Miramar plant plan receives support
Enpex, NRG Energy to promote project

By Craig D. Rose
STAFF WRITER
February 8, 2007

The long-simmering proposal to build a major electric generating plant at Miramar Marine Corps Air Station has recruited a key partner, one that experts say is likely to improve prospects for the project.

Enpex, a Del Mar company that has held an option to build a power plant on the military base since 2002, and NRG Energy said yesterday that they will team up to promote the project.

Among the key assets NRG brings to the Miramar proposal are air- emission credits, which NRG says it would make available by closing the Encina Power Plant in Carlsbad and transferring the hard-to- obtain credits to the new project at the Marine base.

The Miramar project could provide 750 megawatts -- enough to power about 500,000 homes -- while the Encina plant has a maximum output of 965 megawatts and typically operates at about 15 percent of capacity.

The new plant would be fueled by natural gas, as are all non- nuclear plants in California. In addition, Enpex and NRG said they would configure the new plant to meet the characteristics of San Diego's anticipated electricity demand, which is expected to require plants with more flexible generating levels than those built in the past.

To build the Miramar plant, however, NRG and Enpex said they probably will need a contract from San Diego Gas & Electric Co. to buy its power, though the promoters added that was not the only option. The partners emphasized that financing the new facility would require a contract in hand from creditworthy customers.

Enpex is a small, 23-year-old company specializing in power projects. The company's largest completed project was a 150- megawatt plant in New Jersey, which it sold to El Paso Energy in 1999.

Richard Hertzberg, the company's chief executive officer, said he was disappointed that the Miramar project wasn't accepted when it was proposed to SDG&E three years ago, one of a host of proposals submitted in a competitive bidding process.

At that time, SDG&E opted instead to buy the Palomar Energy Center from its parent company, Sempra Energy, and to buy electricity from a second plant planned by Calpine on Otay Mesa.

But SDG&E now plans to open another round of bidding for power projects with a total capacity of about 1,000 megawatts within the next month or so. Hertzberg said the Miramar project will again be submitted, with the addition of NRG as a partner.

"There is a really good fit between NRG and ourselves," Hertzberg said. "We need the air credits -- they are of extreme importance."

Electric generating plants must obtain permits for their air emissions, which are limited to minimize pollution. To offset pollution from new plants, a power-plant developer must either reduce a like quantity of emissions from other sources or obtain existing emission credits from previously approved projects.

Hertzberg said the proposed plant, which would be on a 60-acre parcel in the far southeastern corner of the Marine base near Santee, is targeted for a site near a key electric substation in the SDG&E system.

Jim Avery, the SDG&E vice president who oversees electricity assets for the utility, said the Enpex project was bypassed in the 2003 procurement because other projects were superior.

But Avery said the Miramar might be more attractive this time.

"All things being equal, yes, a project with with air credits is more credible than one without the credits," Avery said. He added that selection would still depend on the outcome of a competitive process for selecting new projects.

Avery said San Diego will need additional power plants and new transmission lines to satisfy its expected electricity demand.

Steve Hoffmann, president of NRG's western region, said closing the Carlsbad plant and shifting air credits to a new power plant at Miramar made strong sense to the company.

NRG has concluded that it will be unable to profitably build a power plant at the Carlsbad site, and it has received significant interest in using the parcel for other purposes.

"From a shareholder perspective, the highest and best use of the site is to develop the real estate," Hoffmann said. NRG, based in Princeton, N.J., owns nearly 50 power plants worldwide, with total capacity of about 25,000 megawatts.

Although SDG&E would be an ideal customer for the Miramar plant's electricity, Hoffmann added that there was interest from other unspecified customers, who are shopping for electricity as a consequence of California's increased requirements for reserve electric generating capacity.

The state raised reserve generating requirements to ensure a reliable electric supply.

Enpex obtained the right to develop 60 acres at Miramar for a power plant in December 2002, when language granting that option was inserted into the 2003 Defense Department appropriations bill by then-Rep. Randy "Duke" Cunningham. The former congressman from San Diego is now serving federal prison time for conspiracy and tax evasion, after admitting he accepted millions of dollars in bribes.

The Enpex option, which came in the aftermath of California's electricity crisis, allows the secretary of the Navy to transfer the property in exchange for the company's providing the military with family housing in the area.

Hertzberg said there was nothing illegal involved in Cunningham's advocacy of the project and that there was no money transferred to the congressman before the legislation passed.

He said that after passage, he was asked by Cunningham's staff to support a golf tournament that would benefit the congressman's political action committee. Hertzberg said he contributed $1,500.

The revived Miramar proposal comes as SDG&E is scrambling to satisfy what it says is burgeoning power demand in the region. But there is significant controversy over power projects that have been proposed, including SDG&E's plan to build the Sunrise Powerlink, a 150-mile power line across Anza-Borrego Desert State Park, and a proposal to build a new electric generator near the site of the South Bay Power Plant.

Environmental and community groups said they were at least initially interested in the Enpex-NRG proposal.

Laura Hunter, a spokeswoman for the Environmental Health Coalition, which is resisting the plan to build a large plant near South Bay, said the Miramar project was deserving of further consideration.

"That plant would be near the Sycamore substation, and that is where SDG&E says they need electricity," Hunter said. "But there are still concerns about the impact on residents downwind from any plant."

Hunter added that global-warming concerns also made it necessary to "find ways to have less natural-gas-fired electricity in our future."

Jeanette Hartman, who works with People's Powerlink, a group opposing the Sunrise project, said any project that would produce electricity within the San Diego area is worthy of consideration.

"That would be an improvement over building Sunrise," she said.


: (619) 293-1814; craig.rose@uniontrib.com

Copyright 2007 Union-Tribune Publishing Company. Used by Permission

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