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HomeMy WebLinkAbout2015-04-21; City Council; 21940; Support California Public Utilities Commission President Picker Approving SDG&E'S Application, Purchase Power Tolling Agreement, Carlsbad Energy Center LLC10 CITY OF CARLSBAD - AGENDA BILL AB# 21,940 CONSIDERATION OF A RESOLUTION IN SUPPORT OF THE ALTERNATE PROPOSED DECISION OF CAUFORNIA PUBUC UTILITIES COMMISSION PRESIDENT PICKER CONDITIONALLY APPROVING SDG&E'S APPUCATION FOR AUTHORITY TO ENTER INTO A PURCHASE POWER TOLLING AGREEMENT WITH CARLSBAD ENERGY CENTER LLC DEPT. DIRECTOR ^^i^ DATE 04/21/15 CONSIDERATION OF A RESOLUTION IN SUPPORT OF THE ALTERNATE PROPOSED DECISION OF CAUFORNIA PUBUC UTILITIES COMMISSION PRESIDENT PICKER CONDITIONALLY APPROVING SDG&E'S APPUCATION FOR AUTHORITY TO ENTER INTO A PURCHASE POWER TOLLING AGREEMENT WITH CARLSBAD ENERGY CENTER LLC CITY ATTY. fj/L^ DEPT. CM CONSIDERATION OF A RESOLUTION IN SUPPORT OF THE ALTERNATE PROPOSED DECISION OF CAUFORNIA PUBUC UTILITIES COMMISSION PRESIDENT PICKER CONDITIONALLY APPROVING SDG&E'S APPUCATION FOR AUTHORITY TO ENTER INTO A PURCHASE POWER TOLLING AGREEMENT WITH CARLSBAD ENERGY CENTER LLC 1 CITY MG^f"^ ^ RECOMMENDED ACTION: That the City Council adopt Resolution No. 2015-101 . in support of the alternate proposed decision of California Public Utilities Commission President Picker conditionally approving SDGSiE's application for authority to enter into a Purchase Power Tolling Agreement with Carlsbad Energy Center LLC (Exhibit 1). ITEM EXPLANATION; On January 14, 2014 the City Council adopted City Council Resolution No. 2014- 010, approving an agreement (Settlement Agreement) between and among the City of Carlsbad (City) and the Carlsbad Municipal Water District (CMWD), Cabrillo Power I LLC and Carlsbad Energy Center LLC (collectively, NRG) and San Diego Gas & Electric (SDG&E), addressing items including: 1. The need for additional generating capacity in the San Diego region following the premature closure of the San Onofre Nuclear Generating Station (SONGS); 2. The permanent shut down of the Encina Power Station (EPS) as soon as reasonably possible; 3. The demolition and removal of EPS by a time certain and the subsequent remediation and redevelopment of the EPS site; 4. The redesigning of the Carlsbad Energy Center Project (CECP) to achieve a smaller environmental footprint, lower profile, and lower stack heights; 5. The provision of recycled water for the redesigned CECP by the CMWD to avoid the use of ocean water for power plant cooling or other industrial uses; 6. The relocation of the SDG&E North Coast Service Center off of the coastline in a manner that is cost-neutral to SDG&E and its ratepayers. On July 21, 2014, SDG&E filed an application with the California Public Utilities Commission seeking authority to enter into a Purchase Power Tolling Agreement with Carlsbad Energy Center LLC (NRG). On March 6, 2015, Administrative Law Judge Yacknin issued a proposed decision denying without prejudice SDG&E's application for authority to enter into a Purchase Power Tolling Agreement with Carlsbad Energy Center, LLC (NRG). The City of Carlsbad, through a letter from Mayor Pro Tem Blackburn on March 26, 2015, requested that this proposed decision be rejected. DEPARTMENT CONTACT: Gary T. Barberio, Assistant City Manager 760-434-2822 Gary.Barberio@carlsbadca.gov FOR CLERK USE. M COUNCIL ACTION: APPROVED M CONTINUED TO DATE SPECIFIC • DENIED • CONTINUED TO DATE UNKNOWN • CONTINUED • RETURNED TO STAFF • WITHDRAWN • OTHER - SEE MINUTES • AMENDED • REPORT RECEIVED • Alternate CPUC Decision April 21, 2015 Page 2 of 2 On April 6, 2015, Commission President Picker issued an alternate proposed decision conditionally approving SDG&E's application for authority to enter into a Purchase Power Tolling Agreement with Carlsbad Energy Center, LLC (NRG). The alternate proposed decision conditionally approves SDG&E's application subject to two conditions: 1. That the proposed project contract capacity is reduced from 600 MWs to 500 MWs while otherwise subject to the same per unit price, and other terms and conditions; and 2. That all of the 100 MWs in residual procurement authority resulting from the amendment of the application must consist of preferred resources or energy storage. staff is now recommending that the City Council consider and adopt a Resolution (Exhibit 1) in support of the alternate proposed decision of California Public Utilities Commissioner Picker conditionally approving SDG&E's application for authority to enter into a Purchase Power Tolling Agreement with Carlsbad Energy Center (NRG). Approval of the alternate proposed decision will allow permanent retirement, demolition, and removal of the EPS as soon as possible and the construction and operation of the CECP as proposed in the application before the California Energy Commission. The California Public Utilities Commission is expected to act on this issue in early May. FISCAL IMPACT: There are no fiscal impacts associated with consideration and adoption of the Resolution in Support. ENVIRONMENTAL IMPACT: Pursuant to Public Resources Code Section 21065, consideration and adoption of the Resolution in Support does not constitute a "project" within the meaning of CEQA in that it has no potential to cause a direct physical change in the environment, or reasonably foreseeable indirect physical change in the environment, and therefore does not require environmental review. EXHIBITS: 1. City Council Resolution No. 2015-101 EXHIBIT 1 1 RESOLUTION NO. 2015-101 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, 3 CALIFORNIA, IN SUPPORT OF THE ALTERNATE PROPOSED