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HomeMy WebLinkAbout2010-01-26; City Council; 20110; Power Plant and CA Energy Commission ProceedingsCITY OF CARLSBAD - AGENDA BILL 13 AB# MTG. DEPT. 20.110 1-26-2010 CM UPDATE ON PROPOSED POWER PLANT AND CALIFORNIA ENERGY COMMISSION PROCEEDINGS DEPT. DIRECTOR CITY ATTORNEY CITY MANAGER RECOMMENDED ACTION: Receive staff update on the California Energy Commissions proceedings regarding NRG's proposal to construct a new power plant. Background On September 14, 2007, Carlsbad Energy Center, LLC, (the Applicant) submitted an Application for Certification (AFC) to the California Energy Commission (CEC) for the Carlsbad Energy Center Project (CECP). Carlsbad Energy Center LLC is an indirect wholly-owned subsidiary of NRG Energy, Inc. (NRG), which owns the existing Encina Power Station. The proposed project is to be located on the 32-acre parcel of land, northeast of the existing Encina Power Station, east of the rail lines and west of Interstate 5. CEC Process As established by the Warren Alquist Act, (PRC § 25000 et. seq.) the CEC has exclusive jurisdiction to license power plants of 50 MW or greater in the State of California. The CEC process is quasi-judicial in nature and the CEC review and licensing process is a regulatory program certified by the Secretary of the Resources Agency which provides for the CEC's process may be submitted in lieu of an EIR (PRC § 21080.5(9)). Its' program; however, must consider all relevant environmental impacts. The CEC licensing process can best be described in the following stages: • Project application • Staff Fact finding and analysis • Commission Preliminary project review and decision • Commission Final project review and decision, and • Appeal The CEC licensing process is intended to take approximately 12 months. However, based on the complexity of the project, the CECP has progressed at an appreciably slower pace. The CEC staff has concluded their fact finding and analysis stage (as contained in the FSA) and are preparing for the Preliminary Review phase of the project which is expected to begin February 1, 2010. This Preliminary Review phase was originally anticipated to occur in June 2008. City Involvement and Prior City Actions At the direction of City Council, the City has been active in the review and analysis of the CECP. Since October, 2007, the City has submitted a number of documents (more than 30) to the CEC regarding the CECP. DEPARTMENT CONTACT: Joe Garuba 760-434-2820 ioe.garuba@carlsbadca.gov FOR CITY CLERK'S USE ONLY. COUNCIL ACTION: APPROVED DENIED CONTINUED WITHDRAWN AMENDED D D D D D CONTINUED TO DATE SPECIFIC D CONTINUED TO DATE UNKNOWN D RETURNED TO STAFF D OTHER - SEE MINUTES D Conunci] received the presentation. At the request of the California Energy Commission (CEC), on May 1, 2008, city staff provided an overview and analysis of the proposed project and its conformance to city land use laws, ordinances, regulations and standards (LORS). The purpose of that analysis was to help educate the CEC staff on the numerous land use documents and LORS that pertain to the CECP. The City also wanted to inform the CEC as to how it would view the conformance of the CECP to those LORS. As highlighted on Page 2 of that letter, City staff clearly highlights for the CEC its position: "The proposed CECP is not consistent with the City's desired vision for the property. Also, as noted below, although NRG has not submitted all information necessary to determine compliance requirements, staff has been able to determine that the CECP is not consistent with many of the policies and/or land use requirements set forth in the various planning documents and/or City Council policies that apply to said property." In July, 2008, the CECP submitted extensive project alterations to the CECP. These alterations included: • Increased smoke stack height to 139 feet • Development of desalination plant for power plant water • Construction of a new SDG&E Switchyard Following the July 2008 submittal to the CEC, on August 12, 2008, the City Council reviewed the proposed project changes. As a result of its review, Council restated its position in Council Resolution # 2008-235 that the CECP would be non-conforming with Carlsbad land use LORS. Council's determination was submitted to the CEC on August 22, 2008. In December 2008, the CEC released its