November 12, 1998
Andrew Barnsdale
Project Manager
c/o Environmental Science Associates
225 Bush Street
Suite 1700
San Francisco, CA 94104

Re: Aggregate NOx Limits Following SDG&E’s Divestiture of the Encina and South Bay Power Plant under Proposed Mitigation Measures Found in the Initial Study for San Diego Gas & Electric Company’s Application No. 97-12-039.

Dear Mr. Barnsdale:

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San Diego Gas & Electric ("SDG&E") has proposed placing the Encina and South Bay Power Plants under an annual aggregate NOx emissions limit of 2100 tons to avoid potentially higher NOx production by the plants after SDG&E’s proposed divestiture. According to proposed Mitigation Measure 4.5.a.1, the 2100 ton annual aggregate NOx limit would be apportioned 1100 tons to the Encina Power Plant and 1000 tons to the South Bay Power Plant either by an amended SDCAPCD Rule 69 or a SDCAPCD operating permit.

We are concerned with the fairness of this allocation. We are not convinced that the Initial Study for SDG&E’s Application No. 97-12-039 contains technically and equitably justifiable explanations as to how the 2100 tons of NOx emissions limits was apportioned between the two plants.

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We believe that the 2100 tons of NOx emissions limits should be apportioned according to the plants’ design capacity. If done in this manner, the Encina Power Plant would have an annual aggregate NOx emission limit of 887.2 tons under the proposed 2100 ton annual aggregate limit for the period up to January 2001.

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Furthermore, Unit 5 of the Encina Power Plant, unlike the other generating units in the Encina and South Bay Power Plants, is independently owned by the PSEG Resources, Inc. ("Resources") and is currently leased to SDG&E. Since this unit is owned by Resources and could be sold in a separate transaction (than the one currently being contemplated by SDG&E) to an entity that may not be the purchaser of the other units of the Encina Power Plant, we believe that any future aggregate NOx emission limits with respect to this unit (and to each other unit comprising the Encina Power Plant) should be allocated on the basis of the design capacity of each such unit. If done in this manner, Unit 5 would be apportioned 414.7 tons of SDG&E’s NOx emissions limits annually for the period up to January 2001 under the proposed 2100 annual aggregate limit, which, in our view, would be a fair allocation of SDG&E aggregate annual NOx emission limits between the Encina and South Bay Power Plants and for each unit thereof.

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Thank you for your attention to this matter. We will be supplementing our comments to you respecting the above as circumstances warrant.

Very truly yours,
Sanjoy K. Bose
Counsel for PSEG Resources, Inc.

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