Californians for Renewable Energy, Inc

C/O Michael Boyd

821 Lakeknoll Dr.

Sunnyvale, CA 94089

STATE OF CALIFORNIA

Energy Resources Conservation

and Development Commission

In the Matter of: )

) Docket No. 98-AFC-3

Application for Certification )

For the Delta Energy Center ) 10/18/1999

Brief on the Delta Energy Center (98-AFC-3) Final Staff Assessment –Inadequacy of Alternatives Analysis Pursuant to CEQA

Petitioner would like to thank the Commission for the opportunity to provide testimony on the adequacy of the alternatives analysis performed in the Final Staff Assessment (FSA) on the Delta Energy Center proposal. This is a petition to support the determination that this analysis is inadequate and that it fails to meet the requirements of the California Environmental Quality Act (CEQA) for alternatives analysis.

Californians for Renewable Energy is a nonprofit corporation whose purposes include, “to engage on a nonprofit basis in research and information dissemination with respect to legal rights in a healthy environment by giving legal advice, appearing before administrative bodies, and enforcing environmental laws through court actions,” and also, “to supply on a nonprofit basis professional legal assistance to planning, conservation groups, and neighborhood groups, in regards to new energy projects in the state of California”. Petitioner is an advocate for new renewable energy supplies as the “environmental preferred alternative” for the people of the state of California.

I have attached for your review exhibits A to C.

My reasons for this petition are:

1) The issues raised in this petition are of statewide significance having effect on all other Licensing cases before the California Energy Resources Conservation and Development Commission (Commission). Further this matter is addressed in pending litigation before the California Supreme Court case#S-081009 Foster v. California Energy Resources Conservation and Development Commission exhibit A. The issue in this case is,

“May the State Energy Resources Conservation and Development Commission (Commission) excuse large gas-fired thermal powerplants from the alternative sites analysis required by the California Environmental Quality Act (CEQA)(Public Resources Code sections 2100 et seq.¹) and the Warren-Alquist Act (section 25000, et seq.), without and exemption from the Secretary of the Resources Agency?

WHY REVIEW SHOULD BE GRANTED

This case presents an important issue because the challenged Sutter project involves the first ten power plants ranging in size from 320 to 1200 megawatts the Commission has exempted both CEQA and the Commission’s Notice of Intent (NOI) requirements for an alternative site evaluation. These ten, and seven more impending projects, are proposed by companies with no experience in the utility industry in populated areas throughout the state, including South San Francisco, Newark, San Jose, the City of Vernon, and Long Beach. The court should grant review under section 25531 to require that all large projects undergo a legally adequate review for environmental impacts. Otherwise, they can be sited anywhere in the state without undergoing an alternative site evaluation.”

Under SB110 recently signed by the governor the exemption from the requirements of CEQA must be review by the Resources Agency. Therefore, it is petitioner’s position that the Energy Commission is currently operating without a certified program.

2) The Commission currently has 10 Licensing cases under review with exemptions from the Notice of Intention (NOI) requirements under the Warren-Alquist State Energy Resources Conservation and Development Act, Public Resources Code Section 25000 et seq., which thereby limits the public’s right to participate in the scope of the analysis and the alternatives analysis as is required by the California Environmental Quality Act. See exhibit B pertinent sections of the Warren-Alquist State Energy Resources Conservation and Development Act that are currently being waived by the CEC pending their eliminated under SB110. See exhibit C CEC blanket waiver of fossil fuel burning gas fired power plants, “In the Matter of: Preparation of the1996 Electricity Report (ER 96)”. Please note that no environmental review was performed on this matter.

3) As a result of this flaw in the site identification process the subsequent environmental review by the Commission failed to identify adequate project alternatives, adequate alternative sites for the project, cumulative impacts and associated mitigations, as is in accordance with CEQA.

Project Alternatives

The, “Delta Energy Center (98-AFC-3) Final Staff Assessment “ the California Energy Commission fails to identify the “environmentally preferred alternative” to this project in compliance with CEQA. Petitioner’s position is that this alternative is renewable energy.

The EPA doesn’t agree with the applicant’s use of Best Available Control Technology (BACT) limits for Precursor Organic Compound (POC) emissions from the gas turbines/HRSG duct burners proposed by the Bay Area Air Quality Management District (BAAQMD) in their Preliminary Determination of Compliance for the Delta Energy Center. The EPA instead requires the use of the Federal Lowest Achievable Emissions Rate (LAER) since the location of the Delta Energy Center is in a region of the state in non-attainment for Ozone. Petitioner would like the record to reflect that emission-free renewable energy meets the requirements of LAER, yet the FSA fails to provide an adequate comparison of the benefits from renewable energy generation in comparison with the proposed project.

Petition cites the CEC’s internet site at the address http://www.energy.ca.gov/renewables/background.html for expert testimony in this matter.

“While all forms of energy production cause environmental impacts, some produce fewer impacts than others. Competition in the electricity industry offers Californians a unique opportunity to help clean up California's air, reduce greenhouse gas emissions and support in-state energy industries by making environmentally sensitive electricity choices.

The State of California has long recognized the importance of encouraging the development of energy resources that are both less harmful to the environment and renewable in nature. In the past, state policy ensured that renewable energy resources were developed to serve California's electricity needs. In the competitive electricity market, consumers will decide whether California's renewable resources continue to be developed for this purpose.

What is renewable power?

Renewable power is energy (usually in the form of electricity) produced using fuel resources that don't run out, or are quickly renewed through natural processes. As defined in California law, these resources include:

§ Biomass

§ Digester Gas

§ Geothermal

§ Hydroelectric (Small)

§ Landfill Gas

§ Municipal Solid Waste

§ Photovoltaic

§ Solar Thermal

§ Waste Tire

§ Wind

What are the benefits of renewable power?

