Carlsbad's Power Plant Getting Torn Down

The Carlsbad City Council approved an agreement Tuesday that will result in a more environmentally friendly, lower profile “peaker” style power plant in Carlsbad in exchange for a guarantee that the old power plant is torn down and land along Carlsbad Boulevard is freed up for uses more appropriate for the coast.

“This agreement allows us to address long-standing community concerns about the use of our precious coastal land while doing our part in continuing to help meet the region’s energy demands,” said City of Carlsbad Mayor Pro Tem Mark Packard. “Best of all, the community will finally get the old power plant torn down and other benefits at no cost to taxpayers.”

In June 2013, Southern California Edison determined that the San Onofre Nuclear Generating Station, also known as “SONGS,” would no longer operate. This closure caused an increased and accelerated need for power generation facilities in Southern California. The California Independent System Operator, which manages California’s power grid, has determined that additional power is needed in the San Diego region by 2018, and even more up north in Southern California Edison’s territory.

On May 31, 2012, the California Energy Commission approved NRG Energy’s application for a new power plant to be located on the site of the existing Encina Power Station, on the Carlsbad coastline. The approval of this project does not include an obligation to tear down the existing plant, leaving the possibility of two power plants on Carlsbad’s coast for the foreseeable future. The City of Carlsbad opposed this project, in part, because there was no contract to sell the power locally and therefore no local benefit to having another power plant on its coastline.

Although the city opposed the project, it does not have authority to deny approval to power plant projects. That authority rests with the California Energy Commission. Given the increased need for power generation, NRG’s power plant project as currently permitted is likely to proceed.

On Dec. 3, 2013, the Carlsbad City Council directed staff to negotiate with SDG&E and NRG on an amended project application that would better address the concerns of the city and the community while meeting the region’s power needs. The resulting agreement, approved by the Carlsbad City Council at its Jan. 14 meeting, outlines a number of conditions under which the City of Carlsbad would support an amended project. Among the conditions in the agreement are:

• NRG will amend its approved project, proposing a plant that is more environmentally friendly, lower profile and would run only during periods of peak demand.
• NRG will completely retire and tear down the old Encina Power Station at no cost to taxpayers and begin the process to redevelop the site.
• To support the City of Carlsbad’s goal of returning its coastal land to non-industrial uses, SDG&E proposes to relocate its operations yard (“North Coast Service Center”) at NRG’s expense, pending regulatory approval, at no cost to ratepayers. SDG&E would then transfer ownership of the existing property to the city. If it is not possible to relocate the service center, NRG will pay the city $10 million.

“We are very pleased to have been able to reach this agreement which is a win for the people of Carlsbad, SDG&E customers and allows NRG to quickly redevelop a site that is very important to the needs and reliability of the local electrical grid,” said John Chillemi, president of NRG Energy’s West region. “We look forward to completing the permitting process so that we can move forward on building a new plant, removing the old plant and developing a site in which we can all take great pride.”

“The reality is that a new power plant will be built at the Carlsbad site,” said Packard. “We appreciate NRG working with us to create a more environmentally friendly project that frees up coastal land for non-industrial uses that our community can enjoy for generations to come.”

With the agreement approved, the immediate next step is for NRG to prepare its amended project application for submittal to the California Energy Commission for review and approval.

–City of Carlsbad