Like many other industrial operators before it, Duke EnergyServices has found that operating along California’s famouscoastline can be a rocky proposition. Duke has been forced to pullback and reconfigure plans for its Morro Bay power plant along thecentral coast to accommodate local city concerns and is makingpromises to increase the city’s coffers by up to 30% through theplant remodel.
Only part of Duke’s massive restructuring of two major gas-firedpower plants it bought from Pacific Gas and Electric Co. more thantwo years ago is currently moving forward in the state regulatoryapproval process. That involves plans to transform the Moss Landingplant from a 1,500-MW site to one of smaller scale but greatercapacity, approaching 2,600 MW, which would be the biggest powerplant in the state, according to Duke spokesman Tom Williams.
After pulling its application from the California EnergyCommission last fall, Duke has made substantial concessions to thecity of Morro Bay. In addition to turning back portions of thepresent plant site for commercial and recreational use as anextension of the coastal fishing village’s embarcadero, Duke iscommitting to annual payments of $2 million beginning with thecommercial operation of Phase I of a two phase expansion project.Phase I is targeted for the summer of 2003. The revenue will becomprised of property taxes, gas franchise fees, easement paymentsand the plant’s operating budget. It would increase the city’sgeneral fund by 30%. Both Phase I and Phase II will generate aone-time payment to the city of about $900,000 in sales taxrevenue.
“They wanted a guarantee that the plant will come down by 2013,and if we don’t go through with the second phase, it would still bedown by 2015,” Williams said. “That’s a $40 million demolitionproject. It will have a larger capacity, but with a helluva smalleroverall plant. It is just a different game.”
Duke plans to refile the expansion plan this summer with the CECwith the full backing of the city government. Williams said amemorandum of understanding between Duke and the city will becompleted later this month and he expects the city council will acton it next month.
Duke now is committed to spending millions of dollars more toeventually demolish the existing 1950-era power plant, its oilstorage holders and three 400-foot smokestacks, replacing them withsmaller, more efficient combined-cycle gas-fired turbines that willrequire four, 150-foot-high stacks and a much smaller overallprofile. Total output eventually will increase from about 1,000 MWtoday to 1,200 MW.
In total, Duke has stated that it intends to double the totalcapacity of the two plants and use about the same amounts of gas— estimated to total about 185 MMcf/d — when operating at fullcapacity.
Richard Nemec, Los Angeles
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