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CA Merchant Plant Survives Court Challenge

CA Merchant Plant Survives Court Challenge

The first merchant electric generating plant proposed following industry restructuring in California more than three years ago finessed a crucial court challenge Tuesday and moved toward a construction start-up early next year on a $300-350 million, 700 MW plant on a former Air Force base in the high desert 75 miles northeast of Los Angeles.

An interceder's petition for the state Supreme Court was turned down, making final the project's authorization by the California Energy Commission last May.

By far the most complex merchant plant siting so far, because of water, air quality and natural gas requirements, the High Desert Project, sponsored by Constellation Power Source, a non-utility affiliate of Baltimore Gas and Electric, and Newport Beach, CA-based developers who formed High Desert Power Project, LLC, back in early 1997, is within a few days or weeks of obtaining federal environmental approvals from a half-dozen agencies. "We have completed the environmental impact statement (EIS), so we know what all the permits will look like," said Andy Welch, project director since its inception. "But they still haven't been issued yet."

The project now calls for a 32-mile natural gas pipeline that will be built by Southwest Gas Corp. to interconnect with both the PG&E and Kern River pipelines that traverse the area. A 7.3-mile transmission line also will be built to connect with the 230 kv Victor Substation.

Welch said once the federal permits are in hand, his firm will arrange for financing, something he appears certain will come together before the end of this year. Lurking in the background, however, is the current statewide debate on the future of California's electric restructuring due to the volatile wholesale prices and resulting rate shock on retail customers in San Diego.

Welch said High Desert is ready to finally break ground early next year for an anticipated 27-month construction timetable that estimates having the plant operable by the spring of 2003.

"We're watching (the restructuring debate) with interest," Welch said. "At this point, we still believe the deregulated market will continue, and state officials are not going to do something rash. Nevertheless, we haven't financed the project yet, so we still haven't made irreversible commitments. We're still optimistic at this point."

Richard Nemec, Los Angeles

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