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Home My WebLink AboutPort Commission Agenda 2007/01/18 i aeelare under penal" Jf perjury that I am , r, employed by the City of Chula Vista in the ~ 11~ . of the City Clerk and that I posted th~ t on the bulletin board according reqUirem:~:~ed~c~rl~~STA Cheryl Cox, .\clavar /fJ' Rudy Ramirez, Councilmember John McCann, Councjlrnember Jerry R. Rindone, Counulmember Steve Castaneda, Council member Jim Thomson, Interim Cit~) 1\1ana.ger An n Moore, Ci ty Attorney Su,an Bigelow. City Clerk CITY COUNCIL OF THE CITY OF CHULA VISTA MEETING CONCURRF.:NTL Y WITH THE BOARD OF PORT COMMISSIONERS SAN DIEGO UNIFIED PORT DISTRICT January 18,2007 4:00 P.M. Council Chambers City Hall 276 Fourth Avenue CALL TO ORDER ROLL CALL: Councilmembers Castaneda, McCann, Ramirez, Rindone, and Mayor Cox PUBLIC COMMENTS Persons speaking during Public Comments may address the Council on any subject matter within the Council's jurisdiction that is not listed as an item on the agenda. State law generally prohibits the Councilfi'om taking action on any issue not included on the agenda, but, if appropriate, the Council may schedule the topic for future discussion or refer the matter to staff. Comments are limited to three minutes. WORKSHOP 1. PRESENTATION REGARDING THE SOUTH BA Y POWER PLANT REPLACEMENT PROJECT APPLICATION CURRENTLY BEFORE THE CALIFORNIA ENERGY COMMISSION The purpose of this meeting is to allow the City Council, Port Commissioners, and the public to hear from key entities that have jurisdiction and influence over the potential siting and permitting of the proposed facility. Staff recommendation: Hear presentations and provide direction to staff. ADJOURNMENT to the Regular Meeting on January 23, 2007 at 6:00 p.m. in the Council Chambers. In compliance with the AMERICANS WITH DISABILITIES ACT The City of Chula Vista requests individuals who require special accommodations to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least forty-eight hours in advance for meetings and jive days for scheduled services and activities. Please contact the City Clerk for specific information at (619) 691-5041 or Telecommunications Devices for the Deaf (TDD) at (619) 585-5655. California Relay Service is also available for the hearing impaired. Page 2 - Council Agenda htto ://www.chulavistaca.!rOY January 18,2007 CITY COUNCIL AGENDA STATEMENT .:$:}\If:.. CITY OF ~CHULA VISTA January 18,2007 Item-L ITEM TITLE: PRESENTATION REGARDING THE SOUTH BAY POWER PLANT REPLACEMENT PROJECT APPLICATION CURRENTL Y BEFORE THE CALIFORNIA EN]l:RGY COMMISSION ./ Laurie Madigan, AS~ City Mana~eb y\tj}.J~' CITY MANAGER i~f:Z \ SUBMITTED BY: REVIEWED BY: 4/5THS VOTE: YES NO X BACKGROUND The purpose of the joint meeting of the City Council and Port Board of Commissioners is to provide to the Council and Board members information as to the regulatory process associated with the LS Power application for the licensing of a new power plant on the Chula Vista Bayfront, and to better understand the process and regulatory approvals necessary to decommission and dismantle the South Bay Power Plant (SBPP). The meeting will afford an opportunity to hear directly from the California Energy Commission (CEC), the California Independent Systems Operator (Cal ISO), the California Public Utilities Commission (CPUC), and the Air Pollution Control District (APCD) about their respective roles in these two processes, and to address questions to staff representing these entities. ENVIRONMENTAL REVIEW Not applicable RECOMMENDATION Hear the presentations and provide direction to staff. BOARDS/COMMISSION RECOMMENDATION Not applicable. January 18,2007, Item----1 Page 2 of3 DISCUSSION History The existing SBPP electrical generation facility was acquired by the San Diego Unified Port District (Port) in 1998, with the specified intent to facilitate its removal from the bay front. The power plant was leased to Duke Energy, who assumed operational responsibilities. This position was subsequently transferred to LS Power, the company that currently operates the SBPP. Under the agreements associated with the SBPP lease, the lessee is required to use commercially reasonable efforts to develop a replacement power plant. After completion of an exploratory analysis of various potential sites for a replacement plant, a joint meeting of the Port Commission and City Council