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Gas-Dominant Sempra Views Coal-Fired Generation as Hedge

Despite billions of dollars of current and future natural gas projects, San Diego-based Sempra Energy expressed a new appreciation for coal last week in responding to newly organized local opposition to its very early plans to develop a major coal-fired power plant 100 miles north of Reno, NV. It is a "strategic" location with access to serving load centers in California, the Pacific Northwest and Nevada, a corporate spokesperson told NGI/Power Market Today on Thursday.

A coalition of clean energy advocates in Nevada stepped forward last Wednesday in strong opposition to Sempra's proposed 1,450 MW Granite Fox generation plant. The Nevada Clean Energy Coalition made a public relations splash just as the Nevada governor's energy adviser was telling NGI that multiple coal generation plants are being seriously considered in the north end of the state, but Sempra only has one in the state near Gerlach, NV.

"There is the northern portion of the Pacific Intertie (high-voltage direct current, HVDC) transmission line, rail links to the Wyoming coal reserves and lots of land and water required for the facility," said Sempra's spokesperson. "We believe this will be one of the cleanest coal-generating facilities in the country." For example, in terms of mercury emissions, Sempra alleges only 0.1 part per million of the coal is mercury, and the company's proposed air emission controls would remove up to 80% of that.

"People knowledgeable in the industry realize that natural gas prices have gotten substantially higher, and have made gas-fired generation less attractive, and that means power produced in gas-fired plants tends to be more expensive," said the spokesperson for Sempra. "A modern, advanced technology coal plant can produce power more inexpensively while meeting environmental requirements.

"In addition, there are more plentiful resources of coal in this country. It is a plentiful domestic resource for the United States As a fuel source it is a stable commodity."

Sempra would propose to ship by railroad coal supplies from the Powder River Basin in Wyoming and Montana, with a loose time frame for having a commercial plant in operation in the range of 2010 to 2012, the spokesperson said, noting "this is just the early beginning."

In attempting to dampen the seeming fire in the opposition coalition, Sempra's spokesperson emphasized that there will be "very thorough reviews" of every aspect of the proposed coal project. The federal Bureau of Land Management is the oversight authority for the proposed facility, and it will begin scoping meetings next month. The company does not expect an environmental impact statement until next year, and there will be "considerable time for public comment and input," the spokesperson said.

Historically, Sempra had no coal-fired projects until last year when it purchased two coal plants in Texas -- a half-interest in Coleto Creek and all of Twin Oaks.

In the LNG arena, the Sempra spokesperson confirmed that pre-construction road work was still underway at the company's Costa Azul receiving terminal site about 14 miles north of Ensenada on the Pacific Coast of Baja in Mexico, but there is still no real steel in the ground. That project has stirred belated local opposition from at least one member of the Baja Norte state Congress and some real estate developers in the general area.

The critics in northern Nevada seemed to want renewable energy projects only -- no fossil fuel-fired ones at this point.

With PR spokespeople assigned to Los Angeles and San Francisco, the coalition announced it had earlier in the week sent a letter to Sempra Chairman Steve Baum, urging him to stop plans for the Granite Fox plant. As an Earth Day event, the group held a press conference in the Washoe County building's courtyard in Reno to unveil what members called an "educational brochure" and website (www.nevadacleanenergy.org). The group alleges environmental and public health concerns from the proposed coal plant, and wants wind-generated power instead.

David Rumsey of Parker Ranch, a local rancher whose property is downwind of the proposed plant, said he feared "grave health risk" from the proposed plant, which Sempra has been advocating as "the cleanest in the West."

Nevertheless, Nevada is thought by some state officials to be destined to have several new coal-fired electric generation plants, in addition to more renewable-based power, according to Gov. Kenny Guinn's energy adviser, Richard Burdette, who talked to NGI Tuesday in between meetings of a western energy group in San Jose, CA.

The power plant activity, which is intensifying, explains the increased interest in running new high-voltage transmission power lines into the southern end of Nevada, Burdette said. For example the north-to-south transmission line proposed by a New Jersey-based wind power developer that purchased the transmission corridor from Sierra Pacific Resources' two Nevada utilities could be either high-voltage direct current (HVDC) or a more common alternating current (AC) high voltage transmission line, he said. "The developer, LS Power Associates, really doesn't care," he said.

In addition to major interstate power transmission lines from Alberta, Canada, Wyoming and the Southwest that could come through the Las Vegas area, Burdette said existing construction is still ongoing on the in-state Sierra Pacific Resources' utility Centennial Project north and east of Las Vegas to connect Harry Allen and Mead Substations, and an existing new line between Nevada Power Co.'s now-under construction 1,200 MW plant that it bought last year from Duke Energy and the Mead Substation.

Burdette is not convinced that either local opposition -- and there is some vocal opposition in and around Gerlach -- nor environmental issues will stop Sempra's coal-fired plant plans, or two or three other proposals, most of which are proprietary and he refused to talk about at this stage of their development. In the Gerlach area, Burdette said the attitudes toward Sempra and proposed wind or geothermal renewable projects is "a mixed bag. In numbers the opponents certainly are larger, but I'm not sure if you limit it to people who are truly local residents, that the numbers are greater on one side or the other."

But the coalition that surfaced last Wednesday is alleging serious environmental and health impacts from the proposed coal plant and the "shutting out" of more viable renewable energy projects. "Developing Nevada's wind, geothermal, and solar energy is smarter, cleaner, and more profitable for our state than coal generation," says Jon Wellinghoff, a Las Vegas-based energy attorney and Nevada's first consumer advocate who has been mentioned by the state's senior U.S. Senator as a possible nominee for a vacancy on the Federal Energy Regulatory Commission. Wellinghoff was quoted by the coalition in its press release.

More than a dozen -- mostly western environmental groups -- were listed by the coalition as among its members, including the Sierra Club, Sacramento-based Center for Energy Efficiency and Renewable Technologies, and Arizona-based Grand Canyon Trust.

In terms of environmental concerns, Burdette said that strictly speaking there is sufficient capacity in the northern Nevada air shed to accept the estimated added emissions from the Sempra plant and other proposed coal-fired generation facilities. "The addition of those point sources will not violate air shed limitations," Burdette said. "And in Nevada, that means there is no environmental basis for rejecting the plant(s). There is no 'best-use' adjudication."

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