Choosing renewable power can provide many benefits to the State of California, such as:

· Making use of secure, indigenous, and replenishable natural resources

· Helping to keep our air clean

· Potential to reduce the production of carbon dioxide -- a leading contributor to global climate change

· Helping to create jobs for California workers

· Establishing California as a world leader and exporter of renewable power technologies

· Nationwide, reducing dependence on imported oil

By purchasing electricity generated from renewable resources, you can demonstrate your commitment to a healthy environment and a healthy economy.

How much potential is there for renewable energy technologies?

California is blessed with abundant renewable resources. The chart below shows how much renewable power could be developed in California. Though California leads the nation in the development of renewable resources, significant opportunities remain for further development. “

Technology	Technical Potential	Developed
Biomass	3,979 MW	1,022 MW
Geothermal	3,297 MW	2,081 MW
Small Hydro	1,380 MW	1,380 MW
Solar	Very Large	~ 360 MW
Wind	4,460 MW	1,749 MW
Sources: CEC, 1991 and CEC, 1996. MW = megawatts of installed capacity

Petitioner cites the internet site http://www.econet.org/awea/pol/eptm971022.html for expert testimony in reference to the “AWEA Testimony on Electric Utility Industry Restructuring before the House Energy and Power Subcommittee Hearings October 22, 1997” which states,

“We believe that the states will continue to play an important role in the electric system but that it is essential, given the development of interstate, regional markets for electricity, that there be a basic federal framework which sets the fundamental standards for competition. Although there is benefit from the direct access markets that are emerging on a state by state basis, we believe that it is essential that there be a date certain by which all consumers gain access to the benefits of competition.

This restructuring process has been widely referred to as deregulation. That is a misnomer--it simply is not realistic to expect that we would ever fully deregulate an industry that has such huge impacts on our economy and our environment. But, we are moving away from a monopoly on generation toward a competitive market in which customers will have the opportunity to choose among power suppliers. We are moving away from complex regulatory schemes toward greater reliance upon market mechanisms. But as we restructure the electric industry, it will be the essential role of Congress to establish new market rules that will guide competition. One essential element of the new market rules is to ensure that those rules drive the market toward cleaner resources that are compatible with environmental sustainability.

Why is it Important for Federal Restructuring Legislation to Address Renewables?

Renewable energy technologies must be an important element of restructuring legislation because:

· Renewable energy technologies provide critical environmental benefits;

· Renewable technologies have value as indigenous resources that reduce our dependence upon imported fuels;

· Renewable energy offers enormous economic potential as among the fastest growing new technologies of the 21st Century;

· The Public Utility Regulatory Policies Act (PURPA) must be replaced with legislation that is more appropriate to a fully competitive market for generation; and

· The public supports a strong renewables provision in restructuring legislation.

Environmental Benefits--Despite significant investments and substantial progress made by the electric utility industry under the Clean Air Act, power plants are still the largest air pollution source in the U.S., responsible for:

          66 percent of SO2

          35 percent of CO2

          30 percent of NOx, and

          21 percent of Mercury

There is a strong case, simply based upon their environmental benefits, that federal restructuring legislation should accelerate more widespread reliance upon emission-free renewable energy technologies. If we hope to significantly reduce the environmental impacts of the electric sector, we must begin to bring renewable energy technologies into the generation mix in a more aggressive way.

Reducing Dependence Upon Energy Imports--We expect that natural gas will play an increasingly important role as a utility fuel. In fact, we see the three critical elements of the electric industry of the future being renewable energy, energy efficiency and natural gas. However, we think that it is in the public interest to balance the growth of gas with the growth of renewables, in that way diminishing too great a dependence upon any single resource. Net imports of natural gas have nearly tripled in the last decade, from 5 percent in 1987 to 13 percent today. According to the Energy Information Administration, gas imports are expected to account for over 20 percent of increased U.S. gas consumption through 2010.

Economic Development Potential--The markets for wind and other renewable technologies have been the fastest growing electric power markets in the world over the past five years, with annual growth each year exceeding 25 percent. Unfortunately, because of the slow-down in the U.S. market, primarily due to the uncertainty surrounding electric industry restructuring, that growth has been almost entirely limited to the overseas markets. For example, in 1996, driven primarily by strong wind energy incentives in Europe, there were 1,273 MW of new wind capacity installed worldwide, but only 10 MW installed in the U.S.

Over the next few decades, wind energy’s growth should accelerate as the technology’s cost-competitiveness continues to improve. According to the World Energy Council, for example, new wind capacity worldwide will total between 180,000 MW and 474,000 MW by the year 2020, which equates to $150 billion to $400 billion worth of business. It is vital that the U.S. make a strenuous effort to compete in this rapidly growing market, and a domestic renewable energy base, which we simply don’t have today, is a critical element in being successful in the global markets.

PURPA and Renewables--PURPA provided the foundation for competition in the electric industry, and also provided the foundation for development of the renewable energy industries in the U.S. Despite the enormous progress made by renewable technologies, PURPA’s objective of facilitating the commercial maturity of renewable energy technologies is not completely achieved. America’s non-hydro renewable energy capacity is currently at only about 2% of our electric capacity. Although new investment is starting to flow toward renewables, the U.S. renewable energy industries still tend to be comprised primarily of small, undercapitalized companies.

Public Support--The American public strongly supports a more significant role by renewable energy technologies in the U.S. electric mix. Over the last few years, a growing body of survey research has demonstrated public support for renewables. In fact, a December, 1996 poll conducted by Research/Strategy/Management (Vince Breglio) showed that a strong majority of those surveyed favored a federal policy that would require all electric suppliers to produce some of their electricity from renewable energy sources, even if it raised the average consumers electricity bill by up to a dollar a month. “

Petitioner cites the report on “How Emerging Green Markets Help Respond to Global Climate Change” by Steven Kelly Executive Director of the Renewable Energy Marketing Board which has the address http://www.cleanpower.org/remb.html on the internet for expert testimony.

“The average California household’s annual use of electricity produces the same amount of smog the average car would generate if driven from Los Angeles to New York City, and about the same amount of global warming-causing carbon dioxide if that same car was driven a third of the way around the world.