was held in November 2001. At that meeting Council approved Resolution No. 2001-387 (Attachment 1) which states support for "the concept of re-siting the plant on the LNG parcel immediately to the south of the existing location, just north of the Bayside Commerce Center in the Southwest Redevelopment Project Area." In June 2006, LS Power submitted to the CEC an Application for Certification (AFC), requesting the licensing of a replacement power plant on the LNG site. The development described in the AFC is a 500 Mw base load combined cycle, air-cooled, gas-fired power plant, with an additional 120 Mw duct-fire component. The project for which the developer is seeking CEC approval includes not only the development of the new facility, but also the decommissioning and dismantling of the existing plant. A site layout is attached (Attachment 2) that depicts the proposed location for the South Bay Replacement Project. Joint Meeting Purpose The purpose of the joint meeting of the City Council and Port Board of Commissioners is to provide to the Council and Board members information as to the regulatory process associated with the LS Power AFC, and to better understand the process and regulatory approvals necessary to decommission and dismantle the South Bay Power Plant (SBPP). The following parties/agencies have been invited to make brief presentations, and will be available to answer questions: . LS Power . California Energy Commission . California Public Utilities Commission . Air Pollution Control District . California Independent Systems Operator An Agenda Statement prepared by Port staff for their Commission for the meeting is attached for your information (Attachment 3). The Port staff report briefly describes the role of the CEC in the jurisdiction and licensing of power plants. The CPUC and APCD have been asked to discuss their respective roles in this process at the joint meeting. January J 8,2007, Item---.l Page 3 of3 The Port staff report also briefly describes the role of Cal ISO in the designation of RMR status. It should be noted that the current RMR program is proposed to be replaced by a new program, often referred to as Resource Adequacy (RA). The authority for regulating RA will rest with the CPUC. Staff has asked that this change in energy regulation be discussed by both Cal ISO and CPUC in their presentations. DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council/Agency Board Members and has found no such holdings within 500' of the property, which is the subject of this action. FISCAL IMP ACT There are no fiscal impacts, as staff is not recommending formal Council action at this time. A TT ACHMENTS I. Resolution No. 2001-387 (Agency Resolution No. 1757) 2. Proposed Location Site Layout 3. Port Agenda Statement Prepared by: Laurie Madigan, Assistant City Manager, City Manager's Office "tachment 1 RESOLUTION NO, 2001-387 (AGENCY RESOLUTION NO /757) RESOLUTION OF THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA SUPPORTING THE CONCEPT OF RE-SITING THE DUKE ENERGY SOUTH BAY POWER PLANT TO THE LNG SITE; AND DIRECTING STAFF TO EXPLORE ALL ASSOCIATED DEVELOPMENT OPPORTUNITIES IN COOPERATION WITH THE SAN DIEGO UNIFIED PORT DISTRICT AND DUKE ENERGY OF NORTH AMERICA WHEREAS, in April, 1999, the San Diego Unified Port District ("Port") completed the purchase of the South Bay Power Plant located in the Bayfront Redevelopment Project Area in the City of Chula Vista from San Diego Gas & Electric and concurrently leased the facility to Duke Energy of North America ("Duke"); and WHEREAS, by the terms ofthe Lease Agreement between the Port and Duke, Duke is to use reasonable efforts to site and develop a replacement plant and decommission the existing plant prior to the expiration of the Lease Agreement on November 1,2009; and WHEREAS, the agreements have set the stage for the aging existing 706 MW plant to be replaced by a modern state-of-the-art combined cycle facility designed to increase generation capacity, reduce emissions, increase fuel efficiency on a smaller development footprint; and WHEREAS, the Port, Duke and the City of Chula Vista have been working in cooperation to determine the most feasible site for the replacement power plant in the general South Bay area; and WHEREAS, after some exploratory analysis of various potential sites, the Port, Duke and the City all support the concept of re-siting the