Emergency peaker plant permitting project ends in California

Ann de Rouffignac
OGJ Online

HOUSTON, Jan. 7, 2002 – With electricity prices falling and money tight, the last peaking power project pending under an emergency program to get electric generating capacity up and running quickly in California was withdrawn from consideration.

California Gov. Gray Davis devised the program, which exempted certain plants from state environmental permitting rules, to address the state energy shortage during late 2000 and 2001. Pegasus Power Project was a 180 Mw expansion of an existing plant at a prison in San Bernardino County. The application was filed by Delta Energy June 7, 2001, and officially withdrawn Jan. 3.

“The project was withdrawn because of the company’s inability to get financing,” said Chris Davis, spokesman for the California Energy Commission. With this withdrawal, the emergency permitting project is closed, Davis said.

State officials reported 1,591 Mw of peaking plant capacity were withdrawn from consideration by the end of 2001. Two of the projects, a 99 Mw unit in Hanford, Kings County, and a 62 Mw plant at Chula Vista, San Diego County, were approved by the California Energy Commission and then withdrawn by the developers.

The electricity crisis subsided beginning last summer after conservation and the slumping economy sent the state’s demand for electricity tumbling. Imports of hydroelectric power from the Pacific Northwest into California also increased. The drought that restricted power imports from the Northwest has finally eased.

Spot electricity prices have also declined in California to the low $20/Mw-hr range, compared to $100/Mw-hr plus this time last year. Forward electricity prices are forecast to remain low which is affecting the availability of capital for power projects.

Peaking plants are typically simple cycle power plants that can be constructed in a relatively small area, do not require water for cooling, and can be readily connected to the existing transmission and natural gas system. The governor’s program directed the energy commission to process applications if all paperwork was submitted within 21days. The projects approved under the program were exempt from the requirements of the California Environmental Quality Act.

“We licensed 683 Mw of peakers with this program. All of this will be on line by the end of January,” Davis said. “By 2003, we should be in fine shape.”

Davis noted the California Independent System Operator said electricity supplies could be tight in May, if plants performing scheduled maintenance don’t come back on line as planned and a heat wave hits early.

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