Granite Run plant faces state effort to cut GHG, city opposition

Granite Run plant faces state effort to cut GHG, city opposition

Washington (Platts)--16Jun2005


Several developments in California, including an effort to cut greenhouse
gases, could make it harder for Sempra Energy to build a coal-fired power
plant in Nevada. 

At a joint public hearing Wednesday by the California Energy Commission and
Public Utilities Commission, energy officials debated whether Gov. Arnold
Schwarzenegger's June 1 executive order setting voluntary reduction targets of
2000 levels over the next five years, to 1990 levels by 2020 and to 80% below
1990 levels by 2050, would impact companies generating electricity outside
California.

Sempra Generation has proposed the 1,450-MW Granite Fox project near Gerlach,
Nev. Sempra, which announced plans to build the $2-bil plant in 2004, hopes to
start construction in 2007. The pulverized-coal plant will use Powder River
Basin coal. The first unit would come on line in 2010 followed by the second
unit in 2011. 

The executive order doesn't address out-of-state power generation sources,
Sempra spokesman Art Larson told Platts Coal Trader on Thursday. "The
executive order focuses on California sources of greenhouse gases and does not
address out-of-state greenhouse gas sources."

However, Joe Desmond, the governor's spokesman on energy matters, said they
do. "The PUC procurement rules apply to investor-owned procurement whether
they are considering in- or out-of-state resources." 

Jon Wellinghoff, a Las Vegas-based environmental attorney also said
conventional coal-fired plants, like Granite Run, won't be able to serve
California due to the greenhouse gas reduction targets. Sen. Harry Reid,
D-Nev., has asked President Bush to appoint Wellinghoff to the Federal Energy
Regulatory Commission. Wellinghoff is working with the Nevada Clean Energy
coalition, which opposes Sempra's project.

California's investor-owned utilities are required to use a "carbon adder"
when considering buying power supplies under a December California Public
Utilities Commission ruling. The adder is designed to make renewable resources
more competitive compared with power from fossil fuel plants. Northern Nevada,
where Sempra wants to build its plant, has about 3,000-4,500 MW in potential 
geothermal sources that could serve California, Wellinghoff said.

But Larson said Sempra will also invest $150-mil in infrastructure upgrades
that would allow California to tap into 200 MW "of renewable wind, geothermal
and solar energy it wouldn't be able to otherwise. You need a stable voltage
supply to get renewables on line."

Also, the San Francisco Board of Supervisors on Tuesday passed a resolution
opposing Granite Fox. The resolution calls on Los Angeles to oppose an
application from Sempra to tap the Los Angles Dept. of Water and Power's
Pacific Direct Current Intertie to import power to California. The San
Francisco Public Utilities Commission is studying the feasibility of using the
power line to import renewable power from northern Nevada, which wouldn?t be
possible if Sempra gains the rights to the line, the resolution said.

The board's resolution has no regulatory or legal weight, but is a sign of
growing momentum in California to reduce greenhouse gases, Wellinghoff said.
Currently, 20% of California's power supply comes from coal-fired sources,
according to the CEC.

But California needs the power. At a technical conference in San Francisco on
June 2, Federal Regulatory Energy Commissioner Joseph Kelliher said there are
still problems five years after the state's electricity crisis relating to the
adequacy of electricity supply in southern California. "If you look at
southern California, it's the worst electricity supply situation in the entire
country."

This story was originally published in Platts Coal Trader
http://www.coaltrader.platts.com

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