Motion to Suspend June 21, 1991; Terminated November 22, 1996

Project Manager: Bob Eller

Staff Counsel: David Mundstock

Hearing Officer: Garret Shean

AFC Filing, the Unit XII Site, and Procedural Motions

Luz’s third AFC at Harper Lake consisted of two more 80 MW facilities, Solar Electric Generating Systems (SEGS) Units XI and XII. The AFC was filed on September 22, 1989, and, as recommended by the Executive Director, the Commission determined that it was incomplete in nine technical areas at the November 1, 1989 Business Meeting.

Many of the AFC data deficiencies concerned Unit XII, which had been proposed for an environmentally sensitive agricultural site bordering the southern marsh, well to the east of the other units at Harper Lake. Although Luz was continuing to review alternative locations, the filing placed Unit XII at a site long considered highly undesirable by CEC staff and other advocates of marsh protection.

Unit XI Data Adequacy

On May 24, 1990, after several supplemental filings, Luz submitted all of the information necessary to satisfy the data deficiencies for Unit XI. The Commission’s June 20, 1990 order confirmed that the Unit XI AFC, Docket No. 89-AFC-2, without Unit XII, was now data adequate, effective May 24, 1990.

Luz would be able to formally revive Unit XII by re-filing it as a separate AFC or as an amendment to the Unit XI AFC. In either case, the Commission would conduct a data adequacy review for Unit XII.

Unit XII Relocation and Data Adequacy

On July 26, 1990, Luz amended the Unit XI AFC by re-filing Unit XII at a new location that would make it contiguous with the other SEGS units at Harper Lake. Luz was attempting to minimize controversy related to the marsh, while also avoiding potential mitigation that a pending bill would have required for removing existing agricultural land from cultivation.

Docket No. 89-AFC-2 would once again include both Units XI and XII. The Commission determined at its December 12, 1990 Business Meeting that, after further supplemental filings, SEGS Unit XII was now data adequate effective November 13, 1990.

Motion to Stay

On December 19, 1990, intervenor James LaMont filed a motion with the Commission to stay the Unit XI and XII proceeding. LaMont’s primary grounds for a stay were his Unit IX and X petition for review to the California Supreme Court, which had been granted and was currently pending, and a separate LaMont lawsuit against Luz in San Bernardino County Superior Court challenging Luz’s rights to use groundwater.

After a hearing, the Committee denied LaMont’s motion for a stay in an order dated January 31, 1991. Given that the Unit XI and XII case was at a very early stage, the Committee found that LaMont would not be harmed if the proceeding was allowed to continue and that his substantive concerns could be addressed within the case itself. At the February 20, 1991 Business Meeting, the full Commission denied LaMont’s appeal of the Committee order.

Project Description

Units XI and XII were now adjacent to the three previously approved units at the Harper Lake site, a vacant former alfalfa ranch in the Mojave Desert of San Bernardino County, 135 miles northeast of Los Angeles. The five SEGS units at Harper Lake now totaled 400 MW, certified or under review, the world’s largest solar facility.

Units XI and XII differed little from their predecessors. Each 400 acre site would contain solar collectors, rows of parabolic mirrors that concentrated the sun’s energy onto a system of pipes circulating a heat transfer fluid. The heat transfer fluid was used to produce steam which powered a conventional turbine to generate electricity for sale to Southern California Edison (SCE). Luz also utilized natural gas-fired HTF heaters for electricity production to supplement solar power for up to 25% of its total energy. All the Harper Lake units relied upon underground aquifers for their water supply.

Major Issues

Biology

Protected Species (Mitigation)

Once again, the major species of concern were the desert tortoise (now protected as a state threatened and federal endangered species [under emergency listing procedures] and the Mojave ground squirrel (protected as a state threatened species and a candidate for federal listing).

The new Unit XII site had not been farmed, so it contained better habitat than the other SEGS sites at Harper Lake. Under the previously established 5 to 1 mitigation ratio for long-term tortoise/squirrel habitat loss, Luz would have had to provide a significant amount of acreage to mitigate these additional impacts.

