In what is a harbinger for other electricity-intensive high-techcorridors that have sprung up in various regions of the U. S., alocal zoning decision in the midst of California’s Silicon Valleycould decide the fate of a new generating plant that everyoneagrees is badly needed to serve the rapidly growing powerrequirements of the Internet-connected, new economy businesses.

A couple of unlikely opponents in the ongoing power plant sitingstruggle are both pillars of San Jose, CA’s bright new economicfuture — Calpine Corp., the merchant power plant developer, andCisco Systems, Inc, the world’s leading provider of the servers andrelated equipment that enable e-commerce to grow.

The state’s newly-enacted accelerated power plant siting processdoes not apply since the project is in what its backers say are thefinal stages prior to getting state approval, probably early nextyear. Ultimately, the decision may require the always-difficultchoice between regional energy needs and local land-use control,unless the backers can reach an agreement with Cisco, which brokeoff talks early in the summer, according to a Calpine spokesperson.

“We recently sent a letter asking for a meeting and we hope theywill take us up on it,” said Lisa Poelle, a San Jose-basedspokesperson for the project that was formed to develop four newpower plants in the greater San Francisco Bay Area. (One is underconstruction in the East Bay and two other sites are yet to beidentified.)

Most state officials and energy industry stakeholders supportthe plans by Calpine and a joint venture partner, SanFrancisco-based Bechtel, to develop a $400 Million, 600 MW, naturalgas-fired power plant at the southern-most end of San Jose, lessthan a mile from critical gas supply pipelines and a major tie-into the grid through a 50-year-old Pacific Gas & Electricsubstation. This would be the first major electric generating plantin Silicon Valley, which sits in a somewhat precarious position atthe bottom of a “funnel” of gas and electric transmission linesserving the power-hungry section of the San Francisco Bay Area.

The major question looming is whether the electricity projectcan get the zoning change it needs in the face of the currentstrong opposition from Cisco. San Jose’s mayor and three councilmembers support Cisco. Eight of the 11 San Jose City Councilmembers have remained neutral pending the completion of theenvironmental and other fact-gathering and analysis being conductedby the California Energy Commission, the state siting authority fornew power plants. The energy commission work is expected to becompleted Oct. 1, after which the city council is expected to holdhearings and make a decision by Thanksgiving.

If the city council refuses to make the zoning change needed forthe power plant, the Calpine-Bechtel alliance won’t say if it wouldabandon the proposed project, the spokesperson, Poelle, said.

While the environmental and technical requirements of the stateenergy commission are apparently all being satisfied, the proposedMetcalf Energy Center, as Calpine has dubbed the power plant, hit ahuge potential stumbling block in Cisco, which has plans to develop688 acres a half-mile from the proposed Metcalf site to build a$1.2 billion office park complex for 20,000 additional employees.It does not want to have the power plant as a visible neighbor,even though the Calpine-Bechtel plans call for giving the electricgenerating site the appearance of an office building and thelarger, 40-acre PG&E substation is already in the area as acritical transmission juncture.

Opponents of the Metcalf plant, which include some local groups,contend there are other suitable sites for a new power plant.Calpine strongly disagrees, saying this is the only site that canprovide a new source of electricity to Silicon Valley within thecritical timeframe of the next two years. (If everything went rightfor the backers, the earliest Metcalf could be online would be latesummer, 2002, according to Poelle.)

Major electric transmission constraints make Metcalf the onlyviable site, according to the backers. The nearby 250 KVtransmission line coming through the PG&E substation is a majorattraction.

“If you put a plant in some outlying area and try to bring thepower in, you have to build a whole new transmission corridor,”Poelle said. “You can’t just hook up to the existing transmissionlines (in outlying areas). Building a whole new transmissioncorridor is tougher than building a new power plant. Nowadays itwould be a private venture; need property rights of ways for miles,and it would take years. Maybe six or seven years, and we don’thave that kind of time. We are in dire need now. People can barelywait until 2002; they are worried about next summer.”

To support her point, Poelle said at a Silicon Valley energyforum early in the summer, Oracle Corp.’s energy director made thepoint that his company’s current servers require about 50 to 60watts of electricity for every square foot of a data center inwhich they operate, but the next generation of server will morethan double that power requirement to 150-200 watts/square foot.

Given the obvious need to keep up with the surge in electricitydemand, Calpine-Bechtel are promoting Metcalf as a model site,applying $10 million just to improve the power plant’s aesthetics,including using a hillside to help “hide” the plant and planting800 trees to rim the site. As it stands, the developers have had topurchase 136 acres, although only eight acres will be used for thepower plant. The rest of the land is un-developable because ofvarious environmental and topographical restrictions.

In addition, the plant will be far below the required airemission limits and will be free of the usual “steam plume”associated with power plants, Poelle said.

“Our contention is that Metcalf is fully compatible with itssurroundings (which include a butterfly habitat and a majorriparian area along a creek traversing the site),” she said. “Rightacross the street is a 40-acre PG&E substation that has beenthe hub for electricity in the Silicon Valley. Cisco chose tolocate its campus within a mile of a huge substation, which manypeople think is quite an eyesore. On the other hand, our projectwill beautify the area.”

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