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HomeMy WebLinkAbout1989-12-12; City Council; 10416; PROPOSED SAN DIEGO GAS & ELECTRIC COMPANY'S COMBINED-CYCLE POWER PLANT AT ENCINAc6, /- c PROPOSED SAN DIEGO GAS & ELECTRIC COMPANY'S a, &I *ii wVI w cdcd 0 Receive staff report and San Diego Gas & Electric presentation. Direct staff to take appropriate action. 2 .5 ELs wa, s: ITEM EXPLANATION: acd ou The San Diego Gas & Electric Company has informed City staff of its plan to a, Llu submit a Notice of Intention (N.O.I.) to the California Energy Commission on cd rl *ii December 15, 1989, for consideration. SDG&E proposes a two-unit combined- as 3 cycle power plant to be built at one of five sites, including Encina. Each urn Q) unit would produce approximately 230 megawatts with a combined output of 460 VI a, .rl megawatts for the proposed plant. acd $4d This proposed project raises a number of concerns and questions about 'a la potential impacts to the community of Carlsbad and surrounding environs. j $5 These concerns will require extensive study and analysis by the City to I .- properly assess the proposal. If Council would like staff can explore ' I fiw 0 .d alternative approaches to addressing this issue before the California Energy I ;VIVI .r( Commission. Given that construction of this facility in Carlsbad would have i -4 VIU u environmental and land use impact, Council may also want staff to address 4E these areas and present alternatives for both to the Council. FISCAL IMPACT: None at this time pending City Council action. $4 uu h sz IOE I u .rl ha +born / M-(=t la, ' G-u 1 cdrl I Llrl 04 I w .rl ) .rl VI Id VI 1 Icd WG 1 *s a, IcdO IU a 4 2. Facts on Combined-Cycle Project. '53 ;2 2 /--- 1. Memo to Mayor & City Council members from the City Manager dated 11-2-89. 4a,M -IC -la,& +>* ! 2Lla.I 3aJo 3s u I n 0 \I \I . 4 .. . 2 4 2 5 a 2 0 2 3 00 LAlllUl I I e 0 November 2, 1989 TO: MAYOR CITY COUNCIL MEMBERS FROM: City Manager SDG&E COMBINED-CYCLE PROJECT On November 1, 1989 I met with Art Bishop and Gleason Verduzco, SDG&E Combined-Cycle Project Manager. Attached is a copy of an information sheet provided by SDG&E regarding this project and an explanation of their proposal for five different sites for a proposed two unit combined-cycle plant. Each unit would generate approximately 230 megawatts of energy, equaling a total plant capacity of 460 megawatts. of the existing Encina plant produce approximately 100 megawatts each, for a combined total of 300 megawatts. each for over 900 megawatts of power for the plant. Mr. Bishop and Mr. Verduzco indicated that SDG&E will submit an application called a "Notice of Intention" (N.O.I.) to the California Energy Commission by November 30, 1989. The Energy Commission's primary responsibility will be to investigate if, in fact, the plant is needed by SDG&E and is the cheapest power available. cycle project meets their criteria they will narrow the five sites being submitted to possibly two or three best sites. review process will seek public input by holding workshops and hearings at the locations of each site. Considering the submittal time of the N.O.I., the hearing in Carlsbad will probably take place during April, May or June of 1990. For these hearings and meetings of the California Energy Commission, the City has the right to become an intervenor, giving the City the right to question any witness appearing before the Energy Commission or a committee thereof upon our request. The Energy Commission will then make findings either narrowing the site selection to two or three sites, or reject all proposed sites. SDG&E will then submit if appropriate an application to the governing body where their site specific selection is located and proceed through local processes, including environmental review. Upon completion of this local process, SDG&E will again apply to the California Energy Commission for certification to build and operate the site specific plant and proceed through the same process as the N.O.I. application. While this may seem complex, it is important that we all receive an understanding of the process as early as possible so we can best input Carlsbad's interests if the Encina site is in fact selected. If the Encina site is selected, we can expect the following general proposal. The project will need five to six acres of land and will have an approximately 150' high emission stack (existing stack is 400'). The building housing the two units will be smaller than the existing buildings at Encina. The location currently proposed for the two units is the four tanks west of the railroad and immediately south of Agua Hedionda Lagoon. These tanks will be removed and the structure placed on the same site. As a comparison, the first three older units The last two units produce 290-315 megawatts If the Energy Commission determines the proposed combined- The Energy Commission N.O.I. e 0 Mayor City Council Members November 2, 1989 Page 2 Additionally? we have found that the California Energy Commission has the authority to preempt all local rules and ordinances for the siting of power plants. As a final note, City staff is currently reviewing the general area of Cannon and 1-5 including the Encina plant and other lands as to their land use designations. I will provide additional information as it becomes available. Should you wish to discuss this issue, please contact me. -3 x. w7 RAY PATCHETT mhs Attachment c: City Attorney Pl anni ng Director Municipal Projects Manager Research Manager Tbe pojectcamb~ two sepatatc ypes of power plants. ne first type is caned a gas turbine (sim;l;a Eo an aimaA jct engine - bat aquipp3 with extensive mise and emission cunb.01~). The Tbr; turbine’s exhaust gases are channeled into a ”heat reoovery steam generator,” and the resulting stem drivps a steam turbine. This heat recovery steam genemtur and steam turbine system is the --- ~~ CombinedGycle Frojecf Detaik - (has& Site 459 mw -xdandsirc 448 mw - WmbetQfUnfts To be &remined (2 units fot planning purposes) - commerclp! Operatfan &!e PW5-IM Lkelldng sChedu18 Nov. 1989 - Dec, I992 CotW~ctlon Schedule costoffotaf Ptant (pr-spent $, w/o AFDC) - coastal sir -rnIandsite May 1993 - Jtme 1995 $388 milIion (1st yr. est tax payment, $4.3 million) $432 milIim (1st yi. est. tax payment, $4-7 million) Opemthg Petsonnet CmTmt oiygas pht) (ass- samt NoJmw as 75 TO?