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Public Utilities Commission thwarts development of cheap green energy from local sources

UT story on geothermal

Carlsbad plant aces out renewable option

Imperial irrigation officials offered geothermal, say it was turned away

By Jeff McDonald3:22 p.m.May 20, 2015

Last month, California Public Utilities Commission President Michael Picker overruled a decision from one of his agency's judges and said a new gas-fired power plant should be constructed on the beach in Carlsbad.

Picker's decision was announced three weeks after one of his aides met privately with NRG Energy, the New Jersey firm behind the $2.6 billion project.

In announcing his decision, Picker said the plant is needed to replace the Encina Power Station that is scheduled to be removed from service as soon as 2018 and to make up for the loss of the San Onofre Nuclear Generating Station, which closed prematurely in 2012 after a radiation leak.

While the greenhouse gas-emitting Carlsbad Energy Center is scheduled to be reconsidered at a commission hearing on Thursday, years-long efforts to promote development of geothermal power in Imperial County have not received as much support from state policymakers.

The Imperial Irrigation District board last week voted unanimously to hire lawyers to pursue civil action against the utilities commission and the California Independent System Operator, the nonprofit manager of most power transmission.

"If they had a level playing field, we could build out 1,400 megawatts and then some of the untapped, known geothermal resources in and around the Salton Sea," district General Manager Kevin Kelley said.

The offer of renewable energy would face transmission issues, as far as it is from urban centers. But the volume is not insignificant. By comparison, the Carlsbad Energy Center would generate up to 600 megawatts, and the San Onofre plant was capable of producing 2,200 megawatts.

According to the irrigation district, a public agency that provides water and power to more than 150,000 homes and businesses in the southeast corner of California, the state grid operators and utility regulators have made it nearly impossible to develop more eco-friendly geothermal resources.

Four years ago, Commissioner Mark Ferron ordered San Diego Gas & Electric, Southern California Edison and Pacific Gas & Electric to plan for importing up to 1,400 megawatts of renewable power offered by the Imperial Irrigation District.

But it was not clear the requirement would stick, and developers were reluctant to invest in geothermal power from Imperial County, the district said.

Former commission President Michael Peevey revised Ferron's 2011 ruling late last year, removing the requirement for Imperial Irrigation renewable energy, weeks before he resigned under the cloud of two public-corruption probes regarding backchannel dealings with power companies.

"I wouldn't have any compunction at all at coming to a resolution of this issue outside of court," Kelley said. "We've been trying to do that, but there comes a point, at least for a public power provider like IID, where you've got to stick up for yourself. If we just leave it up to the bureaucracy, IID is going to be marginalized."

Commission spokeswoman Terrie Prosper said the order from Ferron in 2011 was designed to be temporary, while the California Independent System Operator came up with a better way for private utilities to estimate how much of each kind of power they can import.

"The 2011 decision was intended as an interim fix while the CAISO established more accurate numbers," she said. "These are important numbers to get correct."

SDG&E, which has been pushing for approval of the Carlsbad Energy Center proposal, said one of the main reasons the company built the $2 billion Sunrise Powerlink transmission line was to deliver renewable power from Imperial County.

Senior Vice President James Avery said SDG&E has always assumed in its procurement plans that it could import renewable power from Imperial County, but most of that is generated by wind and solar - not costlier geothermal.

"More than half of our renewable resources are from Imperial County," said Avery, who is in charge of the utility's power supply. "A lot of the geothermal did not make it through the CPUC process because they were not cost effective. The two that did, the developers walked away."

Geothermal power is the product of naturally occurring heat below the earth's surface. In some places, steam escaping from below ground can be directed to turbines to generate electricity.

The Geysers in Sonoma County is the largest geothermal field on the planet. Its combined plants can generate up to 1,500 megawatts of power.

According to the U.S. Department of Energy, Imperial County is home to the Salton Sea Known Geothermal Resource Area, an underground repository where vast reserves of extremely hot water have been identified and mapped.

Since 1990, the resource area has developed 10 separate geothermal power plants that produce a combined 327 megawatts of electricity. One megawatt can generally serve hundreds of homes and businesses.

Imperial officials want to expand geothermal capacity in and around the Salton Sea because the development may offset the impact when source water for the lake is diverted to San Diego by order of the Metropolitan Water District, scheduled to start in two years. If some of the seabed is covered by development instead of sitting fallow, the impact on air quality would be reduced.

But policymakers do not see the geothermal option as an alternative to the Carlsbad plant.

At a conference on Tuesday organized by the utilities commission to discuss pros and cons of the Carlsbad Energy Center project, Keith Casey of the California System Operator said the gas-fired plant is critical to ensuring a reliable and locally generated power supply.

"We don't know of any other resource besides Carlsbad that can be in place by 2018 that can provide the operational need," he told commissioners. "We're talking about public safety ... the vulnerabilities in San Diego are real."

Environmental groups said the utilities and grid managers have exaggerated the need for new gas-fueled power plants.

Robert Sarvey of Californians for Renewable Energy said the California needs forecast has declined while state grid operators keep raising the reserve margin that power companies and utilities rely on to develop and buy electricity.

"Operating reserve is the highest it's been in the last 10 years," Sarvey said. "Even with the retirement of San Onofre the reliability issues are being overblown here."

Bill Powers, an energy consultant and director of the Protect our Communities Foundation, noted that 13 new megawatts of solar came online in March alone. In another few years, he said, there will be more additional solar power being created than the Carlsbad project would generate.

"This was a de facto done deal," he told commissioners.

NRG, the company that would construct the Carlsbad Energy Center, disclosed a private meeting its executives had with in March in San Francisco with Nicholas Chaset, the energy adviser to commission President Picker. At the meeting, the company proposed changes to the plan that other interested parties were not privy to.

Three weeks after the meeting, Picker issued his decision overruling the administrative law judge who said the Carlsbad project was not needed.

Commission critics point to the private meeting as indicating that regulators favor utilities over ratepayers and environmental activists. The investigations being conducted by the U.S. Attorney and California Department of Justice are focused on such behind-the-scenes communications.

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