California regulators override local law to approve Calpine plant

By Ann de Rouffignac
OGJ Online

HOUSTON, Sept. 25, 2001 — After a 2-year plus struggle to get state and local approval, Calpine Corp. received the final okay from state regulators for its Metcalf power plant in San Jose, Calif.

The California Energy Commission exercised its "override authority" over local laws for only the second time in the commission's history. The plant still does not conform with San Jose land use laws even though Calpine and the commission made a concerted effort to get local authorities on board.

In 1981, the commission used its authority to approve a transmission line Sonoma County over the opposition of county officials. Court challenges of the decision were unsuccessful, said Claudia Chandler, commission spokeswoman.

The commission used its override authority for Metcalf because the plant is considered key to a state plan to avoid power shortages in certain locations where power is required for reliability, the commission said.

"The commissioners agreed with the staff that the need for the project and benefits it will bring to the San Jose area outweigh its lack of compliance with local ordinances," the commission said.

The 600 Mw Metcalf plant will be located on a 20-acre site in San Jose at the southern base of Tulare Hill in northern Coyote Valley. Construction is scheduled to begin in October with commercial operation expected for summer 2003.

The merchant power plant company and the city of San Jose were locked into a bitter battle over the location of the proposed plant. The city and many residents in neighborhoods near the proposed plant site claimed environmental problems would result from the plant's operation.

The mayor and the city council also refused to sell water to the plant until a May agreement was hammered out between Calpine and the city. Calpine agreed to give the city about $6.5 million for parks and to subsidize electricity bills for low income consumers, in addition to other concessions.

The city of San Jose also agreed not to challenge a commission override. But the city also declined to change the zoning designation. The original request for a zoning change was denied in November 2000, said David Vossbrink, spokesman for Mayor Ron Gonzalez of San Jose.

"The root of the controversy is still there," he said. "The proposed project is not consistent with land use designation for that area."

Vossbrink said a neighborhood group will appeal the commission's override to the California Supreme Court. Calpine spokeswoman Lisa Poelle said appeals would not delay the groundbreaking.

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