Small Power Plant Exemption Granted May 26, 1993

Staff Counsel: Dave Abelson

Hearing Officer: Garret Shean

Presiding Member: Vice Chair Barbara Crowley

SPPE Filing and Project Description

MLP Energy filed an Application for a Small Power Plant Exemption (SPPE) on July 10, 1992 for a 73 MW natural gas-fired peaking powerplant to be owned and operated by the City of Redding Municipal Utility. The project would be located at an industrial site approximately five miles south of downtown Redding.

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).)

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.

The Redding Initial Study and Environmental Issues

In April 1993, CEC staff issued its Initial Study and Proposed Negative Declaration. A Revised Initial Study was also issued in April 1993, finding no significant impact on the environment or energy resources from the Redding facility, provided certain mitigation measures were implemented. The applicant agreed to the staff’s mitigation measures.

Air quality was uncontested after the applicant agreed to obtain all necessary offsets from a variety of different sources. (Pages 12-13 of the CEC Decision.)

Redding thus conformed to the requirements of section 25541(a) of the Warren-Alquist Act.

Demand Conformance

Need for Redding was uncontested. SPPEs were now being evaluated under a January 2, 1991 ER 90 Standing Committee Order stating that "while an SPPE is reviewed under the same conceptual approach as an AFC, it is subject to a less rigorous standard." (Page 116 of the April 1993 Revised Initial Study.)

CEC staff found no evidence that the project would produce electricity "substantially in excess of the need requirements contained in ER 90." (Page 115 of the April 1993 Revised Initial Study.) The Committee and Commission agreed. (Pages 21-22 of the CEC Decision.) Redding thus complied with Public Resources code section 25541(b) of the Warren-Alquist Act.

Adoption

The Energy Commission unanimously granted the Redding Peaking Plant a Small Power Plant Exemption on May 26, 1993, and construction was completed in 1995 under local permits.

Proposed Amendments

Redding was supposed to be a peaker project that operated for a limited period of time when electricity was needed the most. (In California, peakers normally operate during the summer.) This meant a low capacity factor, which Redding proposed to continuously reduce, as the project was intended to be replaced by other sources of electricity. A Condition of Exemption incorporated Redding's own capacity factor limits, while leaving some room for exceptions. However, the project was permitted as a peaker, and Redding was allowed higher than normal air emissions solely because of restrictions upon the period it would operate.

In 1998 Redding proposed an amendment to permanently eliminate these capacity factor limitations, because it no longer wanted to operate the project as a peaker. Claiming that conditions had changed, Redding argued that the capacity factor restrictions were outdated and would hamper utility operations. CEC Staff resisted the amendment because of air quality concerns. The dispute lasted for approximately two years and included CEC fears that Redding might already be ignoring the existing limitations. This appeared not to be the case. However the amendment was never approved.

Ultimately, the energy supply crisis of 2000-2001 allowed Redding to have the operational restrictions suspended on a temporary basis (until 2004), so long as air emissions offsets were provided to mitigate increased pollution. Approval of this request was granted on May 17, 2001 under the authority several Executive Orders by Governor Gray Davis directing the Energy Commission and its staff to facilitate generation increases by existing projects.

Redding's future operational profile remains in doubt.