The Marsh

The marsh was a distinctive wetlands complex a mile and a half east of the SEGS units, most of which Luz had acquired together with the alfalfa ranch. The wetlands consisted of the northern, central, and southern marshes, part natural and partly the result of agricultural runoff from irrigation. Luz, CEC staff, and various organizations supporting the marsh, had spent a great deal of time trying to find a way for the Luz Harper Lake project to preserve, rather than destroy, the wetlands.

The central marsh, primarily owned by Luz, was the largest, an important habitat for migrating and resident birds. A portion of the smaller southern marsh was owned by Luz, together with the northern marsh area. Both the central and southern marshes depended upon irrigation run-off from current farming by Luz tenants for much of their water supply. The northern marsh was now dry due to the cessation of agricultural irrigation.

SEGS VIII Biology Condition of Certification 5 had proposed the discharge of cooling tower blowdown to restore the northern marsh, but this plan had been aborted due to the threat posted by selenium, which became concentrated as part of the powerplant cooling process. Even though Unit XII had been relocated away from the wetlands, Luz still potentially threatened the marshes by its plans to eventually halt farm operations, thus cutting off the irrigation run-off water supply.

On June 4, 1991, Luz submitted a comprehensive Harper Lake Wetlands Marsh Protection Proposal. Luz offered to donate 400 acres containing the central and south marshes to the Bureau of Land Management (BLM). These were lands designated for acquisition by BLM in its own plan for preservation of this environmentally sensitive area. Luz also offered to donate a working well to BLM to guarantee the marsh water supply and provide a one-time payment of $180,000 for maintenance of the well.

In exchange, Luz requested the elimination of all Biology Conditions of Certification from the prior two AFCs referring to the use of cooling tower blow-down water to restore the north marsh. Luz also asked for its donation to be considered as a credit against any marsh-related mitigation which might be required as a consequence of halting agricultural production at the SEGS Unit XI site.

If implemented, it is likely that this Luz proposal would have successfully preserved the central and southern marshes.

Air Quality

The AFC for Units XI and XII proposed to obtain NOx offsets in the same manner as in the Unit IX and X case. Luz intended to obtain the right to control NOx emissions from another engine at the So Cal Gas Newberry Springs natural gas pipeline compressor station.

As financial pressures mounted, Luz sought to withdraw this offset, even though it had been relied upon for data adequacy purposes. Under CEC staff pressure, Luz reversed itself and reinstated the proposed offset.

Motion to Sever

On April 9, 1991, Luz filed a motion under section 1719 of the CEC regulations to sever Units XI and XII into two separate AFC proceedings and to also stay the Unit XII case. This motion was granted by the Commission on May 29, 1991. Unit XI would retain Docket No. 89-AFC-2 while Unit XII became Docket No. 91-AFC-1.

Luz Bankruptcy

CEC staff learned that Luz was failing to meet deadlines for some mitigation measures required from prior cases. The Commission became aware of a Luz cash shortage that apparently resulted from delay in approval of a state solar tax credit bill and a simultaneous difficulty in obtaining a necessary loan.

CEC staff was preparing to issue its Preliminary Staff Assessment for Unit XI. However, on June 21, 1991, Luz filed a motion to suspend the Unit XI case because of operational constraints. On July 3, 1991, Luz informed CEC staff that it was laying off its employees and halting construction of Unit X. Luz filed for bankruptcy on November 27, 1991, blaming government indecision for limiting the potential of the US solar energy industry.

The Unit XI and XII AFCs remained suspended for several years because they were considered company assets by Luz and the trustee in bankruptcy. Finally, Docket Nos. 89-AFC-2 and 91-AFC-1 were terminated by Commission order on November 22, 1996.

Luz SEGS Units III-IX have continued to operate under the control of Luz’s investors, the limited partners, who stepped in after the bankruptcy of Luz, the general partner.

For my commentary on the Luz projects, see the conclusion of the SEGS Units IX-X summary, Docket No. 89-AFC-1.