Before passage of AB 1890, consumers had no choice but to purchase their power from the utility monopolies that always served them and that continue to contribute to local, regional and global air pollution problems.

Today, consumers have the choice to send their electricity dollars to companies selling renewable energy electricity products. Every residential household that switches from generic utility power to 100% clean, renewable electricity is reducing by almost a ton the amount of carbon dioxide released into the atmosphere every year. The restructuring of the California electricity market has created a promising new environment for the renewable energy industry. This report summarizes how we got to where we are today, current successes and future trends.

The ability to choose power supply is a revolutionary change that will, in the long-term, transform the electricity business. A number of success stories have emerged in California over the past few months. More new renewable energy sources are being planned and built today in California than in the past decade. A diverse group of customers have signed up for clean power -- ranging from a major car company to local governments to churches. One of the best ways to stimulate the green power market is to make a more explicit link between consumer clean power purchases and the need for individuals to take immediate action to stem the steady erosion of our atmosphere due to global warming.

California’s new and existing base of renewable energy facilities offer a host of environmental and economic benefits that are summarized in this report. What follows are highlights:

A Promising Start

Approximately 50% of all residential customer switches in California over the past six months have gone to green power providers;

All 30,000 residential customers served by Enron Energy Services are currently receiving its Earth Smart Power brand, electricity which is generated from at least 50% renewable energy sources;

Green Mountain Energy Resources recently broke ground on two 700 kW wind turbines in response to 7,600 customers signing up for its Wind For the Future green power product.

High Profile Switches

In October, the Santa Monica City Council unanimously voted to purchase 5 MW of renewable energy resources to power all municipal facilities;

Toyota Motor Sales USA is purchasing 100% renewable resources for its headquarters buildings and port facilities in southern California -- a total of approximately 12 megawatts of clean power;

Last July, Ventura-based Patagonia, Inc., an outdoor clothing company, became the first commercial customer in California to purchase 100% of its electricity from a new renewable energy facility -- a wind farm near Palm Springs;

Also in October, the Episcopal Diocese of California approved a resolution urging all 87 Episcopal parishes in the state and all Episcopal congregates to purchase renewable power. Four Bay Area Episcopal Churches already have already switched to clean power.

Statewide And Local Benefits of New Renewable Projects

Developers are planning to build 55 new renewable projects in California, some of which will be on-line beginning early next year. These renewable projects -- over 483 megawatts of new renewable capacity -- represent the first significant investment in new renewable resources in over a decade. According to California Energy Commission (CEC) staff estimates, these new state-of-the-art renewable energy projects represent over $700 million in private capital investment. Other benefits include:

Gross state product impacts estimated at $1.5 billion during construction and $130 million in annual ongoing operations;

Nearly $444 million in wages generated by 10,000 construction jobs;

Ongoing operations and maintenance employment estimated at 900 jobs, representing another $30 million in long-term salaries.

These new renewable energy projects also deliver important air quality benefits:

The offset of 286,113 tons of carbon dioxide, that would otherwise be emitted into the atmosphere every year if the same electricity was provided by the dirty, generic utility mix of power sources consumers;

The avoidance the annual release of 1,300 tons of sulfur dioxide, which is emitted by coal plants and causes acid rain, 1,634 tons of nitrogen oxide, 255 tons of carbon monoxide and 73 tons of small particulates.

The Value of Existing Renewable Resources

At present, California generates roughly 11% of its electricity from renewable resources such as solar, wind, geothermal, biomass and small hydroelectric power plants developed by independent power producers. According to figures compiled by the CEC, the state’s existing renewable energy power plants represent:

Over $6 billion in private sector investment;

Well over $400 million in annual tax revenues;

126,562 construction jobs and over 10,000 operations and maintenance jobs.

Just how important are the state’s existing renewable energy facilities to the economy? Consider Imperial County, which has suffered from the highest unemployment rates in the state. In a county dominated by agriculture, the geothermal industry provides:

High paying, stable jobs to over 285 people, most of which are local residents;

Over $18.5 million in annual salaries and benefits;

About 25% of the county tax base, producing over $12 million in tax revenue for local government, schools, and special districts;

Cal Energy Co, Inc., the largest geothermal company in Imperial County, is the single largest county taxpayer.

California’s existing renewable power plants also offer tremendous environmental benefits in the form of the following annual air emission reductions:

3,000,000 tons of carbon dioxide;

17,000 tons of nitrogen oxides;

14,000 tons of sulfur dioxide;

2,700 tons of carbon monoxide;

750 tons of small particulates;

375 tons of reactive organic gases. “

Petitioner would like the record to note that Michael Boyd individually is supplied electricity for his residence by the California based 100% renewable energy supplier Cleen n’Green which is located at the address http://www.go-green.com/ on the internet.

Petitioner formally protests the failure of the CEC to identify renewable energy supplies, or propose, or consider any renewable energy project, as the “environmentally preferred alternative” in the, “Delta Energy Center (98-AFC-3) Final Staff Assessment”. Petitioner request the CEC prepare and Environmental Impact Report on the proposed project in compliance with both CEQA which identifies renewable energy supplies as the “environmentally preferred alternative” to this project, as the CEC’s environmental program is not currently certified by the California Resources Agency, as the CEC’s certified program is under review by the California Resources Agency pursuant to SB110. Petitioner believes that this analysis of alternatives fails to identify the “environmentally preferred alternative” as such, and therefore fails to comply with CEQA’s requirements for alternatives and mitigation. As evidence of the legal basis for petitioner’s position petitioner cites the CEQA Case “Citizens for Goleta Valley v. Board of Supervisors of Santa Barbara County” at http://ceres.ca.gov/ceqa/cases/1988/goleta_012288.html on the internet, in which the Court of Appeals, “Held that: (2) failure of environmental impact report to consider alternative was improper.”