plant on the LNG parcel immediately to the south of the existing location just north of the Bayside Commerce Center in the Southwest Redevelopment Project Area; and WHEREAS, the LNG site offers for the replacement plant to be built in an area already impacted by nearby power plant uses on a smaller development footprint thereby freeing up substantial property on the existing plant site to the north for highest and best use development; and WHEREAS, it is important for the Port, Duke, and the City to perform more focused analysis and studies on the feasibility ofre-siting the new plant on the LNG site; and WHEREAS, this action does not constitute formal City! Agency approval of a new plant on the LNG site which would be the subject of future actions by the Port, the California Energy Commission and the City! Agency; and any other governing regulatory agencies, NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista and the Redevelopment Agency of the City of Chula Vista do hereby (1) support the concept of re-siting the Duke Energy South Bay Power Plant to the LNG site; and (2) direct staff to explore all associated development opportunities in cooperation with the Port and Duke, Resolution 2001-387 Page 2 Presented by Approved as to form by ~):'~ Chris Salomone Community Development Director ;( PASSED, APPROVED, and ADOPTED by the City Council of the City ofChula Vista, California, this 13th day of November, 2001, by the following vote: AYES: Councilmembers: Davis, Padilla, Rindone, and Horton NAYS: Councilmembers: None ABSENT: Councilmembers: None ABSTAIN: Councilmembers: Salas ~~A0~ Shirley Hart , Mayor - ATTEST: t.u. A..A.. ~....1 .~ Susan Bigelow, City Clerk STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) CITY OF CHULA VISTA ) I, Susan Bigelow, City Clerk of Chula Vista, California, do hereby certify that the foregoing Resolution No. 2001-387 was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the 13tl1 day of November, 2001. Executed this 13th day of November, 2001. ~o..... T3:. ~ Susan Bigelow, City Cl~ "':.,;:. t:",..~ "1>-, ~., . ."", \) ,~ ~ LEGEND 230kV T.',ANSMISSION LINE -== GAS LINE ROUTE c-. WATER SUPPLY ROUTE =-:::m SEWER LINE ROUTE o PROJECT BOUNDARY 200 4DO Fe"t ~t "". 'L ~ ..~ 4. i~ _ A~i~~ '""""'------:.---.1........~-\.,. --~r'.,"'",...,~ ~ Ie In O. " \ ~I ~ ~ I FIGURE 2.1.3 l SITE LAYOUT i SOUTH BAY REPLACEMENT PROJECT I CHULAV1STA,CALlFORNIA : CH2MH!LL" , , "achment 3 SAN DIEGO UNIFIED PORT DISTRICT BOARD OF PORT COMMISSIONERS AND CITY OF CHULA VISTA CITY COUNCIL SPECIAL JOINT MEETING AGENDA January 18, 2007 4:00 P.M. City of Chula Vista City Hall Council Chambers 276 Fourth Avenue Chula Vista, California PLEASE COMPLETE A "REQUEST TO SPEAK" FORM PRIOR TO THE COMMENCEMENT OF THE MEETING AND SUBMIT IT TO THE DISTRICT CLERK. Note: Agendas are available in alternative formats upon request. If you require assistance or auxiliary aids in order to participate at public meetings, please contact Corporate Services at publicrecords@portofsandiego.org or (619) 686-6206 within 24 hours of the meeting. 1. Roll Call. 2. Public Communications (3 minutes each). No actions may be taken on these items. 3. Presentation Regarding the South Bay Replacement Power Plant Project Application and Licensing Process. Driving Directions to the City of Chula Vista Council Chambers From North: Take Interstate 5 South to the "E" Street exit and turn left onto "E" Street. Then turn right on 4th Avenue. From South: Take Interstate 5 North to the "E" Street exit and turn right onto "E" Street. Then turn right on 4th Avenue. For the agenda online and more information about the Commissioners' names and city representation; and future Board meeting dates. please visit our website at www.portofsandiego.org. As a courtesy to all who attend these public meetings. please turn all cell phones to off or vibrate before entering the Board Room. AGENDA ITEM 3 SAND~GOUMREDPORTD~TR~T DATE: January 18, 2007 SUBJECT: PRESENTATION REGARDING THE SOUTH BAY REPLACEMENT POWER PLANT PROJECT APPLICATION AND LICENSING PROCESS EXECUTIVE SUMMARY: The presentation is to provide the Board and City Council information as to the replacement plant project proposal, and the regulatory process required for licensing the project and removing the existing South Bay Power Plant (SBPP). The workshop will afford an opportunity to hear directly from the California