& 1 --w, 8-stlmE; 3-CXI- - ghcefs; 3 - cIc&al& technical; 12 - confrof opxaWmistant coa~~ opentors; 12 - aux2iary eqginedw helpess; 18 - mech8nics, electricians & dchnicians; 16 - mainmce helpers, CtEI Avemge Y&y payroll: $2,9 million C0nb;tN~Qn PWScMl3d 250 * CWhg Water Use -coastal Site ~~~su~~~coolingeowers) Nont (cmcet)nough seawater oooring) capacity factor) wa&x~kasimmethod) -fnrnndSb ~~~~ (3sm -fws, OT S.lgaLl~mrw @ 80% power plant m Water RqUked Tok- ' (deptmaas QI) gas turbine type and - Tax Benefit Details Coastal t~ctjllti~n 4 sDG~'spPoposedCombinedCycleProjectwwldprovide~~1y $4.3 rnillionintaxhefitsduring irs fitst ycat of 0Per;iltian if built at a wastat Xocation. Theuad v&nm'' taxes genemted by the new facility would be spread among all of the cwnties in which SDG&E has operating ppertks, nte major hefit, of came, would be to the taxing agencies of the county m which the plant is Sited. This spreading of be4lefits is control3ed bugh an altocation fonnuIa detednd by the State Board of Equaliaaticfft Ercly school district, wnry civ, every devdapmcmt qmcy would ~ee an itlcIpase to its tax nvenuts due to the plant's con~tructim. Erd UII ~turent estimates and akxation formulas, the &X benefits of the C0dine.d qcle Project can be bken down as follows; Cwnty Genetat ~~~~.~.-.--."..~~..".~-....~~..-..*~.."..~..."..$~.3 rnfl'llon ClfjeS.W*HhY.U..-HII..."~**"* ................................... .$4oo,ow3 fducafitm *c..~*.~""*~.r.**.u............**...9'..**.......*.*."~. .... U*-..u.$2 mlmn R~~~~~~tw-".~~..~.=w** .................................. w".".*,.$2m,m WaW District ..UI..W...*UHH.......... ......................... .......w...m.$lOO1OOO,W - fibfofd .CIII..W.O~~LH*..~~~~b~~~~~~~~~~4b~~..O*~~~b.9~~W~U~~~~~.N*~~~Ou~~~W~ (0th~ Coutlti~] .................. Y**-~~*=~**-.".**.,=...e.*oo.-..b*~...=~,~ TO ~.-.I.-tl.-.~.w ................... ".=...b.*.=woow."-..--.*n**n*=n-~ c p - Figtves bed on Sm Diegu County e;ccltnpke) Tax Benefit Details tntand Location flXiBiE's propxed combined Cycle Project wodd provide nearly $4.7 miuiOn in tar; benefits tkhg h fmi yeaf of opcsatiOn if built at an inland lacatim. Tbe "ad vdcmm"taxts genmated by the new hcifity wdd be spread among all of the counties in which sDG&E has operating pqwies. The major benefit, of come, wm1d be to the taxing agencies ofthe mty in which the plant is sited This spretading of benefits & controUd -ugh an &cation fornula determined by the State Board of Equalization. Every sehd district, every ci~~ every redevebpmertt agency would see an in- to its tax revenues due to the plant's construction. Based m current estimates and alkeatim formulas, the tax benefits of the Combined Cycle Project can k ITrGbl down a$ fouows: Corutv &nt?d Fu~.~~..~~~~~~~~~~~~~..~.~~~~~.~,.~~..~~~~ $9 mflliorr cws UCCII-.~.h~.-+..o".~=.~*.-~n-..~.-o~..~*."..~*."=*, .... ..*k..=* @wm ~fO talH..".. "...**,"=*-=."*4*.-.~" ........................................ $3.7 m E~#fjOn .-.rw. n==e~w".-.=-.-=.~.=..-4o.....,e....~,.....,4.~..~, ... $f04 m#/kN? -& DIStrjCfS ..... n,4C....,.w.HI-.=n.-......9=.-~*..H.,b..."*,....e.4&.... $m#mo R~v~~p~~t .-.. "~*....",9",.."~-.~~,&UO.~.~*.~.,,....O*O,...,b..H.O $m#mo (otner CO~n~e$) .U..,...HU-b.m~.Hu+. .... UI...L.....H..II...14.".... $1 mijikm - s&zmm!Q TO~-LI.U.; ,,*.. ~~~OU.~~*.~~~~~~."..~.~~~.-.C.~.~O~H..H.~H..U=O~.~=~~. p - Fig- based on Riverside County srcmrpfe) TilTGI P i76 bMM=QCk Pw d ekmmt of the proposed Chbinea-Cycleproject The steam turbine spins asxdgemmor, which makes additional elccttici~~ Tht pjezt will have a fuel efficiency of 42 percent, corn& to typical efficiencies of 30 percent to 35 percent for conventional fd-bkd pow= plants. ht plans call for the 460 m plant to be made up of two combined-cycle units, each generatrig 230 mw. Tlme+d and sin@c-unit c4nfigurations also are under consimm. 5. Wn the merger with SCE affect this project? d SCE has CansWle rtserrcs sf power that could q.& the wds of San Diego County fk the next few yeas. These surpluses, however, are expected to be exhausbed by the end of the next decade. A mtzger with SCE could &lay ohis project for ohree years. 6. What are the environmentat impacts? Acombined-cyck system wiU use the best available emissions oontrol tdmologies to mea strict cnvire>nmr=ntal standards. Tbe new equipment wi_U prhwily burn natd gas. Backup fuel- for use wh gas is tmavaitabke - will k cxfrmdy bw-sdfw diesel fuel. ICkpcndizlg on the fmal ~c~~siteselec~anysignificantenriss~sfrom~newf~~may~offsetbypennanent lreductions of emissions hm other SOU~CCS. An Environrrrwltax Review will be conducted during the NOIpnxeuhgs and more detailed site-specific envir0amC;ntal studies will be conducted during the 7. When will tt begin operating? 4 PreWmy cngineesinlJ and pt.eparatioz! of the Notice of htent will be completed in 1989. Regulatory =view of SDG&E's site selection mmmmdatim will begin in late 1989. After a site - is appbvui (Carry XW), licensing applications for the power plant will be ppad and submitted to the CEC. Any constnrctim wtxk wouid occur dy after public bearings and appmval by va&~s StateandIOcal g0v-a agencies. Xffd~vdisgivcn,~~dondkghh 1993andopWationih I995.Thecsurenttime AWkith fa CCItifiCiib stages NOV. 1989 - Apt. 1991 J"' 1991 - Dec. 1992 CEC Notice of hmt fad, CEC hearings; Si& apprtrval, ax Application for CNlcatiCm and Puc ccrtifiwion of Public Convenience and Necessity fited; CEC hearings; PUC hearings; Finat approval. Find cfesign of facility. Commercial aperation (first unit). 3- 1992 - Au~. 1994 Mp), 1993 -June 1995 furre 1995 (Note; Aci;vities do overl(crp it^ SUM ma; all dates cue subject IV appmvd; uctivities 4Rd dares widd chmgc.) 