MMC struggles to replace power plant in Chula Vista

San Diego Business Journal, May 14, 2007 by Thomas York

To catch a glimpse of the absurdist political theater that passes for serious public discourse in San Diego County, one need peer only as far as Chula Vista.

For the past year, MMC Energy Inc. has been attempting to get approvals to replace an existing, but outdated 40-megawatt peakload power plant with an advanced, cleaner-burning 93-megawatt plant.

The existing plant, acquired by New York-based MMC in January 2006, served our region well in providing reserve electricity during last summer's chronic heat wave.

Since last summer, MMC, which also owns plants in two other Southern California locations, has spent untold hundreds of thousands of dollars submitting the required paperwork to the city Planning Department, and courting City Council, seeking permits for its project.

Now, after 12 months of effort, Chula Vista demurred, saying it can't really OK a replacement plant, and sent MMC to the state Energy Commission for approval.

Here's the irony. The plant will be approved, and will be built--Chula Vista just doesn't want to make it easy for MMC.

As we all know, San Diego--not to mention the rest of California--faces a shortfall in electric power generation capacity, especially at peak periods.

Score Points

But the council and planners know they can score points with the electorate, or at least the special-interest pockets of the electorate, by turning over the decision-making to state bureaucrats.

They can honestly say they didn't approve the project, while at the same time knowing all too well that the project will be OK'd--eventually.

The problem is that these thespian tactics end up costing MMC possibly millions in the added costs of going to Sacramento, a process that will take another year to complete.

Had Chula Vista's officials done what's right, they would have granted approvals and the replacement plant would be on course for construction.

To be fair, Chula Vista has its reasons for closely examining MMC's submittal, but no reasons to reject it.

First, the existing facility sits near a less-advantaged area of the city--an area that tends to get more than its fair share of ungainly industrial projects.

Second, city officials have been tangling over the future of a bay front power plant owned by LS Power. There, the New Jersey utility wants to demolish the current plant, and replace it with a smaller, more efficient plant.

However, the city wants the existing plant removed--with no new plant in its place, though it has no power to do so because the plant sits within the San Diego Unified Port District lands.

Could Chula Vista's officials be taking out their frustrations on MMC's plant, the future of which they do have power over?

Improvements

MMC's proposed replacement plant will improve upon the old plant in several different aspects.

It will produce more power using less gas, and it will better serve the existing plant in that it provides more than twice the capacity.

Moreover, the new plant will add up to $80-plus million in new capital investment, which means higher assessment and hence higher property tax revenue. The assessed value of the existing plant is now just $5.4 million.

But, think of the message that the city is sending to the rest of the business community.

This drama involving MMC is not only theater of the absurd, it's politics of the absurd as well.

Thomas York is editor of the San Diego Business Journal.