Cisco, Calpine butt heads over power project

Even though blackouts remain a real threat in California, Calpine Corp, the City of San Jose, and Cisco Systems Inc. have locked horns over a proposed power plant that would bring some relief to the power-starved Silicon Valley. The bitter controversy over the power plant�despite the state's near electricity crisis�illustrates how it got into the present jam and why it is so difficult to site plants in California.

Jul 12th, 2000


Ann de Rouffignac
OGJ Online


Even though blackouts remain a real threat in California, Calpine Corp, the city of San Jose, and Cisco Systems Inc. have locked horns over a proposed power plant that would bring some relief to power-starved Silicon Valley.

Calpine has proposed, and Cisco is contesting, a 600-Mw gas-fired power plant in south San Jose about a half a mile from a new corporate campus Cisco is planning. The bitter controversy over the power plant�despite the state's near electricity crisis�demonstrates just how difficult it is to site plants in California.

It also helps explain why only five new plants have been approved by the California Energy Commission so far in a state where 7,000 Mw of aging generating capacity needs to be replaced and new megawatts built to satisfy growing demand.

Underscoring the need, a group of San Jose manufacturers met earlier this week to discuss the problem after some companies had electricity cut off on June 14. A spokeswoman for the organization reported one manufacturer lost $3 million/hr, while the power was off.

While Cisco, which has its own temporary back-up system, acknowledges the state is facing serious electricity shortages, the company is skeptical a power plant next door will relieve them.

�We don�t think the plant is needed,� says Langdon. �There is an immediate need for power. But Calpine�s plant won�t do anything for that." Nor will the plant be needed, if and when, it gets built, he says.

Moreover, Calpine's proposed power plant site is not zoned for industrial use, Cisco points out, a contention borne out by San Jose's master plan. To build a power plant on the site will require zoning changes by city officials.

The site should be devoted to office parks and high tech company development not industrial use, says Steve Langdon, Cisco company spokesman. San Jose's mayor also opposes the power plant because of its proximity to a residential neighborhood. The 14-acre parcel is at the base of Tulare Hill near the Santa Teresa neighborhood.

�The impacts of this large project at this location would harm the quality of life for San Jose residents,� Mayor Ron Gonzales said in a statement.

�This is a question of �Do you want this truly in your back yard'?�, asks David Vossbrink, mayoral spokesman.

Project opposition
Sources close to the controversy say area residents oppose the power plant. They have reportedly enlisted Cisco�s help in heading up the opposition. Cisco, the area's largest single employer with about 15,000 employees, is expanding to accommodate another 20,000 at the new corporate campus. Some sources speculate if Cisco doesn't help defeat the power plant, angry residents will then oppose Cisco�s development of the new office campus.

To make the project more palatable to opponents Calpine has proposed $10 million worth of enhancements. It plans to build a fa�e on all sides of the plant to make it appear like an office building. The emissions stack will be �plume abated." The plume will not be visible at any time, says Curt Hildebrand, Calpine vice-president of project development.

State-of-the-art gas turbines will emit less than 2 ppm of NOx, the lowest level for any gas-fired power plant in the US, he says.

�The plant cannot be seen from the neighborhood and all heavy equipment for the construction will be brought in on rail that�s located behind the site,� he says.

Commission review
Calpine�s project must first pass muster with the California Energy Commission. In a preliminary commission staff assessment of the proposed plant, 17 of 21 points reviewed received a positive rating.

Developers familiar with the process in California say most power plant projects begin with objections that are mitigated during negotiations between the regulatory authorities and the power plant developer. A final assessment is not due for at least 2-3 months. Then the whole commission will vote on the project, says Rob Schlichting, commission spokesman.

Getting the commission's approval is not out of the question. But even if the commission approves the power plant, it is unlikely to override the wishes of local government authorities.

�We legally have the final say about a power project. But the commission doesn�t try to force things down the throat of a local community,� says Schlichting. He says the commission approved a controversial power plant at Hunter�s Point, contingent on the developer�s getting local approval. Local authorities never approved the plant and it was scrapped.

No matter the outcome of the Calpine project, most agree California is short on generation. But Cisco, Mayor Gonzales, and the neighborhood constituents don't accept the need for a plant to be located in Silicon Valley. In fact, the city's Vossbrink says the recent blackout was mostly the result of transformers blowing out and not limited transmission line capacity into the area.

But others say Silicon Valley suffers from transmission constraints that curtail the amount of power that can be brought into the region. That means local generation is the solution to increased demand. Rolling blackouts occurred in the region this summer and not elsewhere because additional power could not be imported over the existing wires.

The California Independent System Operator made its position clear in a letter to Mayor Gonzales last spring. �The San Jose area would be a beneficial place to locate new generation because of its high and growing demand for power and lack of significant local generation. Resources near load centers will go a long way in eliminating the risk of local system collapse,� explained Terry M. Winter, California ISO president.

�The Bay Area has transmission constraints coming into the area,� says Ken Abru, development manager for Calpine's proposed Metcalf Energy project. �The weakest part of voltage support is in the South Bay or Silicon Valley and the peninsula.� Despite the opposition, the company says there is plenty of need for Metcalf Center in the Bay area even after 2003.

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