Project Alternative Siting

The, “Delta Energy Center (98-AFC-3) Final Staff Assessment” fails to identify the “other adequate alternative sites” and the “environmentally preferred alternative” to this project in compliance with CEQA. Petitioner cites the http://www.energy.ca.gov/sitingcases/delta/documents/1999-09-10_DELTA_FSA.PDF Petitioner’s position is that adequate alternative sites to the proposed project are required under CEQA and not provided. Petitioners further states that the “Delta Energy Center (98-AFC-3) Final Staff Assessment” failed to meet the requirements of CEQA to clearly identify the “Proposed Pittsburg District Energy Facility site or the DEC Alternative Site C siting alternatives” as an “environmentally preferred alternatives” to the proposed DEC. In regards to potential benefits and impacts of these alternative sites the FSA states,

” DEC ALTERNATIVE SITE C SITE DESCRIPTION

· Alternative Site C is an undeveloped parcel which is owned by USS-POSCO,

and located in the City of Pittsburg. The parcel is approximately

170 acres in size. Its western boundary is east of the baseball fields near

Columbia Street on the Pittsburg-Antioch Highway, with the southern

boundary fronting on the Antioch Highway. USS-POSCO’s buildings form

the northern boundary, and the eastern boundary is near Loveridge Road.

· This site contains undulating hills, with Great Valley Willow scrub and a

small wetland area.

· Residential development is located approximately 2000 feet from the

area’s northeastern boundary.

· Pittsburg’s zoning ordinance designates Alternative Site C as General

Industrial which allows power plant construction.

ADVANTAGES

· Alternative Site C is slightly preferred from the visual resources

perspective when compared to the proposed site, since a power plant on

the property would not reduce or block a view corridor to the San Joaquin

River.

DISADVANTAGES

· This area is in the very preliminary stages of soil remediation, with years

of work before industrial site development would be possible. USS-POSCO

is working with the California Department of Toxic Substances

Control on a remediation plan. Note that the previous landowner, U.S.

Steel, is liable for the toxics problem.

PROPOSED PITTSBURG DISTRICT ENERGY FACILITY SITE

ALTERNATIVE

SITE DESCRIPTION

· The proposed Pittsburg District Energy Facility (PDEF) site alternative is located on an existing 12 acre industrial site owned by USS-POSCO in the northeast corner of the City of Pittsburg. It is approximately 0.8-mile from Dow Chemical.

· The proposed PDEF site lies within an approximately 65 acre area, owned by USS-POSCO, called “Area LB”. The area’s northern boundary is 3rd Street, with the southern boundary near East Santa Fe Avenue. Harbor Street is the area’s western boundary, with USS-POSCO’s mill forming the eastern boundary.

· The site was formerly used for sludge drying and wastewater treatment

related to steel production and is now unused. Approximately eight acres

of the site contain arsenic contaminated soil. The PDEF applicant plans to

cap the contaminated soil area with additional layers of fill and asphalt.

The California Department of Toxic Substances Control has cleared the

site for industrial development.

· Adjacent land uses include the Pittsburg Marine Terminal Petroleum Coke Handling Facility to the northwest, the GWF power plant to the northeast, the USS-POSCO steel mill to the southeast, Dow Chemical’s

petrochemical production facility to the east, and a Johns-Manville

sheetrock production facility to the west.

· The site is zoned for general industrial uses with electric power plants

being allowed in this zone.

· The nearest occupied residences, which are the closest noise receptors,

are approximately 1800 feet from the project site.

ADVANTAGES

· The PDEF site alternative is more disturbed than the proposed DEC site. Therefore, biological resource impacts would be somewhat less at this alternative site, when compared with the DEC site.

DISADVANTAGES

· The applicant’s minimum size requirement of twenty acres is not met with this alternative site, which is approximately 12 acres in size.

· This alternative site is closer to residences than the proposed DEC site.”

Petitioner believes that this analysis of alternative siting “environmentally preferred alternative sites” fails to identify either alternative site as such, and therefore fails to comply with CEQA’s requirements for alternative siting and mitigation. As evidence of the legal basis for petitioner’s position petitioner cites the CEQA Case “Citizens for Goleta Valley v. Board of Supervisors of Santa Barbara County” in which the Court of Appeals, “Held that: (3) alternative of development on a different site was not adequately considered.” As such, the petitioner’s position is that this projects environmental document therefore fails to meet the requirements for CEQA.

The No-Project Alternative

The, “Delta Energy Center (98-AFC-3) Final Staff Assessment” fails to identify the “the No-Project Alternative” as the “environmentally preferred alternative” to this project in compliance with CEQA. Petitioner’s position is that failure to identify the no-project alternative as the “environmentally preferred alternative” to the proposed project fails to meet the requirements of CEQA. In regards to potential benefits and impacts of this alternative sites the FSA states,

“THE “NO PROJECT” ALTERNATIVE

CEQA requires consideration of the “no project” alternative, requiring agencies to evaluate whether “no project” is environmentally preferable to the proposed project. The project, described previously, would be a large industrial facility built in an industrial area, on vacant land that is zoned industrial and has an industrial general plan designation. Since the project is a power plant, it requires a transmission line to deliver its power to the PG&E switchyard west of the project. The transmission line, as proposed by the applicant, would be above ground to a location near the perimeter of the industrial zone, which borders on a residential neighborhood. From this point, the applicant proposes that the transmission line go underground. If the project is not built, the project structure would for the time being, be avoided, and the project site would remain vacant. However, the site is zoned industrial, and it is reasonably likely that another industrial project would eventually be constructed there. If the project is not approved or built, the energy efficiency advantages of a large industrial project with a connection to a steam host would not be realized. Staff believes that the project will have some benefits over the “no project alternative” from more efficient use of fuel.

