HomeMy WebLinkAbout2019-11-12; City Council; Resolution 2019-228RESOLUTION NO. 2019-228
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE MAYOR TO SIGN A LETTER GRANTING
CABRILLO POWER I LLC (NRG) A NOT-TO-EXCEED, NINE-MONTH
EXTENSION IN THE DEMOLITION DEADLINE UNDER THE JAN. 14, 2014
SETTLEMENT AGREEMENT BETWEEN AND AMONG THE CITY OF
CARLSBAD (CITY), CARLSBAD MUNICIPAL WATER DISTRICT (CMWD),
CABRILLO POWER I LLC AND CARLSBAD ENERGY CENTER LLC
(COLLECTIVELY NRG), AND SAN DIEGO GAS & ELECTRIC COMPANY
(SDG&E)
WHEREAS, on Jan. 14, 2014, the City Council of the City of Carlsbad approved a Settlement
Agreement (Agreement) amongst and between the City, CMWD, NRG, and SDG&E (Resolution
No. 2014-010); and
WHEREAS, per the Agreement, the City agreed to support NRG's construction of a 500
mw peaker plant located east of the railroad tracks and west of 1-5 known as the Carlsbad Energy
Center Project (CECP); and
WHEREAS, in exchange, NRG agreed, among other provisions of the Agreement, to shut
down the existing Encina Power Station (EPS) on the commercial operation date of the new CECP,
which was Dec. 12, 2018.; and
WHEREAS, in addition, NRG agreed to start the above-ground demolition and remediation
of EPS within one year following the shutdown date of EPS and to complete the demolition within
two years of the start date of the demolition; and
WHEREAS, Poseidon Resources (Channelside) LP (Poseidon) owns and operates the
Claude "Bud" Lewis Carlsbad Desalination Project (CDP) and since the December 2018 shutdown
of EPS, Poseidon has continued to utilize EPS's circulating water pumps to deliver seawater to
the CDP; and
WHEREAS, it was expected that Poseidon would complete the construction of their own
new pumps by Dec. 31, 2019. That schedule will not be met due to extensive challenges and time
delays in receiving all the agency permits needed to move forward on construction of the new
CDP pumps; and
WHEREAS, to ensure continuity of water supply operations, it is necessary for NRG to
accommodate Poseidon's need for continued use of the EPS pumps through at least April 2020,
and possibly as late as June 2020; and
WHEREAS, the accommodation of Poseidon's water pump needs represents a major
constraint to NRG's ability to comply with the demolition completion date currently outlined in
the Agreement; and
Nov. 12, 2019 Item #12 Page 4 of 13
WHEREAS, the San Diego County Sheriff's Department (Sheriff) operates the Regional
Communications System (RCS) utilized by both police and fire emergency response agencies in
North San Diego County; and
WHEREAS, the Sheriff is currently working towards the implementation of a new RCS
which is not expected to be up and running until April 2020; and
WHEREAS, the existing RCS relies upon an antenna located on the EPS stack for reliable
emergency services communication coverage throughout north county; and
WHEREAS, NRG had originally expected to demolish the EPS stack early in their demolition
schedule, but NRG has had to defer demolition of the stack until the new RCS is up and running;
and
WHEREAS, the accommodation of the Sheriff's RCS needs represents a major constraint
to NRG's ability to comply with the demolition completion date currently outlined in the
Agreement; and
WHEREAS, NRG, along with Poseidon Resources (Channelside) LP (Poseidon), is now
requesting that the City Council grant a not-to-exceed, nine-month extension to the demolition
completion date specified in the Agreement.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California,
as follows:
1. That the above recitations are true and correct.
2. That the City Council of the City of Carlsbad (City Council) hereby grants NRG's
request for a not-to-exceed, nine-month extension to the demolition completion
date specified in the Agreement.
3. That the City Council hereby authorizes the mayor to sign the attached extension
letter (Attachment A).
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 12th day of November 2019, by the following vote, to wit:
AYES: Hall, Blackburn, Bhat-Patel, Schumacher.
NAYS: None.
ABSENT: None.
MATT HALL, Mayor
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Nov. 12, 2019 Item #12 Page 5 of 13
<icityof
Carlsbad
Office of the Mayor
November 12, 2019
Eric Leuze
VP, Asset Management
Cabrillo Power I LLC
804 Carnegie Center
Princeton, NJ 08540
Subject: Extension of the Encina Demolition Deadline
Dear Mr. Leuze,
Attachment A
Ccarlsbad
Municipal Water District
Office of the President
Poseidon's Claude "Bud" Lewis Carlsbad Desalination Plant ("CDP") provides 50 million gallons of
water per day to support the integrated water supply of the San Diego County Water Authority
and member agencies including the Carlsbad Municipal Water District. CDP's desalination
process currently relies on operation of the now-retired Encina Power Station's ("Encina's")
circulating water pumps. The city understands that under the Ground Lease Poseidon has with
Cabrillo Power I LLC ("NRG"), the owner of Encina, Pos_eidon's right to continued operation of the
Encina pumps into 2020 is limited by several conditions, including a requirement that the city
consent to operation of the Encina pumps after Dec. 31, 2019.
The city further understands that based on Poseidon's current schedule for replacement pumps,
continued operation of the Encina pumps will be necessary through at least April 20, 2020, but
that Poseidon believes Encina pump operation may be necessary through June 2020. There are
no alternatives to the continued operation of the Encina pumps during that period, meaning that
without operation of the Encina pumps after Dec. 31, 2019, the CDP would necessarily shut down
for an additional four to six months. This significant disruption to an essential water supply to
San Diego County and Carlsbad is not in the public interest.
The city also understands that the demolition schedule is further complicated by delays in the
transition to a new emergency communication system that the San Diego County Sheriff
Department is coordinating. The existing system relies on an antenna located on the Encina stack
that serves the Sheriff Department and other emergency response agencies. NRG has advised
the city that the original plan was to demolish the stack early in the overall schedule, but stack
demolition has now been delayed to April 1, 2020, to accommodate the Sheriff Department's
transition to the new system.
Under the Jan. 14, 2014, Settlement Agreement among the city, NRG and others, NRG is obligated
to begin demolition of Encina no later than Dec. 12, 2019, and to complete demolition no later
than Dec. 12, 2021 ("Demolition Deadline"). The city acknowledges that additional delays in the
Mayor Matt Hall
City Hall 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2830 t I www.carlsbadca.gov Nov. 12, 2019 Item #12 Page 6 of 13
Mr. Eric Leuze
Nov.12,2019
Page 2
construction of Poseidon's new pumps, and the completion of the Sheriff Department's new
communication system could impact NRG's schedule for demolition.
In light of the unavoidable interruption to the supply of water to the CDP that would otherwise
result, the city consents to the continued operation of Encina's pumps after Dec. 31, 2019.
Additionally, the city agrees that the stack demolition should be delayed until the Sheriff
Department has completed the transition to the new communication system. Furthermore, so
long as NRG demonstrates reasonable efforts to complete the demolition of Encina as soon as
possible, the city hereby authorizes an extension in the Demolition Deadline, such extension not
to exceed nine months. Si;/j/;U
Matt Hall
Mayor, City of Carlsbad
President, Carlsbad Municipal Water District Board of Directors
cc: Scott Chadwick, City Manager
Celia Brewer, City Attorney
Gary T. Barberio, Deputy City Manager, Community Services
Sachin Chawla, Poseidon Resources (Channelside) LP
Nov. 12, 2019 Item #12 Page 7 of 13