Los Esteros Energy Facility - Notice
[California Energy Commission Letterhead]


Energy Resources
Conservation and Development Commission

_________________________________________ )  


I. Background

On September 25, 2001, the Energy Commission accepted the Application for Certification (AFC) for the Los Esteros Critical Energy Facility (LECEF) under our four-month process. (Pub. Resources Code, § 25552.) Calpine anticipated that the project would be completed and operational during the summer of 2002. Section 25552 requires, inter alia, that a proposed project filed under this process must be in service by December 31, 2002, and requires the Energy Commission to expedite, to the extent feasible, the processing of such an AFC. Our initial four-month schedule was modified and protracted due to Applicant's delays in providing necessary information for Staff to complete its Staff Assessment and subsequent Supplement (Staff Assessment).

On March 11, 2002, immediately after the Staff Assessment was released, this Committee conducted an Evidentiary Hearing at which the parties presented evidence on the proposal. We have reviewed the record in preparation of the Presiding Member's Proposed Decision (PMPD) and determined that the evidence does not support a finding that LECEF can be in service by December 31, 2002. Further, the record is incomplete in several topics, which prevents us from finding that LECEF, as currently described, would comply with applicable laws, ordinances, regulations, and standards (LORS).

II. Summary of the Evidentiary Record

The AFC states specifically that "[c]onstruction of the project is expected to last approximately 12 months.")1 ; (Ex. 2, [Vol. 2], App. 8.1D.)2 At the March 11, 2002, Evidentiary Hearing, however, Applicant advocated an expedited construction schedule of four to six months, which would call for two, 10-hour shifts--essentially construction around the clock. (3/11/02 RT 572:18-574:5.) Applicant's inconsistent representation of its construction schedule resulted in an incomplete environmental analysis.

For example, in the Air Quality section, Staff's environmental analysis and evaluation of the LECEF project envisioned the construction schedule would occur over a period of 12 months, with a five-day workweek, which would include a single, 10-hour work shift, per day. ["Facility construction is expected to take about 12 months;" (Ex. 1, pp. 4.1-12/13 and Table 6.)]3

At the Evidentiary Hearing, Staff's expert witness testified that he had never seen Applicant's documentation to support a compressed construction schedule nor had Staff conducted air quality modeling under such a compressed schedule. (3/11/02 RT 198:15-199:12.) Our review of the record discloses that Staff did not specifically consider construction impacts resulting from an expedited construction schedule for topics such as nighttime noise, increased traffic, and air quality issues, all concerns arising from around the clock construction.

The Committee expressed concern in our Briefing Order as to whether LECEF could reasonably be expected to be in service by the December 31, 2002, deadline in light of testimony that:

  • the planned PG&E Los Esteros Substation will not begin construction until sometime next year; and
  • until PG&E completes the Los Esteros Substation, LECEF will rely on a temporary transmission connection via a 2000-foot aboveground "tap-line" that PG&E will build to interconnect the facility with an existing 115 kV line at Zanker Road. (3/11/02 RT 89:19-91:15; Ex. 4F, p. 53.)

According to the Staff Assessment, PG&E and the CPUC had different estimates of the potential cost of constructing the substation, and, therefore, the substation project was suspended until these differences could be resolved. On December 11, 2001, the CPUC approved the project, but at a lower cost than that proposed by PG&E. Consequently, PG&E is not certain it will go forward with project construction. (Ex. 1, p. 4.5-7.)

At the March 11, 2002, Evidentiary Hearing, Applicant testified that negotiations with PG&E over a Generator Interconnection Agreement (GIA) and a Generator Special Facilities Agreement (GSFA), and with the City of San Jose over a right-of-way easement were continuing4. Applicant's witness stated that a verbal understanding was reached with the City of San Jose, but that the PG&E GIA and GSFA concerning the tap line were not expected for several months. (3/11/02 RT 90:21-108-16.)

Applicant's post-hearing brief contains an attached letter from PG&E that identifies certain timelines for completing the GIA and GFSA. We direct Applicant to provide testimony on these issues at the May 20, 2002, hearing.

We are further concerned by the lack of evidence in the record to demonstrate that final design plans or permitting has begun for the construction of a stormwater drain to the low-flow channel of Coyote Creek. This construction could require permits from the California Fish and Game (CDFG) and possibly the U.S. Army Corps of Engineers. Staff notes that additional mitigation measures may be required to protect biological resources. (Ex. 1A p. 4.2-26.) However, none of the parties presented such mitigation proposals. We direct the parties to provide testimony on mitigation measures for Biological Resources that should be included in the conditions of certification.

Finally, the Committee has serious concerns about the state of the record on Visual Resources. We believe that additional mitigation measures are needed consistent with some of the proposals that have been recommended to us by the City of Milpitas. (See City of Milpitas Opening Brief, pp. 4-7.) We direct Applicant to confer with Milpitas in an effort to develop an appropriate mitigation plan to screen the proposed project consistent with local LORS. Applicant shall include such a plan in its testimony on Visual Resources at the May 20, 2002, hearing.

In conclusion, upon consideration of the entire record we cannot find that Applicant was successful in meeting its burden of proof under the statutory mandate for approval of an expedited project that can reasonably be in service by December 31, 2002. [Pub. Res. Code, §§ 25552 (d) & (e).]

Accordingly, the Committee hereby Orders:

  1. The LECEF AFC is removed from the four-month process;
  2. The LECEF AFC hereafter shall be reviewed under the 12-month process; and
  3. The Evidentiary Record shall be reopened and supplemented as set forth in our ORDER REOPENING THE RECORD and NOTICE OF EVIDENTIARY HEARING, which is released concurrently herewith.

Dated April 24, 2002, in Sacramento, California

Chairman and Presiding Member
Los Esteros AFC Committee

Commissioner and Associate Member
Los Esteros AFC Committee

  1. In the AFC, Applicant acknowledged that, to meet its initially proposed May 2002 operation date, a 24-hour per day, around the clock construction work schedule would have been required. Applicant's calculation presumed construction beginning in December 2001, startup and testing in April 2002, and commercial operation beginning in May 2002. Thus, Applicant's own calculations reflect that a five-month, around the clock construction period is required for LECEF's earliest possible commercial operation. Of course, we are now at a point where a May 2002 operation date is impossible. (Ex. 2, [Vol. 1], 2.2.14 & Table 2.2-1.)
  2. The AFC is ambiguous on the question of nighttime construction. (cf. Ex. 2, [Vol. 1],;Table 8.8-10 (Applicant will employ day and night construction shifts and 2.2.14 (Construction will be scheduled between 6 a.m., and 6 p.m., Monday-Saturday see also Conditions NOISE-1, 2, and 6.)
  3. However, compare Staff's Public Health section where a 4-6 month construction period is projected. (Ex. 1, p. 4.7-9.) We are even more troubled by the internal inconsistency in Staff's Analysis. At worst, it affects erroneous underlying assumptions. At best, it reflects a miscommunication of the project's parameters.
  4. We understand that Applicant is negotiating with the City of San Jose to obtain the required easement. (Applicant Reply Brief, p. 17; 3/11/02 RT 91:16-93:14.) In light of the general support that the City has demonstrated for the LECEF project, we are willing to assume that a written agreement will be forthcoming and that it will not delay the project. We are unwilling to make this assumption, however, in the area of Transmission System Engineering because in our view, the record simply is not as clear. At our May 20, 2002, hearing, scheduled by concurrent Notice dated April 24, 2002, we direct Applicant to provide us with an update on negotiation of a written agreement with the City of San Jose over the transmission line easement.

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