DECISION OF CALIFORNIA PUBLIC UTILITIES COMMISSION 4 PRESIDENT PICKER CONDITIONALLY APPROVING SDG&E'S APPLICATION FOR AUTHORITY TO ENTER INTO A PURCHASE 5 POWER TOLLING AGREEMENT WITH CARLSBAD ENERGY CENTER 6 7 8 9 10 WHEREAS, the Encina Power Plant (EPS) has been located on the coastline of the City of Carlsbad since 1954 and is an aging power plant that is inefficient, operates with outdated air pollution control systems, uses ocean water for cooling and other purposes, and has a 11 significant adverse visual impact on the coast; and ^2 WHEREAS, on January 14, 2014 the City Council of the City of Carlsbad, California adopted City Council Resolution No. 2014-010, approving an agreement (Settlement Agreement) between and among the City of Carlsbad (City) and the Carlsbad Municipal Water District (CMWD), Cabrillo Power I LLC and Carlsbad Energy Center LLC (collectively, NRG) and 13 14 15 16 Ij San Diego Gas & Electric (SDG&E), addressing items including: 18 1. The need for additional generating capacity in the San Diego region following the 19 20 21 22 23 3. The demolition and removal of EPS by a time certain and the subsequent 24 remediation and redevelopment of the EPS site; 25 26 27 28 premature closure of the San Onofre Nuclear Generating Station (SONGS); 2. The permanent shut down of the Encina Power Station as soon as reasonably possible; 4. The redesigning of the Carlsbad Energy Center Project (CECP) to achieve a smaller environmental footprint, lower profile, and lower stack heights; 15 16 17 18 use of ocean water for power plant cooling or other industrial uses; 6. The relocation of the SDG&E North Coast Service Center off of the coastline in a manner that is cost-neutral to SDG&E and its ratepayers; and 1 5. The provision of recycled water for the redesigned CECP by the CMWD to avoid the 2 3 4 5 5 WHEREAS, the approval of a Purchase Power Tolling Agreement for the Carlsbad Energy 7 Center Project, based on analysis and statements by the California Independent System Operator, will provide significant electricity system benefits to the City of Carlsbad and the San 9 Diego region including improved electrical reliability in the region following retirement of 10 SONGS and planned closure of the EPS in conformance with the State Water Resources Control 11 j2 Board's once-through-cooling regulations; and 13 WHEREAS, the approval of a Purchase Power Tolling Agreement for the Carlsbad Energy 14 Center Project will provide significant benefits to the City of Carlsbad including 1. Removal of the visual blight on the coastline associated with the EPS, abandoned oil tanks, and related industrial facilities located on the EPS site; 2. Elimination of the biological impacts on the Agua Hedionda Lagoon and ocean 19 associated with the use of ocean water for power plant cooling and other uses for 20 the EPS; 21 3. Elimination of air and greenhouse gas emissions and noise from the old and 22 inefficient EPS; 23 24 4. Redevelopment of the entire EPS site between the coast and the rail road tracks 25 allowing greater coastal access, open space, and coastal oriented land uses; 26 27 28 -2- III plant that is more environmentally friendly, has a lower profile, and a cap on power generation and hours of operation; and WHEREAS, on March 6, 2015, Administrative Law Judge Yacknin issued a proposed 1 5. Redesign of the CECP approved by the California Energy Commission in 2012 to a 2 3 4 5 g decision denying without prejudice SDG&E's application for authority to enter into a Purchase 7 Power Tolling Agreement with Carlsbad Energy Center, LLC (NRG) which the City of Carlsbad 8 through a letter from Mayor Pro Tem Blackburn on March 26, 2015 requested be rejected; and WHEREAS, on April 6, 2015, Commission President Picker issued an alternate proposed decision conditionally approving SDG&E's application for authority to enter into a Purchase Power Tolling Agreement with Carlsbad Energy Center, LLC (NRG); and 9 10 11 12 13 WHEREAS, said alternate proposed decision conditionally approves SDG&E's application 14 subject to two conditions: 15 16 17 18 19 2. That all of the 100 MWs in residual procurement authority resulting from the 20 amendment of the application must consist of preferred resources or energy storage NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California as follows: 1. That the proposed project contract capacity is reduced from 600 MWs to 500 MWs while otherwise subject to the same per unit price, and other terms and conditions; and That the above recitations are true and correct. 21 22 23 24 25 2. That the City of Carlsbad supports the alternate proposed decision of California 26 Public Utilities Commissioner Picker conditionally approving SDG&E's application 27 -3-28 1 2 3 4 5 6 7 8 9 /// 10 /// 11 12 /// 13 /// 14 /// 15 /// 16 /// /// 17 /// 18 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 26 /// 27 28 for authority to enter into a Purchase Power Tolling Agreement with Carlsbad Energy Center LLC (NRG) which will allow permanent retirement, demolition, and removal of the EPS as soon as possible and the construction and operation of the CECP as proposed in the application before the California Energy Commission. 3. That the City Manager is hereby authorized to transmit a copy of the passed, approved and adopted Resolution in Support to the California Public Utilities Commission. 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 21^' day of April 2015, by the following vote to wit: AYES: NOES: Council Members Blackburn, Schumacher, Wood, Packard. None. ABSENT: Council Member Hall. KEIlVi BLACKBURN, Mayor Pro Tem ATTEST: BARBARA ENGLESON^ity Clerk (SEAL) o^S^v-SBAoX