819189 mantconstructim and ttsting. I 1 I I 1,- 0 0 8. AB #10,416 - PROPOSED SAN DIEGO GAS &ELECTRIC COMPANY’S COMBINED-CYCLE POWER PLANT AT ENCINA. Mayor Lewis: City Manager Ray Patchett: Mayor I’d like to have uh this dealt with in two two parts. The first part I would like the SDG&E folks to come up and make a presentation regarding their combined cycle power plant that they are proposing at Encina and then at the conclusion of their presentations and any questions that you may have I‘d invite Mr. Hagaman, the Research Manager to come up and share some information with the Council and then you can direct this as YOU see fit. And that will bring up Mr. Bishop. Art Bishop: Thank you Mr. Patchett, Members of the City Council, Art Bishop representing San Diego Gas & Electric. I have with me tonite Mr. Gleason Verduzco who is the project manager of the Combined-Cycle Unit and he is the one who will be giving you the presentation. We do also have a handout that I’d like to introduce Paul O’Neill who will be our new Governmental Affairs rep who will probably be residing here in Carlsbad before long, his offices will be here also so you may see him frequently. Paul, do you want to handout the deals, and G1 eason.. . Verduzco: good evening, I am Gleason Verduzco the project manager for San Diego Gas & Electric for the Combined-Cycle project. SDG&E stand alone resource plan, that is the comparison of projected energy demands to available resources shows that in the mid 199O’s, about 1995/1996 we are looking at about a 460 mega watt shortfall of a demand over available resources. When I say stand alone resource plan, I am referring to our proposed merger with Southern California Edison. If that merger is not complete, SDG&E still has to be there with the energy for the demands for our service territory. we propose to satisfy this shortfall with a Combined-Cycle power plant which is essentially a gas turban with waste heat exhausting to a heat recovery boiler that drives a steam turbine generator. It is about a 42% efficient cycle compared to existing plants that are on the order to 30 to 33% existing fossil fired plants. Should the merger with Southern California Edison be completed this project would be deferred about 3 years. The NO1 that we will be filing next week is the first step in a three year licensing process. It is essentially a site selection process that began in early August of this year. We reviewed a long list of a number of sites in Southern California on a basis of proximity to existing transmission facilities, existing fuel facilities, cooling water and of course, an available and suitable piece of land. We came up with five candidate sites - the Encina Power Plant her in Carlsbad is one of them, South Bay Power Plant in Chula Vista, we are also looking at West Sycamore Canyon which is a site about six miles east of Miramar Naval Air Station, we are looking at the Heber Geothermal site which is just south of El Centro in Imperial County, and also the Blythe site which was formally considered for our sun desert nuclear project back in late 70. The Blythe Site is in riverside County. The notice of intention that we will be filing next Monday will be distributed to a mailing list by the California Energy Commission including the City of Carlsbad. They tell me that you will receive your copy of this document late next week. It is a rather lengthy, approximately 7 volumes, that will address the various issues that are required by the Energy Commission filing and will include a statement of our need, how we have determined a need for this project, how we selected the combined-cycle over other available technologies, a basic description of the project as well as a Going on to item number 8 uh, City Manager. 0 0 discussion of environmental impacts that we feel this project may have. Of the five sites that we are proposing in the NO1 the Energy commission will approve one or more of these sites. We expect that two or three will be approved by the Commission and then it will be up to SDG&E to evaluate those sites and move forward into the balance of licensing that is the application for certification and the CPCN the Certificate of Public Necessity and Convenience with the Public Utilities Commission. Specifically regarding the Encina site, we felt it was a good candidate site for a number of reasons. It is an existing power plant site so we have transmission available (electric transmission), we have fuel gas on the site, we have a ready and abundant supply of cooling water and we have suitable parcels of land on the plant site for the facility. Rather reluctantly I brought an artist rendering of this site. Now, this is just a draft, you will see a much smoother version of this in the NO1 that you will be receiving next week. If is a perspective from Carlsbad Boulevard looking east across from Agua Hedionda Lagoon. This is the new Combined-Cycle facility with the two associated stacks and the back-up fuel tanks and the existing Encina Power Plant in the foreground. Mayor Lewis: Um, I have a question, I don't understand as yet in going through this what benefits Carlsbad gets out of it, could you, do you have any pluses there for us? Mr. Verduzco: Um, if you look in the second to the last page of the handout you received, uh, there is a breakdown of the tax benefits to the City of Carlsbad. Mayor Lewis: O.K., besides that though, I mean I realize that the tax benefits are a plus in all elements but is there, was anything else besides the $400,000 as mentioned there as far as a plus for Carlsbad? Council Member Kulchin: But that said cities doesn't it? That doesn't just say Carlsbad does it? So how many cities would be divided into that $400,000? I didn't mean to interfere, Mayor, but it didn't say Carlsbad, it said cities with an "S". Mr. Verduzdo: Well, I can let Mr. O'Neill comment on that, I believe he is a little more familiar with that then I am. Mr. O'Neill: Prior to joining our governmental affairs department, I represented the company in tax matters for 18 years. Current tax law, the way it is written the tax benefits represented here would flow through to the entire county of San Diego to all of the cities, so whatever portion you are taking today of taxes relating to public utilities you would still get the same ratio but you would realize your portion of the whatever the figure was 400 and some million dollars.. . Kulchin: Mr. O'Neill: Kulchin: Counci 1 Member Mamaux: So there are what, 16 cities here now in San Diego? You have 19 cities now in San Diego County. 19 cities now, okay 19 cities divided into $400,000, so $20,000. Rough1 y $20,000. 