Certification granted on October 25, 2000

Project Manager: Paul Richins

Staff Counsel: Jeff Ogata

Hearing Officer: Gary Fay

Presiding Member: Chairman William Keese

AFC Filing, Data Adequacy, and Project Description.

Duke Energy submitted its Application for Certification (AFC) for Moss Landing on May 7, 1999. It was found data adequate by the Energy Commission on August 11, 1999. The Moss Landing Power Project consists of two 530 MW natural gas-fired, combined cycle units for a total nominal generating capacity of 1,060 MW. This ultimately made Moss Landing the largest powerplant ever licensed by the Energy Commission, taking the heavyweight title away from La Paloma (Docket No. 98-AFC-2) by the slim margin of 12 MW.

The project site is the existing Moss Landing generation plant, built by PG&E in 1950, and purchased by Duke Energy in 1998 through the PUC as part of the utility divestiture phase of electric industry restructuring. It is on the Monterey Bay coast, in Monterey County, 12 miles northwest of Salinas, and just south of the Elkhorn Slough National Estuarine Research Reserve.

Duke planned to continue operating the two newest PG&E units, with a 1,500 MW capacity while adding its own 1,060 MW powerplant. The five oldest PG&E units (613 MW) had been retired in 1995. Still, the resulting combined powerplants would total 2,560 MW, probably more capacity than any other single site in Northern California.

This coastal location, common to many of the older utility facilities sold to new owners, is central to the Moss Landing case. Duke proposed that its new Moss Landing project would continue to use seawater for cooling purposes, discharging the now heated water into Monterey Bay. It was to be a modified version of PG&E's traditional operation at the site, duplicated by virtually all similar powerplants of that vintage which choose the Pacific Ocean and various bays as conveniently located water supplies for cooling.

However, the intake of seawater and subsequent discharge at a higher temperature would be far less acceptable in our more environmentally sensitive era than it was 50 years ago. The coastal location advantage of the past would become the environmental controversy of the present, and not just for Moss Landing.

Issues.

Biology.

Duke's proposed once through cooling system would raise a series of biological issues that are yet to be fully resolved. Some local environmental groups would accept the mitigation proposed by Duke as adequate, including a seven million dollar package to improve the neighboring Elkhorn Slough watershed. Other environmental organizations would belatedly accuse the first group of selling out and challenge the project in multiple forums, including at the Central Coast Regional Water Quality Control Board and in court against the regional water board's decision. Yet none of these environmental groups ever intervened in the Moss Landing proceeding, and some would later claim not to have been aware of the Energy Commission licensing case.

The only formal intervenor was California Unions for Reliable Energy (CURE), a labor union coalition. However, since Moss Landing was a union project, CURE never opposed it. There should have been other intervenors from the conservation and environmental communities. As intervenors, they could have made their case in the AFC proceeding itself. I believe it is fair to say that, for some reason unknown to me, the normal CEC process of involving concerned members of the public in the Moss Landing Application for Certification did not succeed.

Numerous fish, invertebrates, birds, amphibians, plants, mammals, far too many species to name, were potentially affected by the Moss Landing cooling system's intake and heated water discharge. Many were deemed sensitive or endangered, and entitled to protection under state or federal law. These impacts had also been studied extensively by PG&E and others, including a collection of species killed on the seawater intake screens (impingment) or killed by being drawn into the system through the screens (entrainment). Monterey Bay itself is a valuable commercial fishery and significant marine environment, with numerous legal protections. It is formally classified as the Monterey Bay National Marine Sanctuary. The powerplant's immediate neighbor to the north, Elkhorn Slough, is also a protected significant biological resource.

Duke argued that it would replace inefficient old technology with a new and modern system that used less cooling water on a per megawatt basis, than the existing PG&E facility, while also reducing the number of marine organisms killed or trapped by the water intake system. It was also Duke's position that PG&E's seven units did not have a significant adverse impact upon any species during 50 years of operation. Yet, with the five oldest PG&E units already shut down, there was no question Duke's plans amounted to an expansion of Moss Landing.