Petitioner’s position is that connection to a steam host is an economic benefit to DOW and the applicant not an environmental benefit. Further this section fails to provide a technically accurate analysis of the beneficial effects on air emission of the no-project alternative in comparison with the proposed project. As evidence of the legal basis for petitioner’s position petitioner once again cites the CEQA Case “Citizens for Goleta Valley v. Board of Supervisors of Santa Barbara County” in which the Court of Appeals, “Held that: (2) failure of environmental impact report to consider alternative was improper.”

Reduced Project Alternative

The, “Delta Energy Center (98-AFC-3) Final Staff Assessment” fails to analyze and provide comparative evidence that “the Reduced Project Alternative” is the “environmentally preferred alternative” to this project in compliance with CEQA. Petitioner’s position is that failure to properly analyze the reduced project alternative as the “environmentally preferred alternative” to the proposed project fails to meet the requirements of CEQA. In regards to potential benefits and impacts of this alternative sites the FSA states,

“Of the project alternatives considered, the environmentally preferable alternative would be the smaller, 240 megawatt combined cycle power plant. However, this smaller project would be less likely to meet project objectives and offers no environmental benefits when compared to the proposed project. The environmental impacts associated with the smaller project would have impacts that would need to be mitigated similarly to the proposed project.”

Petitioner position is that this section fails to provide a technically accurate analysis of the beneficial effects on air emission of the reduced project in comparison with the proposed project. Petitioner would like to note that the statement, “this smaller project would be less likely to meet project objectives and offers no environmental benefits when compared to the proposed project”, is technically incorrect in regards to environmental benefits. Further the compliance with the requirements for the applicant’s “economic” objectives should not be cited unless this alternative can be shown to be economically unfeasible. As evidence of the legal basis for petitioner’s position petitioner once again cites the CEQA Case “Citizens for Goleta Valley v. Board of Supervisors of Santa Barbara County” in which the Court of Appeals, “Held that: (1) alternative of a smaller project was not shown to be economically unfeasible.”

Cumulative Impacts and Mitigation

Petitioner contends that as a result of flaws in the site identification process and the alternatives analysis the subsequent FSA prepared for the Commission failed to identify cumulative impacts and associated mitigations, as is in accordance with the California Environmental Quality Act. Petitioner contends that Commission’s staff and Senior Staff Counsel, Dick Ratliff, are under the mistaken assumption that the applicants proposed mitigation measures will eliminate significant adverse air quality impacts associated with this project, and thereby absolves the applicants from identifying environmentally preferred alternatives. Petitioner cites the transcript from the Hearing before the Energy Commission on October 5, 1999 in which the Commission’s chief counsel states,

“MR. RATLIFF: I understand, and I' m saying we found that - - we haven't gotten to air quality yet in that, so we're sort of jumping a little bit ahead of ourselves here. But staff has not found a significant air impact associated with this project. And for that reason, the only environmental benefit of a smaller project would be lower emissions. But if you have no significant impact, as you did in the Goleta case, but if you have no significant impact then there is no environmentally preferable alternative from the smaller project.”

Petitioner position is that the FSA’s failure to comply with CEQA in its alternatives sections resulted in the failure to mitigate adverse impacts on air quality from this project. The applicant proposes to mitigate both regional and cumulative air quality impacts from this project through the use of trading of emission reduction credits (ERCs). Current EPA policy does not encourage the use of ERCs. Petitioner cites the letter to BAAQMD Air Pollution Control Officer, Ellen Garvey, from EPA Region IX Chief Permits Officer, Matt Haber, titled EPA Comments on the Preliminary Determination of Compliance for the Delta Energy Center - September 23, 1999 page 2 where it states,

“The source plans to use the provisions for interpollution trading under District rules and provide 81.8 tons of VOC ERC in place of the required Nox ERCs. In the EPA’s notice proposing limited approval/disapproval of Regulation 2 Rules 1,2 and 4 (63 FR 59924), EPA identified interpollution trading of Nox and VOC as a significant approvability issue. The District rule does not contain adequate safeguards to ensure an overall air quality benefits from this type of trading.”

Petitioner contends that without interpollution trading the applicant cannot mitigate the adverse air quality impacts associated with this project which are both cumulative and regional impacts and should have been examined in the alternatives analysis. EPAs citation of this as a “significant approvability issue” because it “does not contain adequate safeguards to ensure overall air quality benefits” demonstrates staff’s and counsel’s mistaken assumption in that, “staff has not found a significant air impact associated with this project”. This serves to demonstrate the inadequacy of staff’s analysis.

Petitioner would also include that the EPA doesn’t agree with the applicant’s use BACT limits for POC emissions from the gas turbines/HRSG duct burners proposed by the BAAQMD in their Preliminary Determination of Compliance for the Delta Energy Center. The EPA instead requires the use of the Federal LAER since the location of the Delta Energy Center is in a region of the state in non-attainment for Ozone. Petitioner cites the letter to the BAAQMD from the EPA page 1 where it states,

”EPA does not agree with the Best Available Control Technology (BACT) limit for POC from the gas turbines/HRSG burners proposed by the Bay Area Air Quality Management District (District) in the Preliminary Determination of Compliance (PDOC). As the District is aware, Rule 2 of Regulation 2 requires BACT to be at least as stringent as the federal Lowest Achievable Emission Rate (LAER). Neither the limit listed from District BACT Guideline 89.s.1 nor “expected” POC emission rate satisfy federal LAER.”

Petitioner contends that air quality non-attainment is a regional problem associated with air pollution emissions in the San Francisco Bay Area, and the greater Sacramento Valley, and as such, cumulative air quality impacts should be evaluated based on impacts to the entire region, not limited to within a six-mile radius of the project. Figure 1 below shows the regional non-attainment areas of California for Ozone O₃

Figure 1 EPA Region IX Non-attainment Areas for Ozone

Figure 1 shows Contra Costa County directly below Sacramento County on the map. The project’s classification is severe for ozone. This part of the San Francisco Bay Area /greater Sacramento Valley region is in an area classified as severe for non-attainment of Federal ozone standards. Figure 2 below shows the current CEC licensing cases under consideration, all for gas burning non-renewable energy supplies. Petitioner wishes to note for the record that there is six other bay area projects on the Commission’s map, yet no analysis of the cumulative impacts associated with these projects are included in the FSA.

