September 12, 1998
Mr. Bruce Kaneshiro
Project Manager
Environmental Science Associates
225 Bush Street, Ste. 1700
San Francisco, CA 94104

RE: California Energy Commission Comments of the CPUC’s Draft Environmental Impact Report for Application 98-01-008, Pacific Gas and Electric Company’s Application for Authorization to Sell Certain Generating Plants and Related Assets

Dear Mr. Kaneshiro:

Thank you for the opportunity to review and offer comments on the Draft Environmental Impact Report for Application 98-01-008, Pacific Gas and Electric Company’s Application for Authorization to Sell Certain Generating Plants and Related Assets.

The Energy Commission Staff recognizes the tremendous effort that has gone in to the development of this analysis and report. In support of these efforts, the Commission offers the attached comments. If you have any questions regarding these comments, do not hesitate to contact me.


Robert L. Therkelsen

Deputy Director for Energy Facility Siting and

Environmental Protection Division


California Energy Commission Comments on the CPUC’s Draft Environmental Impact Report for Application 98-01-008, Pacific Gas and Electric Company’s Application for Authorization to Sell Certain Generating Plants and Related Assets

September 21, 1998

General Comments

[Begin B1]

1. The Energy Commission Staff agrees that determining the actual plant operations under new ownership is not possible, and, therefore, a conservative analysis is appropriate to determine the potential for adverse environmental impacts. We concur with the decision to establish a baseline and an "analytical maximum" as a basis for this impact analysis. The Energy Commission Staff agrees that it is reasonable to assume the new owners will increase operation of these power plants above the baseline for the characterization of the analytical maximum.

[End B1]

[Begin B2]

2. Energy Commission policy is that restructuring should create no increase in adverse environmental effects; we concur that no net increase in adverse environmental impact should occur as a result of this "project".

[End B2]

[Begin B3]

3. The Energy Commission Staff supports modifying Regulation 9, Rule 11 of the Bay Area Air Quality Management District’s (BAAQMD) rules for NOx emission to reflect changes in power plant ownership and ensure that emission limits would apply to new owners.

[End B3]

[Begin B4]

4. The Energy Commission Staff is pleased to see that "green" alternatives have been included, but believes a more realistic alternative should be used (e.g., a mix of "green" options and perhaps some distributed generation).

[End B4]

[Begin B5]

5. The text does not define "decommissioning in a responsible manner" (see Section 2.2.2) and therefore does not provide clarity on how the adverse environmental impacts will be avoided during decommissioning. Nor does the text discuss any decommissioning requirements contained in leases or contracts that affect plants to be sold to private owners. The Energy Commission Staff recommends that a more thorough discussion on decommissioning requirements or criteria be included in the report to support the conclusion that no significant adverse environmental affects will occur during this period. This discussion should include a description of applicable federal, state and local laws, ordinances, regulations and standards as well as any lease or contract requirements.

[End B5]

[Begin B6]

6. The cumulative impacts analysis in both Sections 4 and 5 needs to be modified and updated to reflect changes in the market and more accurately evaluate potential impacts. For example, with a setting of 2005 for the environmental analysis, the Pittsburg and Contra Costa power plants should include increased operation of both facilities and the addition of Enron’s proposed power project in the Pittsburg area. Calpine’s Pittsburg project and any other projects should be included as if they are filed prior to certification of this EIR. Air dispersion impacts modeling should include the Contra Costa, Pittsburg, and Enron Pittsburg power projects, and the potential industrial development in the Pittsburg area to best reflect the impacts of the divestiture project.

[End B6]

Specific Comments

[Begin B7]

Page 2.5, line 3: What does "quantities of contaminants" mean? This needs to be stated differently, or additional informational provided for the reader to understand what is intended.

[End B7]

[Begin B8]

Page 2-6: "...PG&E’s Application...also seeks authority to transfer all rights and obligations under its steam contracts...". We recommend that the "obligations" pertinent to decommissioning be spelled out as a new heading under Project Description.

[End B8]

[Begin B9]

Page 2-6, First paragraph, second sentence, Geyser’s Power Plants: Add footnote indicator to the end of the sentence, for the following footnote:

"The California Energy Commission certified Units 16, 17, 18, and 20 for construction and operation. The Energy Commission must approve any change in ownership of these power plants. Any new owner will be expected to comply with all existing conditions of certification, including decommissioning."

[End B9]

[Begin B10]

Section 3.6, Modeling Assumptions and Results: The conclusion that Pittsburg units 3 & 4 will be retired by 2005 is not well supported or explained in the text. Are there specific legal or contractual requirements for the retirement of Pittsburg units 3&4 by 2005? As acknowledged on page 3-4, there are factors that may change the operation characteristics of the divested facilities that may, in turn, affect the closure date. The assertion is made on page 3-6 that "new owners would have incentives to operate their newly acquired plants in a more constant mode, particularly if the new owners do not own any other plants in the region." Consistent with the methodology to estimate the analytical maximum to determine the potential for environmental impacts, we recommend that continued operation of Pittsburg units 3&4 (total capacity 326 MW) beyond 2005 and subsequent adverse environmental impacts be accounted for in the analysis. The base case should include the retirement of these units. However, if there are conditions which ensure the retirement of these units such conditions or requirements should be thoroughly discussed in the analysis.

