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Experts Doubtful About Rush to Build Small Power Plants Energy: State wants ’peaker’ units to fill 40% of summer gap. But various factors make that seem unlikely.

By TIM REITERMAN, Times Staff Writer

Gov. Gray Davis has mobilized state government and invited developers to put dozens of small‘peaker‘ power plants online ‘at warp speed‘ to help avert blackouts this summer.

But, as California races against time, industry experts say the logistics and uncertainties of power plant construction make it doubtful the state will have as much peaker electricity as it is seeking: Generating turbines--which resemble giant jet engines--are in tight supply. Design, engineering, construction and testing take several months. And community opposition is sometimes a concern because the plants can be noisy and add to air pollution.

Without knowing how much people will conserve, state officials estimate the summer energy shortage at about 5,000 megawatts--enough to serve 3.7 million homes. They are counting on emergency peaking plants, usually providing 50 to 100 megawatts each, to make up about 40% of that shortfall.

But records and interviews with energy experts, state officials and potential plant developers show that:

* A contracting program the state hopes will bring in about 1,100 megawatts of peaking power has been stalled for weeks. Officials are still negotiating with about 10 developers and are uncertain how much power will be available for summer.

* An effort begun last year to issue plant permits within four months led to approval of only one 50-megawatt plant at San Francisco International Airport. Officials there say the deal is collapsing. Half a dozen other plant applications were withdrawn due to site problems, including pollution.

* The state’s new accelerated 21-day permit approval program is far from meeting Davis’ goal of getting plants capable of producing an additional 1,000 megawatts in operation for the summer. The California Energy Commission approved two projects, and five more are being reviewed, for a total of about 500 megawatts. State officials concede that not all the power will be available the entire summer because developers have until Sept. 30--after summer ends--to get plants online.

During a recent workshop to promote the construction of peaker plants, Roger Johnson of the energy commission said the panel is tracking an additional 900 megawatts worth of plant proposals that developers are expected to file in April.

‘It is possible we can meet the goal,‘ he said, adding that Southern California Edison has 20 requests for new power plant hookups totaling an additional 1,665 megawatts. Can those proposed Southern California plants, most of them designed to run during times of peak electricity demand, be ready for the summer?

‘We don’t think so,‘ said Ronald D. Nunnally, director of federal regulation and contracts in Edison’s transmission and distribution unit. ‘There’s a lot of hurdles. . . . A workshop [like this] would be more useful for next summer. ‘Anything not in the process now has [only] a remote chance of being online this summer,‘ he said in a remark echoed by a number of plant developers. ‘Chances are slim.‘

’People Can’t Seem to Move’

The state reserved a cavernous auditorium at an Ontario hotel March 29 for what was billed as a workshop and ‘energy fair.‘ About 50 potential developers, consultants and sellers of power turbines attended. And many, while praising the state’s efforts to encourage deal-making and streamline permitting, had no deals on the horizon, let alone in the works.

‘People can’t seem to move,‘ said Los Angeles consultant and developer Bob Hoffman, who attended the conference to sell a Japanese turbine that could power a peaker plant. ‘I talked to people with great projects. It doesn’t seem to be congealing.‘ After two weeks on the California market, the turbine was later sold for use in a plant in Nigeria.

To encourage plant development, the state has compressed the permit process. It has offered to quickly contract to purchase power. It has helped prospective developers find smog credits, which allow them to emit air pollutants for a price per ton. And it has enlisted major utilities in quickly hooking up proposed plants to natural gas lines that fuel them and to the grid that carries electricity to users.

‘Nobody has ever moved this rapidly, still being mindful of all environmental standards, to put power online,‘ Davis told The Times’ editorial board Friday. The energy commission has also developed a list of potential peaker plant sites that have a minimum of two acres and proximity to gas and electricity infrastructure.

The commission identified the San Francisco Bay Area, parts of the Central Valley and San Diego as the regions most in need of peaking power plants, but said the Los Angeles region could also benefit. Thirty-two sites with a potential for producing 1,700 to 3,400 megawatts of peaking power passed the initial screening for suitability, according to a Feb. 21 report. They ranged from a soap factory in Sacramento County and a paper mill in Ontario to the former Ft. Ord army base near Monterey and the Pitchess Honor Ranch in Los Angeles County.

The only project approved under the four-month permitting program initiated after outages last summer was El Paso Merchant Energy Co.’s proposed United Golden Gate plant, which would provide about 50 megawatts to San Francisco International Airport. ‘The deal is not dead but it’s near dead,‘ said airport spokesman Ron Wilson. ‘We’re looking for another supplier.‘ Company spokeswoman Kim Wallace said the firm still hopes to make a deal.

