Pittsburg District Energy Facility, Docket No. 98-AFC-1 (Pittsburg,

Los Medanos)

Application for Certification granted on August 17, 1999

Licensed by Enron; subsequently sold to and constructed by Calpine

Project Manager: Lorraine White

Staff Counsel: Dick Ratliff (licensing); David Mundstock (compliance)

Hearing Officer: Susan Gefter

Presiding Member: Commissioner David Rohy

Project Summary

AFC Filing, Data Adequacy and Project Description.

Enron filed its Application for Certification for the Pittsburg District Energy Facility on June 15, 1998. This natural-gas fired cogeneration plant had a nominal capacity of 500 MW, but 530 MW was more accurate. The thermal host was United States Steel, USS-POSCO, which also contracted to purchase up to 60 MW of the plant's output. The project was located in an industrial area within the Pittsburg city limits, in northern Contra Costa County. This was another in the first series of merchant plants filed after de-regulation went into effect. It would use reclaimed water supplied by the Delta Diablo Sanitation District and included two short transmission lines, a one-mile line to USS-POSCO, and a two-mile line to PG&E's switchyard at the Pittsburg Power Plant. Pittsburg was found to be data adequate by the Energy Commission on July 29, 1998.

The project included a unique partnership between Enron and the City of Pittsburg in which the city would receive certain specified benefits, including Enron funding to build Central Park and profit sharing from additional enterprises. The City of Pittsburg had actually initiated this project by requesting proposals for energy-related facilities, and Enron's response was selected by the city. Local Pittsburg residents who objected to the powerplant on health/pollution grounds suspected their position was hopeless because of the alliance between Enron and the city.

The End of Demand Conformance.

Demand conformance would no longer be an issue in any of the new cases, initially because ER 96 established a need for 6, 737 MW of additional capacity. When the avalanche of AFC filings threatened to approach this high ceiling, the Commission abolished any limits on new capacity in a 1999 addendum to ER 96. The Legislature went even further on behalf of electric industry de-regulation, abolishing the Energy Commission's demand conformance finding entirely in SB 110, Chapter 581, Statutes of 1999. A quarter century of state policy that powerplants be found needed was abandoned. Concerns regarding too many powerplants had become irrelevant. All projects would now automatically be needed because they represented private investments, without any possible impact to ratepayers or the public. Only the powerplant owners were presumed to be at financial risk from the new facilities which the Energy Commission would be licensing in an endless parade.


Enron and the CEC Staff worked cooperatively to settle all issues in this proceeding. Potential adverse visual impacts from the proposed two-mile transmission line were mitigated by relocating portions of the line. Air quality brought the normal complications and delays, including a late Determination of Compliance (DOC) from the Bay Area Air Quality Management District, but air was ultimately not disputed.

The project's need for a stack height variance from the City of Pittsburg was incorporated into the decision as a land use conformity, since the City Council formally advised the Commission by resolution that it would have issued such a variance, subject to conditions with the CEC adopted. Essentially, the Energy Commission used its authority to grant the variance in place of City Council action.

Staff issued a single Assessment on March 11, 1999, without the typical Preliminary Staff Assessment (PSA), followed by the Final Staff Assessment (FSA). This was one of many efforts to speed up the Pittsburg licensing process. It was not particularly successful, since staff was unable to make any recommendations without a DOC and other required elements normally expected to be completed prior to issuance of a Final Staff Assessment.

The Committee held evidentiary hearings in April, May, and June of 1999, unable to complete the record until the Final Determination of Compliance was received into evidence on June 15, 1999.

As a state-of-the-art facility, the Committee was convinced that Pittsburg posed no health risk to nearby residents based upon the testimony of staff, applicant, and the air district. There were no cumulative impact risks either, despite Pittsburg being an industrial city, with several older, far more polluting manufacturing and electricity generating facilities. The health concerns presented by a handful of local residents were disregarded, much to their displeasure.


The Committee's recommendation to license the Pittsburg District Energy Facility was unanimously adopted by the Energy Commission on August 17, 1999. Pittsburg was the second merchant plant to be certified, following Sutter, Docket No. 97-AFC-2. They would be two of the facilities racing towards completion over the next two years, seeking to become the first new project to actually go on line and generate electricity. This turned out to matter in 2001, with the new powerplants helping to fight the potential for rolling blackouts. (The race winner would be Sunrise, Docket No. 98-AFC-4).


Calpine takes over.

Enron promptly sold the Pittsburg District Energy Facility to Calpine, which re-named it the Los Medanos Energy Center (LMEC) and began construction. Calpine also set about re-designing the project to its own standards, leading to an unusually large number of post-certification amendments. However, since Calpine would build and operate the project, rather than Enron, Calpine believed all of these changes were necessary. The Energy Commission's Compliance Office set about reviewing and approving Calpine's long line of amendments. One set of amendments raised issues regarding the project's generating capacity and whether Calpine was adding more than 50 MW without a new AFC. The CEC engineers resolved this problem in Calpine's favor. However, as Calpine kept constructing Los Medanos, everything else was overshadowed by a significant Calpine mistake.

The Transition Structure Error - Stop Work Order

Calpine's engineers concluded that they had to relocate a portion of the transition structure, which supported the transmission line to PG&E's sub station as it emerged from the underground phase. They believed it would not fit in the space agreed to be Enron. Calpine's engineering solution amounted to a project modification that altered a compromise reached during the Pittsburg case and reflected in conditions of certification. This modification required a formal project amendment from the Energy Commission, which Calpine did not file because Calpine erroneously believed the change to be insignificant. Calpine built the transition structure their way.

In moving the transition structure, Calpine also violated its easement with the City of Pittsburg and placed the structure illegally on city land intended for a housing project. By the time the City of Pittsburg caught Calpine's mistake, the transition structure was essentially complete. Although the City was acting as the Energy Commission's delegate agency for compliance with all conditions of certification, neither the city nor the CEC had any idea Calpine was re-locating the transition structure. The improper modification should have been identified and halted in the early stages, but that never happened.

Upon finally discovering the relocated transition structure, the City of Pittsburg, through its Chief Building Official consultant, issued a stop work order to Calpine on November 7, 2000, halting all further work on the improper modifications to the transmission system, which was 95% complete. The Energy Commission insisted that the stop work order be maintained until Calpine took necessary corrective action. Calpine spent the next month doing everything it could to get the stop work order lifted so it could maintain its powerplant construction schedule. Calpine paid the Energy Commission the maximum $75,000 fine for violating conditions of certification without CEC staff having to even file a complaint. (Calpine thus joined Luz as the only applicants to pay this fine for post certification non-compliance.) Calpine also filed a formal amendment petition with the CEC on December 7, 2000 to relocate the transition structure to its then current location. This was enough for the CEC to lift the stop work order.

But Calpine still needed an agreement with the City of Pittsburg for a new easement. This was achieved at a cost to Calpine of between two and three million dollars to fully compensate the City of Pittsburg. Finally the amendment (amendment #6) had to be formally approved by the Energy Commission. Following a February 8, 2001 Committee hearing in Pittsburg presided over by Commissioner Michal Moore, Docket No. 98-AFC-1C, the Energy Commission adopted the Committee recommendation and granted the amendment petition on March 7, 2001.


Calpine's Los Medanos Energy Center, now legally expanded to 555 MW, went into operation on July 9, 2001. It finished third in the great race, behind both Sunrise and Sutter, only two weeks behind the leader. But the additional megawatts were most welcome to the people successfully preventing rolling blackouts in the summer of 2001.