A Technical Working Group was established that brought together applicant, regulatory agency, and scientific representatives to evaluate impacts from the Moss Landing Project for both CEC licensing and Central Coast Regional Water Quality Control Board permitting. They met monthly, analyzed prior studies, and conducted some new research to try and quantify the species Moss Landing would impact. The Technical Working Group's conclusion was that, even with Duke's proposed improvements, the powerplant's water intake would still impact 13 percent of the larvae for 8 species of fish, a population primarily living in Elkhorn Slough. This loss was deemed significant, and led to applicant's $7,000,000 mitigation plan to improve the Elkhorn Slough environment. Alternative configurations and designs that could have reduced the need for water intake or better protected the marine organisms, were rejected as impractical or unnecessary.

The discharge of heated water into Monterey Bay and its impacts was also studied extensively. Such discharge is regulated by the California Thermal Plan, under limitations set by the Regional Water Quality Control Board, which exercises both state and federal regulatory authority. Duke would require an exemption from the regional board allowing it to exceed present limitations due to the combined discharge of existing PG&E Units 6 and 7, plus the new Moss Landing project.

The Technical Working Group also analyzed discharge issues, reviewed studies, conducted its own sampling in Elkhorn Slough and Monterey Bay, before concluding, along with the applicant and CEC staff, that thermal discharge impacts from Moss Landing will not be significant. Post-operational studies were required to verify the results of modeling the thermal discharge.

Lacking any participation by environmental organizations as intervenors with their own expert testimony, the Technical Working Group remained the primary source of recommended mitigation measures. The applicant's payment of seven million dollars to fund an Elkhorn Slough Enhancement Project (Biology Condition of Certification 7) resulted from the Technical Working Group's calculations, which were admittedly imprecise. However, no sworn testimony was presented offering any opposing views. (Pages 170-171 of the CEC Decision.)

Two agencies, the California Coastal Commission and Monterey Bay National Marine Sanctuary (Sanctuary), wrote letters expressing concerns that project impact analysis and mitigation might not be adequate. The Coastal Commission appears not to have pressed its recommendations, which the Regional Water Quality Control Board declared to be inconsistent with the Board's own permit for the project. Meanwhile the Sanctuary was satisfied by the applicant's agreement to provide the Sanctuary Foundation with an additional $425,000 to study thermal discharge impacts (Biology Condition of Certification 9.)

The Central Coast Regional Water Quality Control Board, which implements the U.S. Clean Water Act, worked closely with the Energy Commission and ultimately issued its own federal National Pollution Discharge Elimination System (NPDES) permit for the project plus all other necessary permits.

That left members of the public, who according to page 177 of the CEC Decision, "voiced frustration and confusion at the June 20, 2000 evidentiary hearing." Belatedly, the Committee started to hear many discordant voices, questioning the biological analysis and proposed mitigation measures as insufficient, while also claiming never to have been properly notified about the project. The Committee attempted to accommodate them, delaying the process and scheduling informal scientific explanations by members of the Technical Working Group. The newly-mobilized project opponents were not persuaded.

A coalition of environmental organizations, led by the Center for Marine Conservation (www.cmc-ocean.org/), and including the Friends of the Sea Otter and local Sierra Club chapter, alleged that the entire CEC process, the final staff assessment, biology expert testimony, consideration of alternatives, cooling systems impact analysis and proposed mitigation measures, were all completely inadequate.

The Committee, in reliance upon the scientific knowledge of the Technical Working Group and evidence in the record (again from expert witness members of the Technical Working Group), essentially rejected the concerns expressed by environmental groups, while making some modifications to Conditions of Certification suggested by the Coastal Commission staff. The conclusion, at page 186 of the CEC Decision, was that the record was clear: significant biological resource impacts from Moss Landing will be fully mitigated.

Adoption, Construction, and Challenge.

The conservation groups were now requesting a new requirement that the applicant Duke Energy fund an additional monitoring program of biological resource impacts for five years at a cost of $3,750,000. The Committee and Commission rejected this proposal as unnecessary, based upon the scientific evidence in the record.

The Energy Commission unanimously certified the Moss Landing Power Project on October 25, 2000.

Duke began construction of Moss Landing in November 2000 and the project was 40% complete by the summer of 2001. Duke's estimated on-line date was June 2002. The project became operational on July 11, 2002.

Environmental organizations opposing the project filed suit against the Central Coast Regional Water Quality Control Board, challenging the permits that the regional board had issued Duke for Moss Landing. No court took action to block project construction.