IV. The Void (1990-1997)
The Void is my term for a period in which municipal utilities continued to file some new powerplant applications at the Energy Commission, but with little company from other sources of potential generating capacity.
The Sacramento Municipal Utility District (SMUD) was the most active applicant, with four AFCs in the early 1990s, all cogeneration plants. In a competitive process, SMUD selected the facilities it wanted to replace the Rancho Seco nuclear plant closed by the voters. All of SMUD's AFCs were approved, and three out of the four plants constructed. SEPCO was the exception, a controversial failure that involved trying to jointly build an ethanol production plant and powerplant at the same time. On balance, SMUD's construction program succeeded, because a municipal utility could make its own decisions independent of the PUC's struggles with the BRPU. (SMUD actually achieved the BRPU's objectives because the municipal utility wanted to contract for new powerplants through a competitive process.)
The PUC spent years in the early 1990s trying to develop the next generation of statewide Qualifying Facilities in the Biennial Resource Plan Update (BRPU) proceeding, a competitive process. The BRPU collapsed, primarily at the hands of the utilities and FERC. The BRPU's sad story can be found as part of the San Francisco Energy case history, Docket No. 94-AFC-1. That intensely disputed project, the only BRPU "winner" to seek a CEC license, also failed, even though the Energy Commission was willing grant certification.
With the demise of the BRPU, in which the utilities ultimately paid potential QFs not to build power plants, the PUC began the long process leading to electric industry restructuring or de-regulation. This took several more years, and potential applicants had to wait until the rules were in place before they could file their AFCs. Thus, San Francisco Energy was the only 1994 AFC, and no AFCs or SPPEs at all were filed at the Energy Commission in 1995 and 1996. One of the falsehoods circulated five years later blamed the CEC for not licensing enough new powerplants during the "Void" period. However, powerplant applications at the CEC were not rejected or delayed; they were never submitted.
Finally, the PUC adopted its comprehensive decision to restructure California's electric industry. The California Legislature then proceeded to supercede the PUC by unanimously adopting its own version of restructuring, A.B. 1890, Chapter 854, Statutes of 1996.
There would be a new era, which (according to its supporters) promised lower electricity rates through benevolent market forces to be unleashed by price competition and the construction of modern, privately-financed Merchant Plants, in which ratepayers (or taxpayers) could not possibly be put at any financial risk. Instead the PUC and the Legislature managed to utterly destroy a regulated system that was never broken in the first place.
New, state-of-the-art Merchant Plant AFC proposals were about the only part of this de-regulation pipe dream that actually happened. They would all burn natural gas, taking advantage of the latest exemption from the ancient Notice of Intention requirement. Few merchant plants utilized cogeneration, previously the main ticket to an NOI exemption.
And the Energy Commission emerged from "The Void" into an era of so many major powerplant applications that even before the energy supply crisis of 2000-2001, the CEC would be strained to its limits reviewing all the new Merchant Plant AFCs.