0 0 Mr. O’Neill: No we see tax benefits on an annual basis of 3.7 million dollars other counties will receive approximately a million. Mamaux: You are looking at a different sheet then we are looking at. Kulchin: Yes, he told us to look at tax benefit details next to the last page. Mamaux: Oh, I see, I am looking at the other one. Mr. O‘Neill: Oh, I’m sor - well lets see. Kulchin: Council Member Pettine: The other one is $300,000. Kulchin: Mr. O’Neill: I see, I see the confusion .... Kulchin: No confusion. No confusion. Mr. O’Neill: There certainly isn’t - the sub total there is $4 million dollars that is the portion that will be allocated among San Diego County cities. The $300,000 would flow through to other counties. Mamaux: No, I think you are missing the question. The first lines says $1.3 million to the county general fund, which would make me think you would have to put in in the unincorporated areas. Mr. O’Neill: No that would ... Mamaux: That’s my feeling, then it says cities $400,000. You divide that by 19 you get slightly over $20,000 per city, which is basically our share, that is what we are talking about. Mr. O’Neill: Well basically what each one of those is is a taxing agency. The cities that’s the city tax fund ... Mamaux: Mr. O’Neill: No, no, no, no, but the educational benefits which total 2.million dollars .... Mamaux: Just stay on cities will you. Mr. O’Neill: You just want the city itself? Mamaux: Yes, just us. Mr. O’Neill: Well the total tax benefits if $4 million dollars but the $400,000 would be allocated to the cities. Mayor Lewis: Ok, but what does the City of Carlsbad ge $20,000, $30,000, $10, OOO? You‘re looking at the right one Mister. Yeah, we would be going down. Is the City going to get $400,000? a a Mr. O'Neill: That is hard to say, I bel ... Kulchin: Mr. O'Neill: That is hard to say because of the new allocation factors, we don't have those in front of us, but it would be, I think that you allocation probably around IO%, so whatever 10% is of $400,000, probably in terms of $30,000 to $40,000. Mamaux: We get that much off a couple of mercedes. Kulchin: And they drive away don't they Mr. Mamaux? Mamaux: Sometimes. Mayor Lewis: Okay, so that is basically what we are talking about. The picture, illustration you have there is what the City of Carlsbad would get plus in return we ge $23,000 in return is that correct? Are those the benefits? Mr. O'Neill: In tax revenues. Mayor Lewis: Mr. O'Neill: Another consideration here is of course that the cost of the capital cost of this power plant will be recovered in rates. Our customers will pay for this plant ... We asked .... Kulchin: You asked for benefits, didn't you Mayor? Mayor Lewis: Ok, I understand what you are saying but I am talking about Carlsbad you know this is a large facility and uh I want to know what benefits that we have out of this, I guess. Mr. O'Neill: Along the lines of what I was saying that the cost of this plant will be recovered in rates the Encina site is about $200 million dollars cheaper to build than an inland site, given that Carlsbad citizens are rate payers of SDG&E they will benefit in that regard. Mayor Lewis: I see. Kulchin: But if we built it down in Imperial Beach it would ..." Mr. O'Neill : Imperi a1 County? Kulchin: No, I would like to see it down at Imperial Beach - they are looking for some money down that way. Mr. O'Neill: Well let me give you the numbers on the conceptual cost estimates for this facility. For the Encina site if we use that as the base as it turns out that is the cheapest or the lowest cost based on conceptual estimates of the five sites. The Encina site $387 million dollars, the Sycamore Canyon site is an additional $28 million, brings us up to $415 million, the South Bay site is about $52 million dollars higher than the Encina site. They Blythe site is about $150 million dollars higher and the Heber site is about $190 million dollars You've been doing tax for how long? Eighteen years for SDG&E? What are the other benefits? a e higher. These differences are largely the result of the fact that we would have to bring in new linear facilities to any site that is away from an existing power plant. That is we would have to bring in new power lines. For example in the Heber site we have to bring in 123 miles of 30 inch gas line at about 1/2 mi\lion dollars per mile. These things are expensive. The site that we select, the decision that SDG&E makes on the siting of this plant of course is going to be scrutinized by the Public Utilities Commission for prudence that we select a reasonable site given the alternatives we have and the California Energy Commission siting process is by design, an open process, that is the city of Carlsbad and the public at large can make there opinions known during the public workshop sessions of the NO1 which is about 45 days after we file which I expect will be ... actually 45 days after we are considered data adequate so that will put us at probably into the latter part of the first quarter of next year, early part of the second quarter. At those public hearings you can make sure that your concerns about this project, you interests in this project is adequately represented to the Energy Commission and weighed into their evaluation of the sites and of course SDG&E encourages you to participate in that process. Mayor Lewis: Ok, now let me... The way you are talking, it seems to me that it is kind of like a done deal in a way that we have our say when we come to the hearings. Mr. O’Neill : Is it a done deal? Mayor Lewis: Yeah - ok, that whatever comes down is more or less what happens the City will only have its say at the public hearings? Mr. Verduzco: You have complete access to the California Energy commission. They have a designated project manager that is available to you at any time. It is by no means a done deal. SDG&E’s NO1 is an objective treatment of all five sites, the California Energy Commission will review the environmental impacts, the economic factors, the whole picture and based on their review will approve one or more of these sites and then we will go forward with that, but it is by no means a done deal. Pettine: Who is the final deciding authority, the Energy Commission? Mr. Verduzco: It is at two levels. The Energy Commission will come up with the short list and then SDG&E will have to make it’s determination from that short list of which one we go forward with. Mayor Lewis: Does the City have a say at all in this operation? Mr. Verduzco: The City has a say in dealing with the California Energy Commission and of course with SDG&E. We are not going to make this decision in a vacuum. Mayor Lewis: Mrs. Kulchin? Kulchin: I have a question. Where are the workshops going to be held? You mentioned workshops, will they be held locally like here in our Council Chambers? Mr. Verduzco: Well the California Energy Commission schedules those and they are going to be held in cities around each of the proposed sites so Carlsbad a 0 would be one of the locations and I'm not sure where they will hold the workshop, but that will be worked up with representatives from the City. Mayor Lewis: Mr. Mamaux? Mamaux: During the original proposals for the merger there was discussion that SDG&E had a surplus capacity