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Pio Pico plan revisited following San Onofre shutdown

A rendering of the proposed Pio Pico plant in Otay Mesa, which as a "peaker" plant, San Diego Gas & Electric says would provide the region with energy and grid stability, especially following the shutdown of the San Onofre Nuclear Generating Station. Image courtesy of Apex Power Group

It didn’t take long following the June 7 announcement of the San Onofre Nuclear Generating Station’s permanent closure for plans to be revived on a recently denied power plant proposal.

In March, the California Public Utilities Commission denied the application by San Diego Gas & Electric to enter into a power purchase agreement with Pio Pico Energy Center LLC, a proposed project of Apex Power Group LLC, citing that the plant was scheduled to come online years earlier than when the region would need its roughly 300 megawatts of power. But the needs assessment CPUC based that decision on was performed prior to San Onofre’s shuttering.

On June 21, SDG&E filed another application with the CPUC to enter into an amended power purchase tolling agreement with the proposed energy center, which Apex hopes will come online as soon as fall 2015 in eastern Otay Mesa, next to the existing Otay Mesa Generating Project.

SDG&E spokesperson Jennifer Ramp said in August that Pio Pico -- a natural gas-fired “peaker” plant that would be activated at times when the region’s demand is at a peak -- would provide the region with “much needed resource adequacy.”

“At the time the original application was filed in 2011 for this peaker contract, it was assumed SONGS was fully operational,” Ramp said. “Without SONGS, the need for new resources only increases the need for local generation and other potential upgrades.”

SDG&E already had plans to file an amended application with CPUC before the announced closing of SONGS, since the CPUC stipulated in its decision that the utility is authorized to meet a local capacity requirement of 298 megawatts -- by either issuing a new request for offers or by filing a renewed and amended application using either the Pio Pico Energy Center or the Quail Brush Energy Project -- a second project denied a power purchase agreement by CPUC on the same day. The renewed application would have to be amended, CPUC said, to correspond with the identified need.

“SDG&E would have re-filed the Pio Pico application regardless of the status of SONGS,” Ramp said. “The application addresses the CPUC's concerns on timing and we expect it to be approved.”

The new application has a revised Pio Pico power purchase and tolling agreement start date of June 1, 2017, instead of the May 27, 2014, start date previously sought. The CPUC has not yet made a decision on the renewed application.

According to Charlotte TerKeurst, chief of staff to CPUC Commissioner Mark Ferron, the Commission does not typically provide comment on pending matters.

But in light of the SONGS shutdown, SDG&E is bullish on a different result this time around, since it contends Pio Pico will not only help meet local capacity needs, but also help maintain grid reliability. Its system of transmission lines, capacitors, synchronous condensers and static VAR compensators, SDG&E said, could fill the SONGS void.

The Environmental Health Coalition, which lobbied to block CPUC approval of the plant’s purchase agreement in its first application go-around, is working again to keep it from being built, citing multiple concerns that include its estimated $1.6 billion cost to ratepayers over the life of SDG&E’s purchase contract with the facility.

Ramp said contract confidentiality prevents SDG&E from identifying other specifics in the terms of its proposed agreement with the project developer.

“It’s extraordinarily expensive,” Nicole Capretz, associate director of Environmental Health Coalition, said, adding that the cost is the second general reason the group opposes the project.

The first reason, she said, is the planning to bring it online before 2018, the year in which CPUC said its energy may be needed when it made its decision in March.

“They’re trying to accelerate the construction of this $1.6 billion power plant,” Capretz said. “It’s multi-layered, what our problems are with this proposal,” she continued, adding that the coalition believes its benefits can be achieved instead through further distributed generation of electricity -- such as localized solar power -- with fewer greenhouse gas emissions.

If the CPUC goes against SDG&E’s expectation for an approval, Ramp said, the utility will re-assess the situation at that time.

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