[End B10]

[Begin B11]

Page 4.5-68: Table 4.5-32 shows that the Pittsburg power plant causes a violation of the State 1-hr NO2 standard for the 1999 Baseline and 1999 Analytical Maximum cases when project specific impacts are added to the Delta Region Background.

The EIR provides several plausible explanations for the violation, including the conservatism inherent in the modeling, and concludes that the violations will probably not occur. We believe that by showing the violations in the table, many readers will assume, albeit incorrectly, that the Pittsburg plant is causing unhealthy ambient air quality conditions. The preparers of the Draft EIR should perform refined modeling and provide additional discussion to more clearly show the actual impacts of the Pittsburg facility. This will provide a more representative baseline to which the divestiture project can be compared. In addition, we have the following concerns regarding the findings about the Pittsburg plant:

1) The analysis in the DEIR appears to be double counting the effect of the Pittsburg plant by adding the project specific impacts to the background that should already include the ambient air quality effect of the Pittsburg plant. In addition, the DEIR lacks an adequate discussion of why the Delta Region Background is representative of ambient conditions.

2) In performing the ozone limiting method for the Pittsburg modeling, we strongly suggest that you use an hour-by-hour calculation of the ozone and NO2 levels to most accurately reflect the effects of ozone on NO2 impacts. This would also resolve the uncertainty expressed at the bottom of page 4.5-67 whether the ambient ozone and NO2 maximums would occur simultaneously.

3) The project specific air dispersion impact modeling for both the Contra Costa and Pittsburg cases should consider the overlapping impacts likely from Contra Costa and Pittsburg power plants, and incorporate the dispatch order of Pittsburg and Contra Costa necessary to achieve the Delta Water Quality Maintenance Requirements.

[End B11]

[Begin B12]

4) The project specific impact modeling for the Potrero case should consider any overlapping impacts likely from the limited operation of the Hunters Point project.

[End B12]

[Begin B13]

Page 4-8.1, 2nd paragraph: The percentages for electricity consumption by sector appear to be in error. According to the Energy Commission’s 1998 Baseline Energy Outlook, the electricity consumption by sector is: industry 22%; commercial 35% and residential 30%; agriculture 7%, and other 6%. If these numbers are not in error, we recommend more explanation as to what is being represented.

[End B13]

[Begin B14]

Section 4.8 Energy and Mineral Resources, Pages 4.8-4 and 4.8-5: The Energy Commission Staff agrees that it is likely to be in the interest of the new owners of the power plants to operate the facilities as efficiently and as often as possible. However, based on the DEIR conclusion that the units will increase operation, it is unclear if the increased operation of the fossil fired power plants being sold is an efficient use of non-renewable resources if such operation displaces more fuel efficient, cleaner generation unit elsewhere in the state. Please provide more explanation or justification for the conclusion offered in this section.

[End B14]

[Begin B15]

Section 5.2.2, "Future Power Plant Development": Since the cumulative impacts analysis is based on a 2005 maximum, the Commission suggests that this discussion be updated to reflect the following:

Page 5-5 and 5-6: Add additional "expected applications" to discussions:

1) Long Beach District Energy Facilities, which is a nominal 500 MW cogeneration facility, natural gas fired combustion turbine generators, to be located on the port of Long Beach. The Energy Commission expects the application for certification to be filed in October/November 1998.

2) Sunrise Generation and Power Company’s proposed cogeneration facility with a nominal 340MW capacity and consisting of two gas turbines and two heat recovery steam generators. The project is to be located in an active oil field approximately 3 miles northeast of Fellows in western Kern County, California. The Energy Commission expects the application to be filed in November 1998.

3) Calpine Corporation and Bechtel Enterprise’s joint venture to develop a 535 to 800 MW generating facility at the Dow Chemical site in Pittsburg California. The Commission expects the application to be filed in November 1998.

Page 5-6: Strike the last sentence in the final bullet regarding La Paloma and insert: An AFC for La Paloma was filed on August 12, 1998 and the application was deemed complete on August 26, 1998.

[End B15]

[Begin B16]

Section 5.3, Potential Cumulative Effects: By separating out the consideration of impacts associated with future project developments (Section 5.2) from the impacts associated with either new power plant developments or transmission line developments and the increased capacity factors for the power projects being sold, the cumulative impacts analysis is misleading and inconsistent with the conservative analytical maximum approach. To ensure a more accurate analysis of potential cumulative impacts and consistency with the intent of the analytical maximum, the Energy Commission Staff recommends that analysis for Variant I and II (Sections 5.3.3 and 5.3.4) incorporate the following:

1) the proposed Calpine/Bechtel power plant project to be located in Pittsburg. Since the setting is 2005, this project needs to be a part of the cumulative impacts analysis in addition to the Enron Pittsburg project because the proponents expect the plant to be operational before 2005.

2) impacts associated with the future projects discussed in Section 5.2.

3) the potential adverse environmental impacts of simultaneous operation of the four power plants in the Pittsburg/Contra Costa area in combination with the reasonable foreseeable projects described in section 5.2.5 for Pittsburg and Contra Costa in order to identify "the maximum possible change effected by the project" (see page 5-16).

[End B16]

[Begin B17]

Page 5-17, Table 5.2 PDEF has a nominal rating of 500MW, not 450MW.

[End B17]

[Begin B18]

Page 5-42 To the extent appropriate, update data and references to the 1998 Baseline Energy Outlook, Final Staff Report August 1998 (P300-98-012).

[End B18]

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