Small Power Plant Exemption Granted March 11, 1981

Staff Counsel: David Mundstock

SPPE Filing and Project Description

Texaco filed an Application for a Small Power Plant Exemption (SPPE) on December 23, 1980 for a 60 MW cogeneration plant at its refinery in Wilmington, an industrial area of Los Angeles. The plant would primarily burn refinery gas, a by-product of petroleum, producing process steam and 43 MW for refinery operations. Texaco planned to sell the remaining 17 MW to the Los Angeles Department of Water and Power (LADWP) or to Southern California Edison, depending on the outcome of negotiations.

The cogeneration plant resulted from South Coast Air Quality Management District (SCAQMD) directives that Texaco reduce refinery emissions. The new facility would allow Texaco to retire five existing refinery boilers and other polluting equipment.

This SPPE was the first cogeneration plant ever reviewed by the Energy Commission. Over two years would pass before a cogeneration AFC was licensed (Kern River, Docket No. 82-AFC-2), leading to a parade of similar facilities. Additionally, Texaco was the CEC’s first industrial self-generator, an inconsequential matter at the time. The modern age of self-generation began with IBM, Docket No. 85-SPPE-2.

The SPPE Process

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" 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)." If an SPPE is granted, an applicant then obtains local permits for its powerplant rather than a CEC license.

There were no environmental issues related to the proposed Texaco Cogeneration Plant. The project had sufficient internal offsets from the refinery so that it would reduce air emissions, satisfying SCAQMD. An Initial Study/Negative Declaration was prepared in accordance with CEQA.

The Energy Commission’s 1981 Electricity Tomorrow Final Report, (Biennial Report III or BR III, equivalent to an ER of today), declared cogeneration to be a preferred technology. Under BR III, the CEC encouraged cogeneration by finding all such plants to be "deemed needed". The self-generation aspect of Texaco thus received little attention, since the cogeneration facility automatically conformed to BR III’s requirements.

The Committee and the Commission found that Texaco’s Cogeneration Project complied with Public Resources Code section 25541. The SPPE was granted on March 11, 1981 in a brief, 7-page decision. The facility was constructed under local permits, beginning operation in 1983.

The CEC’s review process for Texaco took less than three months. Future SPPE proceedings would become much more complicated, as the division between AFCs and SPPEs started to blur in the late 1980s. However, simple SPPE cases, such as the Texaco Cogeneration Project, serve as examples of how Public Resources Code section 25541 can operate expeditiously.