of 65% and that was one of the reasons that southern Cal Edison was interested in acquiring the company. Mr. Verduzco: Well, I am not familiar with that, we certainly don't have a surplus. In reviewing our resource plan if you look at our forecasted demand versus the resources we have including our power plants and available purchasing power contract there is no surplus. Mamaux: Mr. Verduzco: In Cal i forni a? Mamaux: Yes, in California. Mr. Verduzco: None Mamaux: There is an increasing demand so they are justified. One of our problems or my problem is that we get beat over the head all the time by people saying we are in a region but we don't participate in the region. We wanted to dump sludge at the Otay Mesa and Brian Billbray and the Board of Supervisors . . . it is not your problem, it is reflected here, complained that we are not going to have the sludge from North county dumped down here. We wanted to have a landfill site in northern unincorporated areas and the Board of Supervisors said we don't want to have, we will not approve zoning for sites in unincorporated areas unless certain things happen. Everyone says we don't want dump sites in our town, put them somewhere else. Now we're asked to expand a power plant which is really detrimental to the land uses in our area, and you know my first reaction is take it to Fallbrook, take it to Chula Vista, we've paid our share of this region. SDG&E wend in a deal over with San Marcos to build a plant that our people didn't want and we were told we were just people in "not in our back yard syndrome," yet you take a look at what we have given up for the region and you just told us that you were going to develop power here that is going to go to Imperial county and we're going to pay almost as much taxes to other counties as you are paying the cities in the county. Mr. Verduzco: No, we are not developing power to go to Imperial County. Mamaux: Well, you are paying taxes to other counties is what it says here and I assume they get a benefit or they wouldn't be getting the other taxes. So your service area extends beyond San Diego county boundary. Mr. Verduzco: Our service area does not include Imperial County. Mamaux: Okay, but it does expand beyond San Diego County, or does it? Mr. Verduzco: How many plants have been built in the last 10 years? Orange County to the North ... we go up to Mission Viejo. a 0 Mamaux: And you could by contract go to outside your service area if you had surplus power. See, many years ago, I know I’m going back into history again and I’m not trying to rag on you, by when Carlsbad tried to build a harbor in the Agua Hedionda Lagoon, Mr. Bishop was here then, SDG&E opted out of the assessment district and made it impossible for us to do that and Oceanside build their harbor. and all of that land on the south side of the lagoon the power structure, all of the power plants, all of the power lines that go across there inhibits a lot of nice property within the City of Carlsbad. Granted you own it, and some of it you don’t own, but it inhibits us, so now when you can take up some more you can see our resistance. We have an excellent beach that has been used by your company for all these years, now you are going to expand it. our population to SDG&E and any further expansions. I can remember when SDG&E amounted to 40 - 48% of the tax base in Carlsbad, that is not the case today. Now things have changed and I hope you understand our position and recognize that we... I would at least like to see us appear at those hearings and maybe not be so favorable towards your expansion because you haven‘t offered anything, of course we haven’t seen anything, any mitigation that would off set the damage that is going to happen from the expansion. Mr. Verduzco: Mamaux: Real estate damage, that the people, we are going to be providing something for everyone else and the tax benefits are going to be spilt with San Marcos and Fallbrook and everyone else is going to receive the same percentage, same amount of the revenue that we are going to get, yet you are going to put it in our community, and we have paid our share, we have a sewer plan in town, we do it but we may have reached a point where we may not want to go too much further. Mayor Lewis: Mrs Kulchin? Kulchin: I think we as a City need to hire a consultant to protect us. I think we need to have explicit reasons of our concern, the environmental impacts, the change in our land use standards, the alternatives, so that when we do (I guess the term is intervene with the Public Utilities commission) that we know what we are talking about. We have got to have definite facts and figures and I think we need to protect our citizens and ourselves in terms in looking and hiring a consultant. Mayor Lewis: Mr. Larson? Council Member Larson: Yeah, when Mr. Mamaux was talking about environmental problems, I get real concerned about air quality, and that just jumps right out in front of me immediately and I just want to question the statement that you made in your handout that you have given us that air quality degradation would be offset by permanent shutdown of other operations - I forget how it is actually worded, that that may be the way that it is done. Is it the intention that upon siting such a facility wherever it takes place that some of the inefficient generators or produces of electricity that SDG&E operates would be discontinued, would be shot down? I think we have to take a good hard look at our land uses as to the changing of The damage you are referring to that should be mitigated ... I think we need more information. 