Terminated by the Commission on November 30, 1988

Project Manager: Rick Buell

Staff Counsel: Caryn Hough

Hearing Officer: Susan Gefter

AFC Filing, Project Description, and Overview

The Santa Maria Aggregate Project AFC was filed by the Santa Maria Aggregate Corporation on July 27, 1987. The proposed cogeneration facility, located at an existing diatomite mine near Santa Maria in Santa Barbara County, would burn oil-bearing diatomite to produce a cement-like building material and generate 50.5 MW for sale to Pacific Gas and Electric Company (PG&E).

In plain English, Santa Maria was a dirt burner, the first and only such facility to come before the Energy Commission. Since the proposed technology (an advanced circulating fluidized bed) was new, Santa Maria had filed as a demonstration project under Public Resources Code section 25540.6(a)(5). Demonstration projects were exempt from a finding of demand conformance.

Both the mine and the cogeneration plant were apparently so unpopular in environmentally conscious Santa Barbara County that the applicant preferred CEC jurisdiction over local permitting. The evidence for this theory is project’s capacity set just above 50 MW, the exact opposite of a typical developer’s efforts to avoid the CEC by coming in under 50 MW.

Reacting to the applicant’s tactic, Santa Barbara County was afraid that what it perceived as a "lax" CEC licensing process would subvert local environmental protections by approving the AFC and condoning proposed mining operations under CEQA. Hoping to kill the project themselves, Santa Barbara County questioned CEC licensing and CEQA authority over Santa Maria and also sought to narrow the scope of that jurisdiction to no more than the powerplant, entirely excluding the mine. (Santa Barbara County letters dated June 22, 1987, July 7, 1987, and September 14, 1987.) The jurisdictional issues were discussed and argued, but never conclusively resolved, due to Santa Maria’s incurable offset problems.

Air Emission Offsets

Santa Maria’s air emissions would be significant, requiring the applicant to acquire a major source of offsets, especially for NOx. Applicant’s lack of offsets became an immediate issue in the proceeding. The Commission’s initial determination of data inadequacy on October 9, 1987 was based in part on Santa Maria’s failure to demonstrate available offset sources. The deficiency was later satisfied by a list of potential offsets.

As Santa Maria continually searched for offsets, its best hope appeared to be the PG&E-Morro Bay power plant. PG&E had sufficient NOx offsets to meet Santa Maria’s needs, and the utility appeared interested in selling them. At least, the applicant thought PG&E was a willing offset seller. Negotiations between applicant and PG&E continued amidst efforts by project opponents to suspend the AFC due to the lack of offsets.

Finally, PG&E refused to make any of its Morro Bay offsets available to Santa Maria. This proved to be a fatal blow from which the applicant was unable to recover.

CEC staff first moved for suspension on January 28, 1988. The Committee finally suspended the Santa Maria AFC on June 16, 1988 due to applicant’s continuing offset failure. Five months later, the Committee recommended termination since Santa Maria had still failed to produce offsets. On November 30, 1988, the Energy Commission terminated and dismissed the Santa Maria AFC because of applicant’s inability to obtain air emission offsets.