Preliminary Staff Assessment of the proposed power plant. In that document, CEC staff concluded that the proposed CECP, if approved, would comply with all land use LORS. The City disagreed with CEC staff's interpretation and expressed its belief that per the Warren-Alquist Act, the CEC staff does not have the authority to re-interpret City Council's interpretation of consistency/inconsistency with land use LORS. After a comprehensive review of the PSA, City staff determined that the CECP would constitute a non-conforming land use, as well create significant and negative visual, economic, safety, air quality and biological impacts. These concerns were transmitted as part of the City's comments on the PSA to the CEC on January 30, 2009. In the intervening period since the PSA comments were submitted, the City has continued to work with the CEC staff to address significant outstanding project issues. CEC Final Staff Assessment In November 2009, the CEC staff issued its Final Staff Assessment (FSA) for the CECP. The FSA represents staff's analysis of the project and includes project conditions for the CEC Commissioners to consider as part of project approval. The FSA serves as the CEC's staff testimony through the remainder of the licensing process. City Analysis As anticipated, the CEC staff recommended project approval in the FSA. Its approval was based on a series of project conditions, some of which may prove difficult to implement. The FSA, while substantial in size, is far from comprehensive, and staff believes it either omits or mischaracterizes several issues which continue to pose serious concerns to the City. An example of the FSA's shortcomings is that it fails to identify, let alone analyze, the fact that the mischaracterizes several issues which continue to pose serious concerns to the City. An example of the FSA's shortcomings is that it fails to identify, let alone analyze, the fact that the EPS location was previously analyzed in 1990 for a second power plant and that both the Coastal Commission and the CEC staff came to the conclusion that the site was not appropriate for such use. On December 22, 2009, the City Council and the Housing and Redevelopment Commission adopted Resolution 2009-323 and Resolution 482, which states both agencies opposition to the proposed power plant. CEC Schedule On February 1-4, 2010, the CEC is scheduled to hold a series of workshops, called Evidentiary Hearings, in Carlsbad. The purpose of these hearings is for the CEC Siting Committee to gather information about the CECP. These hearings represent the first time that the CEC Commissioners will hear about the CECP in detail, and provide an opportunity for those involved, including the City and the Housing and Redevelopment Agency, to present information gathered to date. Information collected by the Siting Committee will result in the issuance of a preliminary decision. This preliminary decision is expected to be released in the 2nd Quarter of 2010. Staff will present an update to the City Council on the upcoming CEC proceedings. FISCAL IMPACT: The fiscal impact from the CECP is uncertain at this time. If constructed the CECP will result in increased revenue to the City in the form of property tax and franchise fees from natural gas usage in the range of $2 -$5 million annually. However, this revenue would be realized if the project were to be located at an alternate site within the City. Staff has conducted a preliminary analysis on the potential negative fiscal impact (in the form of diminished future revenues) to the City by precluding or inhibiting the redevelopment potential of the entire EPS site. The initial analysis identifies that the lost opportunity is substantial and would result in diminished revenue for the City under any redevelopment scenario. Impacts from the CECP on the broader tourism industry in the City have not yet been analyzed. The City will continue to review the fiscal impact from the project as more information becomes available through the licensing process. ENVIRONMENTAL IMPACT: The CEC, not the City of Carlsbad, serves as lead agency under its certified regulatory program which is commonly known as the functional equivalent of CEQA for the proposed CECP and performs the environmental review as part of its exclusive jurisdiction to license the proposal. No Environmental Impact Report (EIR) is required; however, the