0 e Mr. Verduzco: The air Pollution Control District, we’ll just talk about the Encina site, and I think it is reflected of all five sites, the San Diego Air Pollution Control District require that if they are going to permit this plant that we show a net air quality benefit, that means that for every pound of pollutants that the new plant puts out we will have to remove 1.2 pounds from the air form existing facilities, and we do that by a system of offsets that you are probably familiar with. We will install some perhaps low knox burners or some sort of select catalatic reduction or urea injection on an existing unit to reduce the emissions in that unit by 1.2 times the amount of the emissions of the new plant is putting out. Larson: But when you speak of you, you are not talking about at the same site specific, you are tal king about anywhere? Mr. Verduzco: No, I am talking about at the same site specifically. I am talking about at Encina Power Plant. If we did not get the offsets at Encina it would be because the San Diego APCD directed us to do otherwise. Other sources are a third party offset from other stations say co-generators or from City buses or whatever sources were considered adequate by the APCD. Larson: But we as a City would have no guarantees that there would be an actual reduction taking place in Carlsbad with the siting of a new plant. Mr. Verduzco: I think the APCD is going to have to have assurances from us that that is going to happen. They are going to have to believe in the case that we make that there will be a net air quality benefit .... Larson: But that is another body other than ourselves that gets to make a decision and there is no guarantees for Carlsbad. Mr. Verduzco: I don’t think ... You will have to take that up with APCD as to whether or not they will guarantee that reduction. Larson: But that is my point, that is another, that is a big concern that we have. It is another element of this process over which we don‘t have a say and it could be very conceivable that this process could get down the road and we could actually end up with an increased degradation of our air quality here in Carlsbad at the benefit of some other area of the basin, and I don’t think you can disagree with that. Mr. Verduzco: I think that is unlikely that you would have any degradation of air quality in Carlsbad. Larson: But it’s possible. Mr. Verduzco: The Combined-Cycle technology is far less polluting than any other fossil fired technology available. A typical plant like Encina, or South Bay Plant has license limits of about 125 parts per million nitro dioxide when the plant is burning gas fuel, that is 125 parts per million. A Combined-Cycle unit produces about 27 parts per million. It’s significantly cleaner, and that coupled with the off sets I think makes it very unlikely that the air quality would suffer at all in Carlsbad. Mayor Lewis: Mr. Pettine? e e Pettine: Well, on that issue sir, your green sheet says two things. First of all it talks about reduction from other sources and it is not specific to say within the jurisdiction of Carlsbad and number two it doesn’t say shall be offset by reductions from other sources it says may be offset. And that is a significant difference it seems to me. That seems to me like that is an option and not a guarantee. Mr. Verduzco: Well, its however the the fact sheets from the PR department - however that is worded it is a fact that there will be offsets there will have to be offsets or we can’t get this plant licensed. When we say that we are not sure that the offsets will come from Encina its much to our advantage that they do come from Encina. If we get the offsets at some distance from the proposed location of the new site the offsets are discounted. We will have to provide 1.6 or 1.8 pounds per one pound from the source, so we of course would like to see the offsets come from Encina. Pettine: Well, how far away from the Encina site can your offsets be discounted? How far away form Carlsbad can you go to stay within your formula? Mr. Verduzco: I think that given the prevailing winds and such it seems unlikely that APCD would consider offsets inland from the coast. So I feel reasonable comfortable that offsets will come from the Encina Power Plant and not from some other location, but of course that is going to have to be confirmed when we take this to licensing with the APCD. Pettine: Now my next question is if there is a conflict between the Energy Commission and the City of Carlsbad as to the siting of this, and maybe I should direct this to the City Manager, I understand from your memo the Commission decision prevails, is that right? We are basically being asked to make an advisory position? City Manager Patchett: When I tal ked to the gentleman at the Energy Commission that is what he had indicated to me. Subsequent to that conversation and the release of that memo, I am told that may not be true and we will be meeting with those folks to clarify who has control of that. Mr. Verduzco: The Warren/Alquest Act that set up the California Energy Commission in the first place in the late 1970’s indicates that the Energy Commission has ultimate authority in these issues, however I think it is very unclear how this is going to go given that no notice of intentions have been filed in the last ten years essentially since the formation of the Energy Commission and we are pretty much plowing new ground here, so I think that remains to be seen. Mamaux: Will this affect the ozone? Mr. Verduzco: Well, knox is considered an ozone precursor so if any were there increased in knox it would but we are saying there won’t be increases in knox. Mamaux: Will it increase any more than you are already doing? Mr. Verduzco: It will in fact be less than what we are presently doing. 0 0 Mayor Lewis: Mr. Larson? Larson: I don’t know whether or not you are familiar, but at the current Encina Plant there are five generators, is that correct? To what capacity are those five generators currently operating? Are they all operating? Mr. Verduzco: They are all operational, but they are dispatched from our on towards the less efficient units. Only about 50% of San Diego’s power is supplied by the power plants here in town, the rest of it comes from purchased power contracts, but we expect the capacity factor that is the amount of time that these units operate will be greater in the near term in the near future because the purchase power contracts that we have enjoyed over the years are just not avai 1 ab1 e anymore. Mayor Lewis: Mrs. Kulchin? Kulchin: Having heard your explanations, I feel uncomfortable with the words unlikely, feel reasonable, however, a difference between may and will, and sitting here listening that APCD, the PUC and the San Diego Gas and Electric will have jurisdiction over what is our City. I don’t feel comfortable at all with that. I really don’t. Mayor Lewis: Okay, I think you have got the message that we do have some concerns about what.. . Mr. Patchett: Mr. Mayor, you may want to when you are finished talking to Mr. Verduzco, let Mr. Hagaman do the rest of his presentation and that may pull it together a little bit. Mayor Lewis: Mr. Verduzco: No, I don’t. Council Member Pettine: Well, we appreciate you coming here, really, we are not trying to give you a bad time. Mayor Lewis: Yes, we do appreciate it very much. Mr. Bishop: