NGI The Weekly Gas Market Report
The first merchant electric generating plant proposed followingindustry restructuring in California more than three years agofinessed a crucial court challenge Tuesday and moved toward aconstruction start-up early next year on a $300-350 million, 700 MWplant on a former Air Force base in the high desert 75 milesnortheast of Los Angeles.
An interceder’s petition for the state Supreme Court was turneddown, making final the project’s authorization by the CaliforniaEnergy Commission last May.
By far the most complex merchant plant siting so far, because ofwater, air quality and natural gas requirements, the High DesertProject, sponsored by Constellation Power Source, a non-utilityaffiliate of Baltimore Gas and Electric, and Newport Beach,CA-based developers who formed High Desert Power Project, LLC, backin early 1997, is within a few days or weeks of obtaining federalenvironmental approvals from a half-dozen agencies. “We havecompleted the environmental impact statement (EIS), so we know whatall the permits will look like,” said Andy Welch, project directorsince its inception. “But they still haven’t been issued yet.” Whenasked when the federal permits are expected, Welch said, “lastJuly,” but then added he expects them “any day now.”
Once he has the opinion on mitigating potential biologicalimpacts from the Fish and Wildlife Service, Welch said he expectsthe other agencies to follow with their permits (Corps ofEngineers, EPA, Bureau of Land Management and the Air Force).
While the time period for this proposed plant already is wellbeyond the average of 18 months to two years that has become commonin California, the proponents in this case changed their plans atseveral junctures, which greatly added to delays. Water has been aburning issue, prompting local opposition at certain times anddesign changes.
A 2.5-mile pipeline for raw water will be constructed to connectthe power plant to an existing 16-inch-diameter Victor Valley WaterDistrict pipeline.ÿ There are also seven extraction wells proposedas part of the High Desert plant.
The project now calls for a 32-mile natural gas pipeline thatwill be built by Southwest Gas Corp. to interconnect with both thePG&E and Kern River pipelines that traverse the area. A7.3-mile transmission line also will be built to connect with the230 kv Victor Substation. The line routing will follow existingtransmission line corridors where possible, and will be configuredto minimize electro-magnetic fields (EMF), according to Welch. TheVictor Substation is capable of accepting 700 MW of power while13,900 MW of power is also being imported into Southern California,he said.
Welch said once the federal permits are in hand, his firm willarrange for financing, something he appears certain will cometogether before the end of this year. Lurking in the background,however, is the current statewide debate on the future ofCalifornia’s electric restructuring due to the volatile wholesaleprices and resulting rate shock on retail customers in San Diego.
Welch said High Desert is ready to finally break ground earlynext year for an anticipated 27-month construction timetable thatestimates having the plant operable by the spring of 2003.
“We’re watching (the restructuring debate) with interest,” Welchsaid. “At this point, we still believe the deregulated market willcontinue, and state officials are not going to do something rash.Nevertheless, we haven’t financed the project yet, so we stillhaven’t made irreversible commitments. We’re still optimistic atthis point.”
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