Calpine Gets Boost in CA, Buys Rights for Plant in Washington

In separate actions last Wednesday, California's governor and state officials gave a thumbs-up to two new power projects by San Jose, CA-based Calpine Corp. as the hyperactive merchant generator announced it assumed the development rights for another new plant in the state of Washington where construction will start almost immediately.

Technically, one of the plants, Otay Mesa, south of San Diego near the Mexican border, belongs to PG&E's National Energy Group (NEG), which gained the go-ahead from the state energy commission Wednesday to build the 500-MW plant, the first new power plant in San Diego County in 30 years. However, Calpine, under a deal it struck earlier, will build the plant, own and operate it, with PG&E keeping half of the plant's output.

Separately, Gov. Gray Davis formally asked the state energy commission to approve another, more controversial 600-MW plant, the Metcalf Energy Center, by Calpine in its headquarters city of San Jose. The plant faces stiff opposition from the local government and businesses, including the San Jose City Council and high-tech giant Cisco Systems, which wants to develop nearby property for an office complex.

"When the opportunity presents itself to get more megawatts on-line, we have to seize it," Davis said. "In this energy crisis, inaction is our enemy. It's time to stop talking about Metcalf and start building it."

The state energy commission has the authority to override local opposition to a power plant siting after it examines the public health/safety, environmental and engineering aspects of the project.

In the state of Washington, Calpine said it has acquired the development rights for a 248-MW gas-fired Goldendale Energy Center in the town of Goldendale, WA, from National Energy Systems Co. of Kirkland, WA. Terms of the acquisition were not disclosed. Construction will begin "immediately," and initial power deliveries are expected by July 1, 2002, Calpine said in its announcement. The plant is located in south-central Washington, 50 miles south of Yakima, WA, and a few miles north of the Columbia River.

Calpine will power the facility under a contract for gas supplies from Williams' Northwest Pipeline. The plant's output will be sold directly into the Northwest Power Pool, and it will interconnect with the Klickitat Public Utility District and electricity will be delivered to the Bonneville Power Administration grid.

Noting that this will be one of the first new power projects built in the Pacific Northwest, which is experiencing tremendous increases in demand as is true throughout the western states, Calpine's John King, business development vice president, said the region is often "overlooked" because of the continuing California crisis, but Washington, Oregon and surrounding states are "facing significant capacity shortages," too.

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