.5 MW energy storage project located at the Ellwood site.”

The proposed decision approves the six contracts are for energy efficiency (totaling 6 MW of capacity), and two contracts are for renewable distributed generation (totaling 5.66 MW of capacity).

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.