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California Sticks by Gas-Fired Generation
As a further sign the state is sticking with natural gas-fired electric generation, the California Public Utilities Commission (CPUC) last Thursday overcame a mounting chorus of naysayers and gave the go-ahead (again) to a power plant that has been in the development phase for more than a decade in Northern California.
The CPUC unanimously approved an amended purchase and sale agreement between Pacific Gas and Electric Co. (PG&E) and Contra Costa Generating Station LLC’s Oakley Generating Station. The benefits of more baseload gas-fired generation are growing larger as states like California add more intermittent power sources, such as wind and solar (see Daily GPI, June 29, 2011).
Two years ago, the CPUC approved a utility agreement for a 586 MW natural gas-fired baseload combined-cycle generation plant in the East San Francisco Bay Area, but the state regulatory panel refused to authorize the plant for inclusion in rates until 2016, two years after its targeted start-up (see Daily GPI, Dec. 21, 2010).
Less than a half-year later, the California Energy Commission (CEC) unanimously approved Oakley as one of two gas-fired electric generation plants (see Daily GPI, May 20, 2011) that would add more than 800 MW to the state’s generation fleet, which remains under pressure along the coast where 20 plants eventually need to meet new once-through-cooling (OTC) rules later in this decade or shut down.
Last Thursday the CPUC approved an amended purchase and sale agreement between PG&E and Contra Costa Generating for the Oakley facility, a 586 MW combined-cycle natural gas-fueled generation plant located in Oakley, CA. As part of the deal, Contra Costa will construct and then sell the Oakley project to PG&E. The project currently has a proposed online date of late June 2016.
“The transaction will result in an annual revenue requirement of about $200 million for PG&E to allow the combination San Francisco-based utility to recover the nonfuel costs of constructing and operating the project,” a CPUC spokesperson said.
CPUC President Michael Peevey said the Oakley plant will “provide benefits to California, including renewable integration and reduced emissions.” Peevey said the Oakley plant is “highly viable” and construction is already under way.
Contra Costa Generating, is a limited liability corporation owned by Radback Energy Inc. Construction is slated for a 21.95-acre site in the city of Oakley.
Late in 2010 the CPUC reversed an earlier denial and approved the PG&E contract with the Oakley developers. Earlier in 2010 the CPUC concluded that the project was not needed to fulfill the utility’s short-term reliability needs. PG&E subsequently brought the project back to the regulators with a deferred date for its ownership from 2014 to 2016. In the two ensuing years, Contra Costa Generating will operate the plant as a merchant facility.
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