Figure 2 CEC Current, Expected, or Approved Power Plant Licensing Cases

Petitioner formally protests that the CEC, fails to identify the “cumulative air quality impacts and associated risks to public health” to this project in compliance with CEQA, in the FSA. Petitioner contends that adequate alternatives analysis cannot be performed based on inadequate or incorrect data provided by the applicant on project related air quality impacts and their proposed mitigation.

The assumption that because the ambient air quality for ozone and PM10 is in non-attainment and that this project would therefore not significantly impact cumulative air quality is not correct and should not be used as a basis for not completing a cumulative impact analysis on air quality impacts and should be factored into any alternatives analysis. From <http://www.pgedivest.com/eirtc/comments/u.html>:

"A project’s impact cannot be considered insignificant because it’s contribution to air quality is insignificant when compared to other sources. Kings County Farm Bureau v. City of Hanford 221 Cal. App.3d 692, 720 (5th Dist. 1990). The Court of Appeals held inadequate the cumulative impact analysis prepared for an EIR for a proposed coal-fired cogeneration power plant. The Court called this method of finding an impact insignificant because it was small compared to other sources, the incorrect approach. Id. This "ratio" theory of impact analysis allows a large pollution problem to make a project’s contribution appear less significant in a cumulative impact analysis. But the Court strongly disagreed, holding that such a method would "avoid analyzing the severity of the problem and allow approval of projects which, when taken in isolation, appear insignificant, but when viewed together, appear startling." It is invalid and terribly misleading of the DEIR to conclude that the impacts to air quality are insignificant because it is less then one percent of regional emissions. (Pg 4.5-59). In fact, the more severe existing environmental problems are, the lower the threshold should be for treating a project’s cumulative impacts as significant. Id. at 721. See discussion of Los Angeles Unified School District v. Los Angeles (1997) 58 Cal. App. 1019, supra."

In other words, in areas with high levels of pollutants in the air, new sources of pollution look less significant from the "ratio theory" point of view.

It is the petitioner’s contention that the failure to meet the requirements of CEQA for alternatives, and alternative siting resulted in a failure to identify and mitigate cumulative adverse air quality impacts and the associated risk to public health. Petitioner’s position is that the FSA fails to discuss cumulative impacts associated with other projects and their association with alternative sites for the DEC. Petitioner wishes to cite further case evidence the CEQA Case “Laurel Heights Improvement Association of San Francisco, Inc., v. The Regents of the University of California” located at the Internet site http://ceres.ca.gov/ceqa/cases/1988/laurel_120188.html, issued by the Court of Appeals,

“First, it found the EIR did not adequately describe the "project" within the meaning of CEQA because the EIR did not discuss the future cumulative effects of the relocation of additional UCSF operations to the Laurel Heights site. Second, the Court of Appeal found inadequate the EIR's discussion of project alternatives. Third, the court found no substantial evidence to support the Regents' conclusion that all significant environmental effects will be mitigated.”

Conclusion

Petitioner wishes to thank the Commission for allowing Californians for Renewable Energy to participate in these proceeding. Petitioner request the Commission issue an order directing staff to perform a more thorough analysis of the projects alternatives, alternative siting, associated air quality impacts and mitigation, that is in compliance with the requirements of CEQA. Petitioner requests the commission provide the petitioner evidence that its environmental program is currently certified by the California Resources Agency, and not pending certification. If certification is pending, petitioner requests the Commission complete and Environmental Impact Report on this project in compliance with CEQA.

Exhibit B

Warren-Alquist State Energy Resources

Conservation and Development Act,

Public Resources Code Section 25000 et seq.

§ 25503. Alternative sites and related facilities; notice; contents

Each notice of intention to file an application shall contain at least three alternative sites and related facilities, at least one of which shall not be located in whole or in part in the coastal zone. In addition, the alternative sites and related electrical facilities may be proposed from an inventory of sites which have previously been approved by the commission in a notice of intent or may be proposed from sites previously examined.

§ 25504. Statement by applicant; contents

The notice of intention shall include a statement by the applicant describing the location of the proposed sites by section or sections, range and township, and county; a summary of the proposed design criteria of the facilities; the type or types of fuels to be used; the methods of construction and operation; the proposed location of facilities and structures on each site; a preliminary statement of the relative economic, technological, and environmental advantages and disadvantages of the alternative site and related facility proposals; a statement of need for the facility and information showing the compatibility of the proposals with the most recent electricity report issued pursuant to Section 25308; and any other information that an electric utility deems desirable to submit to the commission.

§ 25505. Publication of summary of notice of intention; copies to governmental agencies

Upon receipt of a notice, the commission shall cause a summary of the notice to be published in a newspaper of general circulation in each county in which the sites and related facilities, or any part thereof, designated in the notice are proposed to be located. The commission shall also transmit a copy of the notice to the Public Utilities Commission, for sites and related facilities requiring a certificate of public convenience and necessity, and to other federal, state, regional, and local agencies having an interest in matters pertinent to the proposed facilities at any of the alternative sites. A copy of the notice shall also be transmitted to the Attorney General.

§ 25509. Informational presentations; purposes

Within 45 days of the filing of the notice, the commission shall conduct public informational presentations in the county or counties in which the proposed sites and related facilities are located. The place of such public informational presentations shall be as close as practicable to the proposed sites. Such presentations shall be for the purpose of setting forth the electrical demand basis for the proposed site and related facility and providing and knowledge and understanding of the proposed facilities and sites.

