Small Power Plant Exemption Granted May 29, 1991

Staff Counsel: David Abelson

Hearing Officer: Garret Shean

Presiding Member: Commissioner Art Kevorkian

SPPE Filing and Project Description

The Imperial Irrigation District (IID) filed an Application for a Small Power Plant Exemption (SPPE) on October 15, 1990 for repowering of Unit 2 at the El Centro Steam Plant with a new 80 MW gas turbine. The new gas turbine’s waste heat would also generate steam to continue producing 33 MW from Unit 2’s existing steam turbine. The present Unit 2 boiler, placed in service in 1952, would be retired. The net increase in generating capacity was thus 80 MW. Two different gas turbine models were under consideration by the applicant for this repowering project. IID had a total of four units at the El Centro Steam Plant. The project location, El Centro, in southern Imperial County, is approximately 120 miles east of San Diego and 55 miles west of Yuma, Arizona.

The SPPE Process

SPPE eligibility is limited to plants with a capacity of 50 MW up to 100 MW. SPPEs are governed by Public Resources Code section 25541. The CEC must make two separate findings in order to grant an SPPE - that "No substantial adverse impact on the environment or energy resources will result from the construction or operation of the proposed facility" (Public Resources Code section 25541(a)), and that "Generating capacity will not be added which is substantially in excess of the forecast of electrical energy demands adopted pursuant to subdivision (e) of section 25305." (Public Resources Code section 25541(b).) (The "need" requirement for SPPEs was repealed in 1999 as part of de-regulation.)

If an exemption is granted, no AFC need be filed, and the applicant can obtain local permits to build the powerplant.

CEC staff’s environmental analysis for an SPPE is presented in an Initial Study, which the CEC conducts as the CEQA lead agency for the project under Public Resources Code section 25519(c). Traditionally, a facility which qualifies for issuance of a negative declaration is considered to also satisfy the environmental finding for granting an SPPE.

An SPPE had historically been an exemption from the Energy Commission’s site certification process. However, as with Navy 2 (Docket No. 88-SPPE-1) and Mojave (Docket No. 88-SPPE-2), approval of IID’s SPPE included a Compliance Plan and numerous Conditions of Exemption. Such a monitoring program to implement a mitigated negative declaration was now expressly required by CEQA at Public Resources Code section 21081.6, Chapter 1232, Statutes of 1988.

The IID Initial Study and Environmental Issues; Conditions of Exemption

On April 5, 1991, CEC staff issued its Initial Study and Proposed Negative Declaration, finding no significant impact on the environment or energy resources from the El Centro Unit 2 repowering, provided certain mitigation measures were implemented. IID agreed to the staff’s proposed mitigation measures, some of which became Conditions of Exemption in the El Centro Compliance Plan.

Air Quality

CEC air quality staff concluded that the project would utilize Best Available Control Technology (BACT), including selective catalytic reduction (SCR) to limit NOx emissions. Offsets would be provided by shutting down the existing Unit 2 boiler (which often burned oil), and retrofitting other El Centro units to reduce emissions. CEC staff proposed eight Conditions of Exemption to ensure that sufficient offsets were obtained (including acquisition of volatile organic compounds (VOC) offsets), and that emissions from the combustion turbine were minimized (restricting the use of fuel oil). (Pages 57-60 of the CEC Decision.)

Socioeconomics

Socioeconomics staff concluded that the project’s construction workers, moving into the area, would add new students to already over-capacity local schools. At staff’s suggestion, IID negotiated with two school districts and reached agreement on a mitigation fee of $4,000 per project-related student. (Pages 91, 98, and Appendix B of the CEC Decision.)

Energy Resources

El Centro’s effect upon energy resources was a potential issue. To reduce fuel use and increase powerplant efficiency, CEC staff considered advanced gas turbine models as possible alternatives to IID’s proposed conventional turbine choices. The added cost of a highly efficient, commercially available, but unproven new prototype, in the $16-26 million range, appeared exceedingly expensive and risky to IID. Staff concurred. Both the Initial Study and the Decision declared the alternatives to be "infeasible in this particular instance." (Page 110 of the Initial Study; page 109 of the CEC Decision.)

With the Conditions of Exemption, El Centro conformed to the requirements of section 25541(a) of the Warren-Alquist Act.

Need

Demand conformance under the 1990 Electricity Report (ER 90) was not straightforward, because ER 90 lacked any integrated assessment of need for IID. ER 90 also had no specific need test for SPPEs. On January 2, 1991, the ER 90 Standing Committee issued an order stating that SPPEs would be reviewed under the same conceptual approach as an AFC, but "subject to a less rigorous standard." (Page 112 of the CEC Decision.)

The Committee utilized general ER 90 principles to assemble a list of criteria, which it applied to El Centro. These included physical and economic need, plus consistency with ER 90 policies and goals, all of which required the Committee to exercise a qualitative, rather than a quantitative judgment.

Both CEC staff and the Committee concluded that El Centro would not significantly displace IID’s core resources, would provide an economic benefit to IID, and was consistent with ER 90 policies and goals. El Centro therefore did not substantially exceed the ER 90 integrated assessment of need and complied with Public Resources Code section 25541(b). (Pages 113-115 of the CEC Decision.)

This was all a return to the "substantially not in excess" of the forecast standard for SPPEs, a remarkable change from the lengthy debates in 1984-85 over appropriate SPPE demand conformance tests.

Adoption

The Energy Commission granted the Imperial Irrigation District’s El Centro Unit 2 Repowering Project a Small Power Plant Exemption on May 29, 1991. The 199 page Decision primarily consisted of CEC staff’s Initial Study, as revised by the Committee and Commission. The El Centro Repowering Project was constructed under local permits and began operating in 1993.