Energy Commission (CEC), the California Independent Systems Operator (Cal ISO), and other agencies responsible for evaluating and permitting the replacement project, and for determining the timing for retirement and removal of the existing SBPP. District and City staff are not requesting that the Board or City Council take any action at this meeting. The existing SBPP is an outdated and unsightly electrical generation facility acquired by the District in 1998 to facilitate its removal from the Chula Vista Bayfront for the betterment of the Bayfront and the region. The plant is currently operating under a "must run" (RMR) status by state regulatory order to assure electric power supply reliability for the region. The intent of replacing the SBPP with an environmentally superior and more efficient power plant is to remove the RMR status in order to clear the way for the decommissioning and dismantling of the SBPP. Under existing agreements with the District, LS Power, as the successor lessee and operator of the SBPP, is required to use commercially reasonable efforts to develop a replacement power plant. In accordance with these obligations LS Power has filed an application for certification of the replacement plant project with the CEC, the agency with exclusive jurisdiction to license energy generating facilities. Chula Vista's City Council voted unanimously in November 2001 to support the concept of re-siting the power plant near the existing plant on the Chula Vista Bayfront. After a community based "Power Plant Working Group. studied the matter, the District entered into negotiations with the developer for the proposed site (October, 2004). After two years of negotiations, the business terms of the option and lease have been agreed upon between District staff and LS Power (at a staff level). Prior to the Board's consideration of the option and lease at its November meeting, members of the community requested a delay and some Chula Vista City officials also raised concerns. It is anticipated that the option and lease will be brought to the Board for its consideration at a future Board meeting. The purpose of the joint presentation is not to consider the terms of the option and lease, but to address the background of the project proposal, and the process that will determine whether or not the proposed project is licensed and the existing SBPP is removed. San Diego UnifiecJ Port District Board Meeting - January 18. 2007 AGENDA ITEM 3 Page2of4 The following parties/agencies have been invited to make brief presentations, and will be available to answer questions: LS Power California Energy Commission California Public Utilities Commission Air Pollution Control District California Independent Systems Operator RECOMMENDATION: Presentation regarding the South Bay Replacement Power Plant Project application and licensing process. FISCAL IMPACT: This item is a presentation only, there is no action requested, and there is no fiscal impact to the District. DISCUSSION HISTORY 1998 Coooeration Aareement - Obliaations to Coooerate in the Develooment of Reolacement Plant: When the District acquired and leased the SBPP to Duke Energy, it also entered into a Cooperation Agreement setting forth the parties' roles in the pursuit of development of a replacement power project, thereby resulting in the decommissioning and demolition of the SBPP. Under the Cooperation Agreement, Duke (now LSP South Bay, LLC, and for purposes of this Agenda Sheet "the developer") is obligated, at its own cost, to use its best efforts to develop, finance, and place into commercial operation a new power plant that will have a generating capacity sufficient to cause the Cal ISO to remove the RMR status from the SBPP. The Cooperation Agreement requires the developer to locate the replacement plant off Tidelands unless a suitable site cannot be found and the District approves the development of a new plant on District-owned property. The Cooperation Agreement includes several milestones intended to move this process forward. The developer completed a formal site identification process in mid-2002 and identified 29 potential locations for the replacement plant. The developer's assessment of these alternatives resulted in elimination of all but the District-owned LNG site adjacent to and south of the existing SBPP. Subsequently, upon the request of the developer and with the