§ 25509.5. Nonadjudicatory hearings; purposes

No sooner than 15 days after the conclusion of the presentations pursuant to Section

25509, the commission shall commence nonadjudicatory hearings. Such hearings shall identify issues for adjudication in hearings pursuant to Section 25513, issues which may be eliminated from further consideration in the notice proceedings, and issues which should be deferred to the certification proceeding. Any person may participate to the extent deemed reasonable and relevant by the presiding member of the commission in any such hearing. In scheduling such hearings the presiding member shall confer with the public adviser to provide that the hearing dates and locations are as convenient as possible for interested parties and the public. Such hearings shall be conducted in order to accomplish all of the following purposes:

(a) To set forth the electrical demand basis for the proposed site and related facility.

(b) To provide knowledge and understanding of proposed facilities and sites.

(c) To obtain the views and comments of the public, parties, and concerned governmental agencies on the environmental, public health and safety, economic, social, and land use impacts of the facility at the proposed sites.

(d) To solicit information regarding reasonable alternative sources of the electric generating capacity or energy to be provided by alternative sites and related facilities, or combinations thereof, which will better carry out the Policies and objectives of this division.

§ 25510. Summary and hearing order on notice of intention to file application

After the conclusion of such hearings, and no later than 150 days after filing of the notice, the commission shall prepare and make public a summary and hearing order on the notice of intention to file an application. The commission may include within the summary and hearing order any other alternatives proposed by the commission or presented to the commission at a public hearing prior to preparation of the summary and hearing order. The summary and hearing order shall be published and made available to the public and to interested local, regional, state, and federal agencies.

§ 25511. Safety and reliability factors; information required; analysis; findings

The commission shall review the factors related to safety and reliability of the facilities at each of the alternative sites designated in the notice. In addition to other information requested of the applicant, the commission shall, in determining the appropriateness of sites and related facilities, require detailed information on proposed emergency systems and safety precautions, plans for transport, handling and storage of wastes and fuels, proposed methods to prevent illegal diversion of nuclear fuels, special design features to account for seismic and other potential hazards, proposed methods to control density of population in areas surrounding nuclear powerplants, and such other information as the commission may determine to be relevant to the reliability and safety of the facility at the proposed sites. The commission shall analyze the information provided by the applicant, supplementing it, where necessary, by onsite investigations and other studies. The commission shall determine the adequacy of measures proposed by the applicant to protect public health and safety, and shall include its findings in the final report required by Section

25514.

§ 25512. Summary and hearing order; basis; contents

The summary and hearing order shall be based upon the record of the proceeding

including statements or documents presented during any hearing or informational presentation on

the notice, the comments transmitted by the Public Utilities Commission and local, regional, state,

and federal agencies and the public to the commission, and the independent studies conducted by

the commission's staff.

The summary and hearing order shall:

(a) Identify those issues for consideration in hearings pursuant to Section 25513.

(b) Identify those issues which may be eliminated from further consideration in

the notice of intention proceedings.

(d) Contain proposed findings on matters relevant to the provisions of Section

25514.

(e) Specify dates for the adjudicatory hearings.

§ 25512.5. Distribution of copies

Within 15 days of the publication of the summary and hearing order, a copy will be distributed to any person who requests such copy.

§ 25513. Adjudicatory hearings; commencement

No earlier than 30 days after distribution of the summary and hearing order, the commission shall commence adjudicatory hearings pursuant to the hearing order.

§ 25514. Final report; contents

After conclusion of the hearings held pursuant to Section 25513 and no later than

300 days after the filing of the notice, a final report shall be prepared and distributed. The final report shall include, but not be limited to, all of the following:

(a) The findings and conclusions of the commission regarding the conformity of alternative sites and related facilities designated in the notice or considered in the notice of intention proceeding with both of the following:

(1) The 12-year forecast of statewide and service area electric power demands adopted pursuant to subdivision (e) of Section 25305, except as provided in Section 25514.5.

(2) Applicable local, regional, state, and federal standards, ordinances, and laws, including any long-range land use plans or guidelines adopted by the state or by any local or regional planning agency, which would be applicable but for the exclusive authority of the commission to certify sites and related facilities; and the standards adopted by the commission pursuant to Section 25216.3.

(b) Any findings and comments submitted by the California Coastal Commission pursuant to Section 25507 and subdivision (d) of Section 30413.

(c) Any findings and comments submitted by the San Francisco Bay Conservation and Development Commission pursuant to Section 25507 of this code and subdivision (d) of Section 66645 of the Government Code.

(d) The commission's findings on the acceptability and relative merit of each alternative siting proposal designated in the notice or presented at the hearings and reviewed by the commission. The specific findings of relative merit shall be made pursuant to Sections 25502 to 25516, inclusive. In its findings on any alternative siting proposal, the commission may specify modification in the design, construction, location, or other conditions which will meet the standards, policies, and guidelines established by the commission.

(e) Findings and conclusions with respect to the safety and reliability of the facility or facilities at each of the sites designed in the notice, as determined by the commission pursuant to Section 25511, and any conditions, modifications, or criteria proposed for any site and related facility proposal resulting from such findings and conclusions.

§ 25515. Final report; hearings

No later than 30 days after the final report is distributed, a hearing or hearings on the

final report shall be commenced. Such hearings shall be concluded within 15 days of their

commencement.

§ 25516. Approval of notice; necessity for alternative site and related facility proposals;

exception

The approval of the notice by the commission shall be based upon findings pursuant

to Section 25514. The notice shall not be approved unless the commission finds at least two

alternative site and related facility proposals considered in the commission's final report as

acceptable. If the commission does not find at least two sites and related facilities acceptable,

additional sites and related facilities may be proposed by the applicant which shall be considered

in the same manner as those proposed in the original notice. If the commission finds that a good faith effort has been made by the person submitting the notice to find an acceptable alternative site and related facility and that there is only one acceptable site and related facility among those submitted, the commission may approve the notice based on the one site and related facility. If a notice is approved based on one site and related facility, the commission may require a new notice to be filed to identify acceptable alternative sites and related facilities for the one site and related facility approved unless suitable alternative sites and related facilities have been approved by the commission in previous notice of intention proceedings. If the commission finds that additional electric generating capacity is needed to accommodate the electric power demand forecast pursuant to subdivision (e) of Section 25305 and, after the commission finds that a good faith effort was made by the person submitting the notice to propose an acceptable site and related facility, it fails to find any proposed site and related facility to be acceptable, the commission shall designate, at the request of and at the expense of the person submitting the notice, a feasible site and related facility for providing the needed electric generating capacity.

