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CA's First Merchant Plant Nears Starting Gate

CA's First Merchant Plant Nears Starting Gate

Although gas supply and power contracts probably won't be signed until next year, California's first major merchant generation plant is expected to get its final state regulatory approval next week and break ground this summer north of Sacramento in Sutter County near the agricultural town of Yuba City. A set of environmental concessions by the project sponsor, San Jose, CA-based Calpine Corp., pushed it into the lead spot among seven other projects undergoing the state regulatory approval process. Project financing, gas supply contracts and power supply deals will all be wrapped up in the second and third quarters of 2000, according to Calpine's Sutter project manager, Curt Hildebrand.

Calpine's proposed $310 million, 500 MW natural gas-fired, combined-cycle plant incorporates various environmental measures that have leapfrogged it into first place over an earlier proposed desert-based project in Southern California that is sponsored by Baltimore Gas and Electric Co.'s affiliate Constellation Power Development. The latter plant's water requirements and more recent decision to include a second, 30-mile natural gas supply pipeline from Kern River-Mojave have caused its slowdown for further environmental and local permitting considerations in the high desert, 100 miles northeast of Los Angeles.

California Energy Commission sources, which have to approve all new merchant power plants, speculate that a project in the Kern County 40 miles west of Bakersfield most likely will be the second one started. The $500 million, 1,045 MW, gas-fired plant, called La Paloma, sponsored by US Generating Co. enters the hearing phase this month. Both Sutter and La Paloma will require new 230-KV power transmission lines to connect with the state's transmission grid. Calpine also needs a 16-inch-diameter, 14-mile pipeline to tie-in to PG&E's gas transmission system. La Paloma needs only a 370-foot link to tap into the nearby Kern-Mojave interstate natural gas transmission pipeline.

With seven other merchant plants, totaling nearly 4,000 MW also in the state application process, and another dozen on the drawing boards, state energy commission officials are downplaying how much of Calpine's environmental concessions may be required of other proposed projects. Calpine's concessions on water and other environmental factors added $25 to $35 million over its original estimates two years ago.

"I think Calpine has shown that these are feasible measures," said Roger Johnson, energy commission siting program manager. "I doubt that they will become a requirement, but if there are similar types of problems with other projects, they could bear some weight on those projects.

"For the High Desert project I think it is being looked at a little more seriously now because of the water problems being encountered there." While environmental requirements may get stiffer, regulators and power plant proponents are all still assuming that the first eight project proposals will all get built one way or another. But for the short term, Calpine appears to have the only sure thing.

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