Another nail in the new power plant coffin - CPUC Proposed Decision

Yesterday, the California Public Utilities Commission (CPUC) issued a draft decision on long term energy procurement in Southern California.  This decision, once final, will determine the total long term natural gas power capacity the CPUC will allow our power company, Southern California Edison (SCE), to put on contract.  And this decision will have a huge impact on the future of the power plant site in Redondo.

The stage was set when the state established a 2021 deadline for power plants in our part of the grid to stop using ocean water for cooling.  That started the wheels in motion for AES to rebuild their Redondo Beach power plant.  The power companies pleaded with the CPUC to let new long term power contracts to incentivize companies like AES to make the investment in replacing their old plants.  Last year for our section of the grid, the CPUC responded announcing it would require SCE to issue contracts for a minimum of 1,000 MW of natural gas power generation capacity and a maximum of 1,200 MW of natural gas power generation capacity.  

This was a blow to AES.  AES has three ocean water cooled power plants in our part of the grid that when combined represent about 4,100 MW of power generation capacity.  They have filed applications with the California Energy Commission (CEC) to rebuild all three sites.  AES' problem is the 2013 CPUC decision meant SCE could only put AES on contract for a maximum of 1200 MW of power generation.  And no contract means AES' investment in the new plants would be at risk.  

To add to AES' woes, the City of Redondo issued a power plant construction moratorium and is proposing an emergency ordinance that would not allow a new power plant in our coastal zone, which includes AES' current property. That means if it wanted to approved the new Redondo plant,  the CEC would have to override Redondo's zoning. In order to override Redondo zoning, state law requires the CEC to prove power is needed from that specific site for grid reliability.  The 2013 CPUC decision was the first nail in the proposed replacement Redondo power plant's coffin as it was solid evidence the plant is not required.

"Wait", AES told the public. The CPUC decision had not considered the shut down of the San Onofre Nuclear Generation Station (SONGS).  AES was correct.  The CPUC was making its determination as to whether it should increase the amount of power SCE could put on contract for the future in light of the loss of the nuclear plant as a generation source.
         
Well, yesterday, the CPUC released its draft decision about the impact of shutting down San Onofre.  For SCE, the CPUC kept the minimum natural gas power procurement at 1000 MW, but it revised its upper cap to just 1,500 MW of natural gas power generation.  This is yet another blow to AES and another nail in the coffin of a new power plant in Redondo.  SCE cannot issue contracts to AES for all the power from all three plants.  And the decision certainly makes it difficult for the CEC to demonstrate that power from the Redondo Beach plant is essential to grid reliability.  No contract and no application approval means no new power plant in Redondo.

Recent AES run rates have dropped.  For the first three quarters of 2013, despite the shutdown of San Onofre, our power plant ran at a piddly 3% of its capacity.  Adding to this very real evidence, every government report since 2008 has shown we do not need power from the AES Redondo site for our grid reliability.  This latest CPUC draft decision is yet another in a six year long growing list of reports from the State Water Resources Control Board, CAISO, the State Coastal Conservancy, the CPUC, and the City of Redondo Beach all corroborating that the Redondo power plant can be permanently retired without putting our part of the grid at risk.

Hats off to residents, Councilman Bill Brand, City Attorney Mike Webb and the City's consultant for getting us this far.  But we cannot let down our guard.  We can't count on SCE, the CPUC, and the CEC to do the right thing on their own.    We must keep the pressure on wherever and whenever we can.  But at least there is light at the end of the tunnel.   The vision of a harbor free of a blighting, polluting power plant is within our grasp... we can win this fight and take back our waterfront!