Lengthy CA Permitting ScaresOff Power Plant Investors
Ground was broken this month for development of a $275 million,
540 MW natural gas-fired power plant in Arizona by San Jose,
CA-based Calpine Corp., and close observers of California electric
restructuring are indicating this plant may be the first of many
more out-of-state plants designed to serve California.
California's cumbersome power plant siting process ultimately is
going to increase the numbers of new merchant plants in the
surrounding states as a result, several observers said. There are
fewer economic hurdles for out-of-state plants selling into the
California grid, assuming gas supply availability and electric
transmission bottlenecks are not a problem.
Calpine will be shopping for gas supplies totaling about 90 Bcf
annually for this power plant, which is located less than a mile
from El Paso and Transwestern interstate pipelines near the
convergence of the California, Nevada and Arizona borders. It
expects to finalize gas supply deals during the construction of the
plant on the Ft. Mojave Indian Reservation. The plant, called the
South Point Power Plant, is scheduled to begin operating early in
2001 as the first merchant electric plant on an American Indian
reservation. It will sell power in Arizona and Nevada in addition
to the California market.
The investment community reportedly is losing interest in
California power plant projects because of the added permitting
time and environmental restrictions relative to other states. "I am
doing business coast-to-coast," said one national energy manager
for a major industrial operator. "And I can build a power plant
anywhere I want in two years time and have it online a year faster
than I can in California. The differential is the permitting. I
hope California is not using the federal two-year time frame for
permitting as a model that indicates their one-year process is
okay. It doesn't make them look very good compared with states you
can get through in three to six months. It's pretty sad."
Actual permitting time for the Arizona project took about 14
months, according to Calpine's environmental specialist, Ed
Merrihew, noting that there is a lot of required public involvement
in the process of reviewing draft environmental impact statements
(EIS). "All this takes time, and I don't think it can be done in
six months, but I think the usual time for an EIS process-start to
finish-is twelve months. If you ran into problems, it might take 18
months. If you said 12 months in California, you would be lying,
however. You would be looking at 18 months-plus in California from
Calpine's first new gas-fired plant to gain state approvals in
California in Sutter County north of Sacramento took more than two
years undergoing the California Energy Commission's stringent
environmental processing. "That is easily 18 to 24 months,"
Merrihew said. "Trying to get this project in California would have
taken three years."
Richard Nemec, Los Angeles
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