Although gas supply and power contracts probably won’t be signeduntil next year, California’s first major merchant generation plantis expected to get its final state regulatory approval next weekand break ground this summer north of Sacramento in Sutter Countynear the agricultural town of Yuba City. A set of environmentalconcessions by the project sponsor, San Jose, CA-based CalpineCorp., pushed it into the lead spot among seven other projectsundergoing the state regulatory approval process. Projectfinancing, gas supply contracts and power supply deals will all bewrapped up in the second and third quarters of 2000, according toCalpine’s Sutter project manager, Curt Hildebrand.

Calpine’s proposed $310 million, 500 MW natural gas-fired,combined-cycle plant incorporates various environmental measuresthat have leapfrogged it into first place over an earlier proposeddesert-based project in Southern California that is sponsored byBaltimore Gas and Electric Co.’s affiliate Constellation PowerDevelopment. The latter plant’s water requirements and more recentdecision to include a second, 30-mile natural gas supply pipelinefrom Kern River-Mojave have caused its slowdown for furtherenvironmental and local permitting considerations in the highdesert, 100 miles northeast of Los Angeles.

California Energy Commission sources, which have to approve allnew merchant power plants, speculate that a project in the KernCounty 40 miles west of Bakersfield most likely will be the secondone started. The $500 million, 1,045 MW, gas-fired plant, called LaPaloma, sponsored by US Generating Co. enters the hearing phasethis month. Both Sutter and La Paloma will require new 230-KV powertransmission lines to connect with the state’s transmission grid.Calpine also needs a 16-inch-diameter, 14-mile pipeline to tie-into PG&E’s gas transmission system. La Paloma needs only a370-foot link to tap into the nearby Kern-Mojave interstate naturalgas transmission pipeline.

With seven other merchant plants, totaling nearly 4,000 MW alsoin the state application process, and another dozen on the drawingboards, state energy commission officials are downplaying how muchof Calpine’s environmental concessions may be required of otherproposed projects. Calpine’s concessions on water and otherenvironmental factors added $25 to $35 million over its originalestimates two years ago.

“I think Calpine has shown that these are feasible measures,”said Roger Johnson, energy commission siting program manager. “Idoubt that they will become a requirement, but if there are similartypes of problems with other projects, they could bear some weighton those projects.

“For the High Desert project I think it is being looked at alittle more seriously now because of the water problems beingencountered there.” While environmental requirements may getstiffer, regulators and power plant proponents are all stillassuming that the first eight project proposals will all get builtone way or another. But for the short term, Calpine appears to havethe only sure thing.

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