If I may Mayor, there are a couple of items I wanted to clarify. Edison has access to other energy, John, not SDG&E. We are in a position now of having, if we do stand alone as Gleason said, to provide our customers adequate power. Unfortunately, I hope you understand that we are obligated, absolutely to look at this Encina site as on of the five. It is a real prim candidate, and we are not trying to fool you. But we do urge that you participate. The Energy Commission will hold hearings, we want you to participate and give your concerns and talk with us, this is going to be above board, we are going to be open with everything that we do, and we want to work closely with the City of Carlsbad. Thank you for your time. Mr. Hagaman: Mayor Lewis and members of the Council, we have been in contact with the California Energy Commission and they have a public advisor, and we have done some preliminary discussions with them. It is still very tentative, but hopefully with the information we have we can throw some light onto the process dispatching center on the basis of economy. That is as demand increases we move Okay, do you have anything else to add to it? - 0 0 they are talking about. I have some overheads that hopefully will simplify the process so we can all understand it. Out of the brochure, after SDG&E submits to the Energy Commission a Notice of Intention, the goal of that notice is to have a1 ternate and site sui tabil i ty evaluation. The objectives are to determine the need for the plant to examine alternative sites, determine suitability of power plant and related facilities on each of those sites, determine conformity with ’laws and standards and provide early public input into the process. This initial step is considered to take approximately 12 months. And once they do it within that process after having the goals and objectives identified.. . We’ve been able to determine at least five steps. First the application is submitted by San Diego Gas and Electric as indicated and then there is a determination made by the Energy Commission itself and their staff for completeness of all the information necessary to review the application. Then they hold what they call a discover hearing in workshops. Those workshops would be as referred to in the conversation at sites - at each of the sites. The discovery hearings are to seek information from all parties. And then this is done by a committee of the Commission, of two commission members would come to the site and do that. It wouldn’t be the entire Energy Commission. That particular Committee then makes findings and determinations that presents those to the full Energy Commission, and then the Energy Commission holds. formal hearings. (GAP IN TAPE) ... and makes a decision on possible sites. And what would happen then they would have not sites is one decision they could make or all five sites and then SDG&E would have the option of choosing to proceed through the local process with an application for that site and essentially what happens.. . . Kulchin: Excuse me, you talk about a committee of two comes around at the workshop, are they the same two from the Energy Commission that goes around and listens to every or are they different members of that particular Commission? Mr. Hagaman: My understanding is the same two that would go to each of the hearings. They formed a sub-committee of the commission to hold these hearings. Pettine: Jim, does the Commission sit in Sacramento, is that where the body ... ? Mr. Hagaman: I don’t know for sure, I am assuming that because our contact is up in Sacramento. Mr. Patchett: Yes that is right. Mamaux: Yes, it’s in Sacramento. Mr. Hagaman: Now, this may seem like a shorter process but I suspect this will be the longer part of the process and then one a local application is made then you go through the normal proceedings within the individual jurisdiction for land use and environmental review which would be like any application to a city local government body. Once that process is through then the choices or the agency sends out SDG&E to apply back to the Energy Commission for an application for certification. Then the process redoes itself, where again a committee is heard, they make evaluations on the site, it has now gone through local review, and they hold formal hearings and then the commission will certify a powerplant at that point, so that this due process is a Notice of Intention, local hearings, and then the application for certification which is another hearing. 0 e Kulchin: When you say uh, makes local application, O.K., through the land use, you are talking about going through our Planning Commission and through the City Counci 1 ? Mr, Hagaman; Yes, ma’am. Mayor Lewis: Jim, in reference to in going through that, if the City determines that this is a bad situation for the community, the City does not have the ultimate choice on the land use on this though do we? Mr. Hagaman: Well, that was the question that I think was brought up earlier and it is kind of unclear as I understood it. Mr. Patchett: we are going to review that with them, probably go up there and talk to them again, but what they told me on the phone was they do have the final jurisdiction on that and we want to test that with the City Attorney‘s Office and whoever he needs to talk to to review that. Kulchin: Well then why would they go through number six through the land use and environmental review? Pettine: Pub1 ic relations. Kulchin: If we say no, no, no, no... Pettine: If they have the ultimate authority in Sacramento, you can almost see the scenario, they will get all of our public relations input and they will look at the factors that it is less expensive, we have an existing facility, the locals are unhappy, but we’ll clean up the air someplace else and offset it. So let’s site it here. Ron Ball: The comment I would make is that by conceding to the local jurisdictions over the plant, it seems like the CEC doesn’t preempt everything, although that is a question that preempts local powers jurisdiction over land use. It is also necessary because at that time it becomes project specific and so that may be why the dual sort of application if you will. The other thing is that you have to at that time look at the application as any other application before you, that is you look at the specific facts that are introduced at that, uh, during those proceedings and during those hearings and apply the law and the ordinances to it at the