City Opts For Future Of Power

City Opts For Future Of Power
Vacaville grants a lease option at the wastewater treatment facility for a firm that wants to build a 500-megawatt-or-less peaker plant.
By Jennifer Gentile/Staff Writer

Years of scrutiny lie ahead before a power facility is built near Vacaville's wastewater treatment plant, but City Council action Tuesday night moved the proposal forward.

By unanimous vote, the council granted a three-year option to lease 25 acres at the Easterly Wastewater Treatment Plant. The lease includes two additional one-year extensions. Washington D.C.-based Competitive Power Ventures is proposing to build a 500-megawatt-or-less peaker plant in the southwest corner of the site.

Peaker plants generally operate only during periods of high demand.

With Pacific Gas & Electric looking to add 2,300 megawatts of new power in its service area, CPV plans to pitch its idea for a Vacaville plant to the company. The site's closeness to a natural gas pipeline, access to high-voltage power lines and the availability of water sparked the firm's interest in the site.

"This is an ideal site for a power plant," said Michael Hatfield, CPV's director of project development. "We looked very carefully for sites that make sense."

The plant may require millions of gallons of water a day for cooling purposes, and CPV has proposed buying from the city some wastewater treated at Easterly. This agreement could mean up to $200,000 a year to the city, officials have said, and is one of several financial gains the city could realize if the plant moves forward.

While the option to lease is in effect, the firm must pay $100,000 the first year and an another $25,000 each additional year. When the lease is initiated and the plant is fully operational, CPV would pay $650,000 adjusted annually, while also guaranteeing at least $1 million each year in tax revenue as long as the firm is contracting with PG&E or another power purchaser. These revenues would bolster both the city's general fund and utility operations.

In addition to the lease option, the council considered potential lease terms that are nonbinding at this point. The proposed terms include the financial points of the lease and call for a 25-year lease period that can be extended for two additional 10-year periods.

Along with his colleagues, Councilman Curtis Hunt spoke strongly in favor of the plant.

"This is the exact kind of thinking we're going to have to proceed with as a city government," Hunt said, adding, "this has great potential for us."

Councilman Steve Wilkins said the idea "makes good sense."

"I see this as a good business practice," Wilkins said, "and a way to deal with the energy consumption issue we're certainly going to be facing."

Staff stressed that the plant is far from fruition - even with the council's support. For example, the proposal must be accepted by PG&E, and the licensing process through the California Energy Commission calls for an environmental review.

"It is a highly public process," Hatfield said of licensing. "It could take up to 18 months." Given the permitting requirements and other obstacles, the plant may not be completed until 2012.

City Manager David Van Kirk said the proposal is exciting, as well as timely. With Vacaville's Measure I set to expire in 2013, he explained, the revenue from the plant would offset the loss of those funds.

Jennifer Gentile can be reached at vacaville@thereporter.com.