§ 25516.1. Finding of relative merit of available alternative sites

If a site and related facility found to be acceptable by the commission pursuant to

Section 25516 is located in the coastal zone, the Suisun Marsh, or the jurisdiction of the San

Francisco Bay Conservation and Development Commission, no application for certification may be filed pursuant to Section 25519 unless the commission has determined, pursuant to Section 25514, that such site and related facility have greater relative merit than available alternative sites and related facilities for an applicant's service area which have been determined to be acceptable by the commission pursuant to Section 25516. On a notice which proposes an expanded ultimate electric generating capacity for a site, the commission may, based upon findings pursuant to Section 25514, either approve the notice only for the initial facility or facilities proposed for operation within the forthcoming 12-year period or may approve the notice for the initial facility or facilities and find the site acceptable for additional generating capacity of the type tentatively proposed. The maximum allowable amount and type of such additional capacity shall be determined by the commission. If a notice is approved which includes a finding that a particular site is suitable to accommodate a particular additional generating capacity, the site shall be designated a potential multiple-facility site. The commission may, in determining the acceptability of a potential multiple-facility site, specify conditions or criteria necessary to insure that future additional facilities will not exceed the limitations of the site.

§ 25516.6. Decision on notice; determination for completeness; determination as to when

notice is considered filed

(a) Except as otherwise expressly provided in this division, the commission shall

issue its written decision on the notice not later than 12 months after the notice is filed, or at any

later time as is mutually agreed upon by the commission and the applicant.

(b) The commission shall determine, within 45 days after it receives the notice,

whether the notice is complete. If the commission determines that the notice is complete, the notice shall be deemed filed for the purpose of this section on the date that this determination is made. If the commission determines that the notice is incomplete, the commission shall specify, in writing, those parts of the notice which are incomplete and shall indicate the manner in which it can be made complete. If the applicant submits additional data to complete the notice, the commission shall determine, within 30 days after receipt of that data, whether the data is sufficient to make the notice complete. The notice shall be deemed filed on the date the commission determines the notice is complete if the commission has adopted regulations specifying the informational requirements for a complete notice, but if the commission has not adopted regulations, the notice shall be deemed filed on the last date the commission receives any additional data that completes the notice.

Exhibit C

STATE OF CALIFORNIA

Energy Resources Conservation

and Development Commission

In the Matter of: ) Docket No. 95-ER-96A

Preparation of the )

1996Electricity Report ) ADDENDUM TO ER 96

(ER96) ) RE: NOI EXEMPTIONS

ADDENDUM TO ER 96 RE: NOI EXEMPTIONS

Public Resources Code section 25540.6(a) provides an exemption from the Notice of Intention (NOI) requirements for a natural gas-fired power plant that is the result of "a competitive solicitation or negotiation for new generation resources." The Commission has reviewed requests for NOI exemptions on a case-by-case basis in accordance with Commission policies and procedures that were originally established in the 1994 Electricity Report and the Addendum to the 1994 Electricity Report, and that were continued in the 1996 Electricity Report. (See ER 96, p. 75, fn. 1.)

Recently, the Commission issued a precedential decision under Government Code section 11425.60 declaring that power sales by natural gas-fired power plant projects to the California Power Exchange (PX), other power exchanges, wholesale or retail marketers, direct access power markets, or other power consumers are the "result of a competitive solicitation or negotiation for new generation resources" within the meaning of Public Resources Code section 25540.6(a). (Blythe Energy, 98-SIT-2, Order No. 98-1104-04.) The Commission has granted an NOI exemption to each natural gas-fired merchant project (i.e., a project operating in a competitive market and not supported by ratepayer financial guarantees) that has requested an NOI exemption since the precedential decision in Blythe Energy was adopted.

(See, Three Mountain (Docket No. 98-SIT-3); Otay Mesa Generating Company (Docket No. 98-SIT-4); Delta Energy Center (Docket No. 98-SIT-5); Elk Hill Power Project (Docket No. 98-SIT-6); AES South City (Docket No. 98-SIT-7); AES Antelope Valley (Docket No. 98-SIT-8); Pastoria Power Project (Docket No. 99-SIT-1); Midway Sunset Cogeneration Company (Docket No. 99-SIT-2); Metcalf Energy Center (Docket No. 99-SIT-3); and Newark Energy Center (Docket No. 99-SIT-4).

While the precedential decision has reduced the time and resources required to process individual NOI exemptions, the Commission believes that it is possible and desirable to further streamline the siting process. As the Commission stated in the Blythe Energy decision, gas-fired merchant power plants that participate in a competitive electricity market are presumed exempt from NOI requirements pursuant to Public Resources Code section 25540.6(a). (Blythe Energy, p. 17.) ER 96, however, states that the Commission will continue a case-by-case review of NOI exemption requests as established in the Addendum to ER 94. That procedural guideline appears inconsistent with the precedent adopted in Blythe Energy. Establishing a clear and direct policy and corresponding procedures for a unified approach to NOI exemptions would eliminate the need to expend effort on what has become a pro forma exercise.

Therefore, the Commission hereby amends ER 96 by revising Footnote 1 at page 75 to establish a blanket NOI exemption for gas-fired merchant power plants. The case-by-case review process announced in the Addendum to ER 94 is suspended. Hereafter, any proponent of a natural gas-fired merchant power plant project may file an Application for Certification (AFC) without applying for an NOI exemption. The AFC shall comply with the requirements of Public Resources Code section 25540.6(b) and all other applicable legal requirements.

Dated: May 12, 1999 ENERGY RESOURCES CONSERVATION AND DEVELOPMENT COMMISSION