time. Mamaux: What you are saying is we have to look at the land use that we have and whether or not it is to accommodate that use. Ron Ball: Exactly, you have to apply those standards that are applicable at the time that it.. . Mayor Lewis: Do they have to also follow if there is an EIR put out and it comes back that it would be detrimental do they have to apply - does it apply to them as well as any other developer that would be involved in the City? Ron Ball: at this time I don’t know of any reason why it doesn’t why it shouldn’t apply to them, that is they have to apply to the same standards that CEQA does if it is considered a project and that is an overlapping - there is You can almost see that scenario being played out. e e many jurisdictions here, you have heard of the APCD has one, the PUC, the CEC, and also CEQU applies and then it is who is the lead agency to hold the hearings and coflduct the studies of that, Mr. Mayor. Mamaux: Are they required to pay all the City fees that are in existence at the time or are they exempt like school districts and other things? Ron Ball: Mr. Mamaux, I don’t know the answer to that question, it is one that we will look into at the time we also look into the preemption issue. Mamaux: Would you pl ease? Ron Ball : Yes. Kulchin: Maybe Mr. Ball can answer this question. In terms of when anybody comes to develop in the City of Carlsbad and we do an EIR the developer has to pay for that, would they also have to pay for the Environmental Review? Ron Ball: If they are not exempt under any theory then they would be the the entity necessary to pay the fees. They would have to pay the fees, there is no waiver provision that I know of and if there was a waiver petition it would have to be to the lead agency, that is the agency that is conducting the studies. Mayor Lewis: Any other comments? Mr. Hagaman: Mayor Lewis, I might make one other comment. During the Notice of Intention the City would be literally a consultant as one of the obvious sites of the selection of the process, but you also have an option which I have talked to them about in Sacramento of filing a, as we indicated, a Notice of Intervention or becoming an intervenor with the process, and the process which goes through this is quite lengthy and very court orientated in terms of evidence being filed in proper form, cross examination of witness and information being presented at hearings before this and during that process the Council may want to consider having someone represent the City during these hearings and either being an intervenor or just an interested party giving testimony at these hearings. that is before it gets to the City, that is during the consideration. Kulchin: Would that be our attorney? Ron Ball: That could be your attorney, that could also be an expert or a consultant that is used to present evidence before them. They borrowed the jargon, if you will, from the court process, from the litigation process, and this is a fairly formal procedure so that we could appear as just an interested amicus or just an interested party or we can appear as intervenor which gives us the status of an actual party before the commission so that we can participate fully in the proceedings and that can be by your attorney and by anybody else that you deem to present evidence subject only to the Commission’s allowing it. Kulchin: What do you mean, excuse me - what do you mean allowing it? I thought.. . One las question, Mr. Mayor, if I may. k e e Ron Ball: That is, you would, the commission would make the ultimate decision whether or not the evidence that you were offering was relevant and important for its consideration. That is they are, if you will, the fact finder. Kulchin: But they couldn’t stop us from being an intervenor. Ron Ball: No, we have to make an application to be an intervenor. It is highly unlikely that that kind of an application would be denied since we are such an interested party. Kulchin: Thank you, Mr. Mayor. Larson: Jim, you mentioned that Notice of Intention of process takes 12 months, it is a 12 month process, what about the subsequent action? Any indication on what kind of time frame is involved in that? Mr. Hagaman: Well, the local action there is no indication of time frame because that would be our own processes. The Notices of Certification I found nothing in the evidence yet indicating a time frame there. Larson: And the twelve month figure is nothing specific or required by law that certain things have to take place in a time frame, that is just an estimate of the amount of time it might take? Mr. Hagaman: The only comment that was in here was a maximum of twelve months. Larson: It does actually state that there is a maximum of twelve months so perhaps there is some obligation for that process to take place. Okay, thank you. Mayor Lewis: Mr. City Manager, based on the comments that this council has made in reference to the process, and what could go down, what would be the staffs recommendation as far as the proper method to try to control this as far as we are concerned? Mr. Patchett: Well Mayor, there is really two tracks in which you may want to consider action on this item. There is the California Energy Commission item and you may want us to intervene on behalf of the council and we can look at that and come back with how we think the best way to do that might be. The second track has to deal with the land use impacts and the impacts of an additional facility in that area and we can come back with another report addressing how the Council might address the land use impacts ranging from you may want to support the project to you may want to oppose it, you haven’t seen all that and neither have we so if you would like to direct us to do that we would be happy to do it. Mayor Lewis: Is that agreeable - both issues? - Okay, we will not that all five council person are nodding there heads in agreement that we would like you to continue that process please. Mr. Patchett: We wi 11. Mayor Lewis: O.K., anything else? . c + * e ! Kulchin: Patchett: Mamaux: I so move. Kulchin and Pettine: Second. Mayor Lewis: A1 right will you vote please? O.K. note that all five council persons have supported that and Mr. Bishop we thank you folds for coming in and uh getting us going on this and uh informing us what is going to happen, and Jim, we appreciate the report that you and staff have done for this. Thank you very much Art. Do you need a vote on that? I think that it would be helpful.