CEC certification process is subject to certification by the Secretary of the Resources as the functional equivalent of CEQA; therefore, the CEC must analyze all potential environmental impacts resulting from the project. The PSA and FSA produced by CEC staff have so far provided the project environmental analysis. As noted herein, city staff believes the proposed CECP, if approved by the CEC, would cause significant land use, fire safety, and visual impacts and potentially other impacts as well. EXHIBITS: 1. City of Carlsbad Project Opposition Details CITY OF CARLSBAD PROJECT OPPOSITION DETAILS 1. LOCATION: Power plants no longer need to be built near the ocean. Today's modern plants are air-cooled, not water cooled. If a new power plant is needed in Carlsbad, it should be built in a more suitable location, such as an industrial park, not along the beach. 2. SAFETY: The Carlsbad Fire Department has raised serious safety concerns regarding the proposed power plant. These concerns are heightened since the new plant would be just a stone's throw from the widened 1-5, making it the closest power plant to a major freeway in California. 3. AIR POLLUTION: The new plant could run many more hours a day than the old generating units it would replace, which would result in a tenfold increase in air pollution over the 2008 levels. 4. VISUAL BLIGHT: There is no way to screen the view of this plant. Building this plant condemns the North County coastline, and the gateway to the San Diego region's tourism economy, to another 50 years of heavy industry. 5. NO GUARANTEED POWER FOR CARLSBAD: There's no guarantee the energy produced by the plant will be used in our region. NRG does not have a contract with SDG&E to use the energy locally. The community should not have to bear the burden of another power plant if they don't get any benefit from it. 6. PROPOSED POWER PLANT CONFLICTS WITH LAND USE REGULATIONS: The proposed power plant does not comply with the City's or Housing and Redevelopment Agency's land use regulations. Proposed Power Plant Project Agenda Project Background Schedule Project Issues Agua Hedionda Lagoon 14 stories tall 10 stories tall 6 stories tall Hearing/Workshop/Plan ned Event or Filing CEC Initial Schedule Carlsbad Anticipated Schedule Draft Preliminary Staff Assessment (PSA) April 2008 December 2008 PSA Workshop April 2008 January 2009 Final Staff Assessment (FSA) May 2008 November 2009 Testimony Due Jan 2010 Evidentiary Hearings TBD Feb 1-4, 2010 Preliminary Decision (PMPD)November 2008 2nd Qtr 2010 Revised PMPD 3rd Qtr 2010 CEC Decision 1st Qtr 2009 3rd/4th Qtr 2010 Other Agency Approvals / Legal Challenges 6 months Plant Construction 18 -24 Months 30-36 Months Potential Online Date Nov 2010 2nd Qtr 2014 Revised Schedule January 2010 We are here Evidentiary Hearings February 1-4, 2010 Hilton Garden Inn (on Carlsbad Blvd) Public Comment Feb 1, 2, & 3(?) Public Comment starts at 6 pm Shuttle parking at the Flower Fields Evidentiary Hearings Monday –10:30 Project Description (1.5 hours) Land Use (5 hours) –Redevelopment –Coastal –Local Socioeconomics (.5) Public Comment –6 PM to 10 PM Evidentiary Hearings Tuesday –9 a.m. Air Quality (3.3 hours) Public Health (1.3 hours) Power Plant Efficiency (.3) Visual Resources (3.3 hours) Public Comment –6 PM to 10 PM Evidentiary Hearings Wednesday –9 a.m. Green House Gases (5.7 hours) Project Alternatives (4.2 hours) Public Comment –6 PM to 10 PM (If needed) Evidentiary Hearings Thursday –9 a.m. Worker Safety/Fire Protection (3.1 hours) Hazardous Materials (.4 hours) Soil and Water (.3 hours) Noise (1.1 hours) Traffic (.1 hours) Biological Resources (.1 hours) NO PUBLIC COMMENT Project Issues Land Use.CECP does not conform to city and redevelopment regulations Coastal Act.Development of a new power plant is not consistent with sound coastal development practices and is inconsistent with the Coastal Act. Fire Safety. Carlsbad Fire Department has determined that the CECP provides constrained access and represents a hazardous location which limits the ability to deliver service to it. Visual Impacts.The CECP will result in significant adverse visual impacts. Questions ? Agua Hedionda Lagoon Existing Power Plant I-5 (Widened) Strawberry Fields RR Future Desal Plant Sewer Line & Rail Trail Lift Station 186 ac. LEGEND: Owned by NRG Owned by SDGE Acreage of Cannon Corridor Properties