While various market participants and analysts are advising astepped up construction schedule for new power plants, oneCalifornia community may be getting the message.

The San Jose Silicon Valley Chamber of Commerce is urging theSan Jose City Council to reconsider its 11-0 vote rejecting theapproval of the Metcalf Energy Center, a $400 million joint ventureproposed by Calpine Corp. and Bechtel, to develop a 600 MW, naturalgas-fired power plant at the southern-most end of San Jose.

The site is less than a mile from critical gas supply pipelines anda major tie-in to the grid through a 50-year-old Pacific Gas &Electric substation. This would be the first major electric generatingplant in Silicon Valley, which sits in a somewhat precarious positionat the bottom of a “funnel” of gas and electric transmission linesserving the power-hungry section of the San Francisco Bay Area. Themain opposition to the plant has come from Cisco Systems, which hasnimby concerns since it would be located adjacent to its own planneddevelopment (see Daily GPI, Sept. 20,2000).

The chamber action came as a result of a resolution adoptedunanimously by the organization’s board of directors. The area hasbeen subject to rolling blackouts off and on for the last twoweeks, a spokesman said. Chamber President Steve Tedesco cited twomajor concerns of the group, which supported the Metcalf projectduring the city council hearings.

“First, at the time of the hearings in November, council memberswere told by city staff that there was no reason to construct morepower plants in the state,” he said. “If the council’s decision wasbased on this kind of information, the need to reconsider thatdecision is absolutely essential.”

Second, Tedesco referred to the growing pressure to force theCalifornia Energy Commission to override the city council andlocate the plant there anyway. “It would be better for San Jose tobe a partner in the plant’s siting to ensure that city concernsabout impacts were addressed properly,” Tedesco explained.

A chamber e-poll conducted in December showed that nearly 80% ofthe chamber’s members believed the energy plant’s sponsors shouldcontinue to seek California Energy Commission approval, which couldby law override the city council’s initial decision, and/or start asignature drive to place the energy plant on a citywide ballot tolet voters decide.

Meanwhile, a group of energy marketers is strongly urging thestate energy commission to use its legal authority to bulldoze overlocal opposition to order the siting of new power plants throughoutthe state. Leaders of the National Energy Marketers Association,which met in San Diego earlier this month, said a main cause ofCalifornia’s problems is the lack of adequate generation.

“If California has taught us anything, it is that you can’texpect prices to remain stable or decline without construction ofnew generation,” said Craig Goodman, president of the marketers’association. “Another lesson is that consumers must be able torespond to correct price signals in order to conserve energy.”

The marketers are urging California to “step up and takeresponsibility” for the crisis, including assuring the solvency ofthe major investor-owned utilities and use of long-term supplycontracts, which should have been employed from “day one,”according to Goodman, noting that the state’s full reliance on thespot market for supplies was inconceivable. “How did that happenwhen people knew demand was growing and no new supply was coming online?”

For the short-term, the marketers are “not optimistic” for thesituation easing this summer, Goodman said. “If supply is notavailable elsewhere, there are going to be problems in other statesas well. Anywhere that consumers are getting false price signalsyou are going to have distorted markets. That is the real problem.”He said there are “very serious problems” lurking in the westernstates with the low water levels, fishing industry issues, and lowsnow pack.

The marketers think the “confluence of events in California” isunique to the state, but they are concerned in various areas thatlocal concerns are being allowed to block new generating plantsfrom being built. So in California and elsewhere it is an”unequivocal, bottom line” that plants get built for the broaderregional good.

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