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SDG&E Asks For Power Plants Switch to Oil

SDG&E Asks For Power Plants Switch to Oil

In another emergency step to alleviate summer peak electric demand, San Diego Gas & Electric asked state regulators last week for some relief on its natural gas transmission system by allowing the intermittent switching to oil of two major natural gas-fired power plants serving SDG&E customers.

The utility cited "unprecedented gas usage" on its pipeline system. Merchant owners of the two generating plants, as expected, are not thrilled with the idea and have filed in opposition to the proposal.

SDG&E's 80 largest interruptible gas customers are more likely to be curtailed in the coming weeks than "any time in the last 10 years," the utility told regulators. It maintains the current stresses on the gas system are almost entirely due to the high power plant loads. SDG&E's two merchant electric generation customers use about 220 MMcf/d on a typical July day, compared to a average daily system load for the utility of 560-590 MMcf/d.

For a temporary period of less than 90 days, SDG&E is proposing to switch to plants operated by Duke Energy and a combination of Dynegy/NRG Energy companies to interruptible from firm natural gas service as a means of allowing them at peak-demand times to switch to oil. Environmental and renewable energy advocates labeled the proposal last Monday as a "disaster" from an air quality standpoint, and a spokesperson for the California Public Utilities Commission noted that any opposition to the proposal will mean it cannot be handled this week as the utility is requesting.

"Due to unprecedented power plant demand on its gas system, SDG&E is currently being forced into near-curtailment situations on a regular basis," the utility said in its Aug. 1 advice letter to the CPUC. "SDG&E believes that over the next 90 days this situation (for gas) may get even worse, as temperatures and electric demand rise throughout the state.

"Because SDG&E does not have any on-system storage, it must rely on compression to 'pack' the system at low-demand times (usually the middle of the night), in order to meet system demand at high-demand times (such as peak electric demand times)."

When SDG&E owned and operated the two gas-fired power plants it did so on a interruptible gas service basis, the utility told the CPUC. The South Bay generating plant south of San Diego that is operated under a lease, with an option to buy, by Duke has 10-13 days worth of oil stored in three remaining tanks; three other oil storage tanks have been removed as part of Duke's clean-up and modernization of the site it eventually plans to own, according to Duke's California-based spokesperson Tom Williams, who added that even with the oil on-site, electric reliability can be "threatened" in the switching process back and forth between fuels.

Williams said that in making the switch, generation units must operate at half-capacity for one to two hours.

"We have not burned fuel oil at the plant commercially since we closed on the lease in April 1999," Williams said. "We have done so a couple of times to test the equipment. This is required as part of our must run contract with the Cal-ISO (independent system operator). We do not view burning fuel oil as a part of the normal operations of the plant --- but rather as a last resort."

Duke suggested that perhaps SDG&E's recent natural gas transmission pipeline upgrades to serve Mexican markets south of the international border in northern Baja are contributing to the problem. SDG&E spokespeople confirmed that 60-75 MMcf/d of gas is flowing to Mexico to fuel electric generation plants in northern Baja.

SDG&E's CPUC filing did note that because of "high electricity market prices and increased electricity demand south of the border," it is experiencing "unprecedented gas usage on its system" this summer.

"Electricity price spikes are driving gas demand, making forecasting gas load and planning gas operations extremely difficult for SDG&E," the CPUC request said. "Power plants that in the past cycled only during peak hours are now starting sooner and running later in the evening, thereby exhausting line pack and running the system closer to its limits."

Richard Nemec, Los Angeles

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