Admin Law Judge Rejects Carlsbad Deal

A proposed regulatory decision released March 6 disapproves San Diego Gas & Electric’s 20-year agreement for the output of the 600 MW Carlsbad project to help fill in the supply gap left by the closure of the 2,200 MW San Onofre Nuclear Generating Station.

The agreement between the utility and Carlsbad Energy Center, according to a California Public Utilities Commission administrative law judge, upends the agency’s ruling directing SDG&E to purchase a minimum of 200 MW and maximum of 800 MW of preferred resources—renewables, energy efficiency, demand response and storage—by 2022 to meet local capacity needs.

“The decision recognizes that clean energy is a viable option and must be allowed to compete against dirty fossil fuels,” said Matt Vespa, Sierra Club senior staff attorney. The Sierra Club, along with Earthjustice and the California Environmental Justice Alliance, oppose the Carlsbad project.

The crux of the issue is that the San Diego utility wants approval of a bilateral deal for the natural gas plant’s power before getting the final results of its request for offers for preferred resources to meet local demand, as directed by the commission.

In Track 4 of the commission’s Long Term Procurement Plan proceeding, SDG&E was directed to solicit offers for some or all of the 800 MW considered necessary to meet local capacity demand. A request for bids was issued by the utility in early September 2014 and offers came in on Jan. 5, 2015. A short list is expected in mid-May.

CPUC Judge Hallie Yacknin wrote it’s “unreasonable” to approve the Carlsbad deal “at this juncture pending a determination that the results of SDG&E’s [request for offers] demonstrate the lack of feasibly available and cost-effective preferred resources or energy storage to meet some or all of SDG&E’s [local capacity resources] need beyond the 200 MW minimum of alternative resources.”

She also noted that the commission previously approved the utility’s agreement for the 298 MW Pio Pico plant over considerable opposition, to help meet local resource demands.

The utility argued that the Carlsbad plant was needed because the neighboring Encina power plant may close in 2017. State law requires that its heavy water use for cooling spinning turbines be slashed. SDG&E also asserted that the conventional power was needed to integrate new renewable resources.

SDG&E’s request for early approval of the Carlsbad plant made “a mockery of the requirements and did not provide a level playing field for cost-effective, clean energy resources to compete,” countered the Sierra Club