The California Independent System Operator contracted with developers of about 29 peaker plants last year, but the state Department of Water Resources, which has been buying power since mid-January, is renegotiating longer pacts. ‘We will try to get as many as we can for this summer,‘ said Vijay Patel of the department. ‘They are all in play.‘

The new contracts, he said, will be for five to 10 years and allow plants to run several thousand hours a year--far more than peaking plants commonly do. The companies, he said, would be free to sell power on the open market after they fulfilled their power sales contracts to California. ‘These will run in peak periods and any time we need to call for power,‘ said energy commission spokesman Rob Schlichting. ‘Maybe we should call them Stage 3 power plants.‘

When The Times contacted owners of about 20 plant sites on the state list, few said they had deals or solid proposals for construction. Many were fielding calls from owners of turbines and potential developers who had seen their names on a state Web site.

‘We’re on the list but don’t belong there,‘ said Dave Rib, manager of a solar plant in Boron. ‘We are the largest solar plant in the world. We’re here in the Mojave Desert. We do not develop plants, and we have no plans to. Maybe [the energy commission] will find a developer.‘

Exploring Several Sites

Several sites are being explored by Calpine, which has 11 turbines and a contract to provide 495 megawatts to the state, starting with 90 in August. The proposed peaker locations are in Northern California. Spokesman Bill Highlander said the company will not divulge more precise locations until a feasibility study is finished.

In Solano County, a peaker has been in planning since last summer at Lambie Industrial Park, named after nearby pastures with lambs. Hal Mitchell, a principal of Sterling Energy, said the plant will produce 147 megawatts and could be running by September. ‘We have a client who wanted to put some assets in the ground,‘ he said.

‘Coincidentally the big crunch came along. [It] would have been built despite the energy crisis. ‘We’ve been getting all kinds of calls, people selling equipment, people trying to buy projects, and flakes,‘ Mitchell added. ‘Some say, ’I got five acres on top of a mountain. How ’bout building me a power plant?’ ‘

Phil Consiglio, vice president of Merit Energy Systems in Burbank, said he is close to contracting with a developer at Ft. Ord, a former military base that now houses Cal State Monterey, among other things. ‘There is an area scheduled for utility usage,‘ he said. ‘We found an area where they are removing contaminated water [from the ground] and cleaning it. It’s not potable, but we can use it for a power plant. ‘It will not be up and running for the summer.‘

Two oil production facilities in Inglewood and Montebello are on the list. Steve Rusch, manager of government affairs for Stocker Resources Inc., said three developers are interested in one of the sites. But he said he is skeptical that such sites can be turned into plants by summer. ‘The biggest issue is land use,‘ he said. ‘ ’Not in my backyard.’ . . . Another thing is that pollution offsets are tough to get. The reins need to be loosened up.‘

A Stocker site in San Luis Obispo County is on a list of more than 100 other potential sites that state officials say require further evaluation. These include a soup factory and a former nuclear power plant.

Some sites were found to have ‘fatal flaws‘ because they were too near habitat of endangered species such as the fairy shrimp. Numerous sites are hydroelectric facilities owned by Pacific Gas & Electric Co. in mountainous areas far from gas lines necessary to fuel them. Anticipated community resistance was listed as a problem with a site in Morro Bay, where Duke Energy is already expanding a full-size power plant.

‘This [listing] is news to me,‘ said Duke spokesman Tom Williams. ‘We can’t even burp in Morro Bay without a permit.‘ Mark Seedaal, Duke’s director of electrical modernization, said it would probably take the company nine months to design, install and get on the grid even a small peaker plant of 50 megawatts. ‘You don’t just drive up on a truck, put it down and drive away,‘ he said. ‘I don’t se how you can do it by the summer of 2001.‘

The Sacramento Municipal Utility District has an existing cogeneration plant at a Procter & Gamble factory and is already building a peaker scheduled to begin operation in May. ‘We’re a little confused as to why we’re on the state list,‘ said spokesman Greg Fishman. So how long did the district’s peaker take to build? ‘It is a seven- or eight-month process to do the actual construction,‘ he said. ‘And . . . getting the parts is often a yearlong process.‘

One site on the state list is in Redding, where the municipal utility district broke ground on a 43-megawatt plant that was two years in the planning and will not be finished much before summer of 2002. ‘The state would like to take some credit, but it is all the city of Redding,‘ said Pat Keener, group manager for energy services.

The first two projects approved by the energy commission under the 21-day program are Wildflower Energy LP peakers totaling 225 megawatts in Palm Springs and San Diego. Project manager John Jones said that they have been in development since last year, that construction started a week ago and that the plants should be running sometime in July. ‘If [other developers] have not started [the permitting] already,‘ he said, ‘it would be a real challenge to be up by the summer.‘

Copyright 2001 Los Angeles Times

-- Swissrose (cellier3@mindspring.com), April 15, 2001