support of the City of Chula Vista, the District entered into negotiations relative to the subject site. San Diego Unified Port District Board Meeting - January 18, 2007 AGENDA ITEM 3 Page3of4 ProDOsed South Bav ReDlacement Proiect The development described in the June 2006 application for certification is a nominal 620 MW. combined cycle, gas-fired power plant. which is comprised of two natural-9as- fired combustion turbine generators, and one steam turbine generator and a duct firing component. and does not rely on bay water for cooling. The application also describes the conceptual aesthetic enhancements considered by the Ad Hoc Committee. (The Ad Hoc Committee consisted of three Board Mambers and one Chula Vista City Council Member and was formed by the Board to address visual impacts of the proposed project). According to the application for certification, the benefits of the project include: . Removes the existing SBPP. . Makes the 115-acre SBPP site available for redevelopment. while using only 15 acres for the replacement project. . Uses air cooled condensers I dry cooling technology, . Eliminates the use of San Diego bay-water for cooling. . Lessens the potential for adverse biological impacts. . Reduces noise emissions as compared to the SBPP. . Reduces stack heights from existing 180 feet to maximum of 125 feet. . Mitigates air quality impacts through use of best available control technology, . Reduces dependence on older less efficient power plants. . Reduces dependence on out-of-area power generation. . Effectively uses a brown field site (a state policy goal). . Uses existing infrastructure (pipelines. transmission lines. water/sewer). . Recycles costs of energy production back into the local economy. and . Enhances visual resources (lower profile and more compact facility). California IndeDendent Svstems ODerator - RMR Determination A representative from CallSO will make a presentation regarding the role of the SBPP in regional energy reliability and the replacement project's impact on the SBPP's "RMR" status. Under the Cooperation Agreement, LS Power is to develop a plant of sufficient capacity to cause Cal ISO to remove the RMR designation from the SBPP. The California Public Utilities Commission (CPUC) may be playing a more prominent role in the State's energy reliability in the future. which will effect the RMR process as it exists today, and will also playa role in approving the relocation of the SDG&E South Bay substation. The CPUC will make a brief presentation. California Enerav Commission (CEC) - Jurisdiction and Licensina The CEC is the state's primary energy policy and planning agency. The CEC is responsible for licensing thermal power plants with a generating capacity of 50 MW or more. The licensing process includes an environmental review process equivalent to san DiegO Unified Pon District Board Meeting - January 18. 2007 AGENDA ITEM 3 Page 4 of4 an Environmental Impact Report (EIR) as required under the California Environmental Quality Act (CEQA). The CEC maintains full control over the licensing process for any new power plants under its jurisdiction. California regulations preempt the District's ability to directly regulate power plants, including related environmental processing, documentation and mitigation. The CEC conducts, as part of its review process, a number of local public workshops and hearings. The various Impacts of the project are considered and mitigations imposed by the CEC. Opportunities for further public involvement are within the CEC process. The .project" for which the developer is seeking CEC approval, includes not only the development of the new facility, but also the decommissioning and dismantling of the existing plant. CEC representatives have informed staff that the decommissioning and dismantling of the SBPP will be a condition to any license to develop a replacement plant. A representative from the CEC will make a presentation regarding the licensing process, and will be available to answer questions. Port Attorney's Comments: Not applicable. Environmental Review: This item does not contemplate any Board action and is not subject to environmental review. Equal Opportunity Program: N/A PREPARED BY: Randa J. Coniglio, Area Real Asset Manager - Real Estate Anthony Gordon, Assistant Asset Manager - Real Estate San Diego Unified Port District Board Moeting -January 18, 2007