Coyote
– It’s that time of year again: baseball, barbecues and threats
of rolling blackouts interrupting summer fun and imperiling
California’s economy.
Coyote – It’s that time of year again: baseball, barbecues and threats of rolling blackouts interrupting summer fun and imperiling California’s economy.
Energy experts are predicting that California will get through the summer without an energy disaster barring an unusually long and searing heat wave. Calpine Corp.’s new 600 megawatt plant coming online in Coyote June 1 will help.
Calpine currently is saddled with a negative cash flow and fending off bankruptcy rumors. Now, after six years of planning and construction, the Metcalf Energy Center is ready to start generating power for the area and revenue for Calpine.
“The plant will provide a new source of revenue in an area where there is an identified need for power,” Calpine spokeswoman Lisa Poelle said. “The area is generation deficient and too reliant on imported electricity from remote locations.”
But the power plant is also something of a risky venture. Power plants sell their energy in two ways, through long-term contracts or on the real-time, or spot, market. The spot market is where a company can take advantage of increased demand and higher prices, but long-term contracts underwrite the cost of doing business.
Metcalf has no long-term contracts to guarantee that it can pay to operate the plant, pay its employees and service its debt.
“It’s fraught with worry,” said Gary Ackerman, executive director of the trade group Western Power Trading Forum. “It’s not a good business proposition to be on the spot market alone. There’s no way possible in the current environment for Calpine to recover all of its costs.”
At 600 megawatts, Metcalf will produce enough energy for 500,000 homes, the vast majority of which, Calpine officials say, will go to San Jose, though energy can’t be tracked like other products.
There are some people decidedly unhappy that the plant, which covers 11 acres and spills exhaust through two towers reaching 145 feet to the sky, will operate in a rural residential area.
Phil Mitchell, a former South San Jose resident who led neighborhood opposition to the plant before it was approved, said it will harm the Coyote Valley environment.
“It’s ludicrous to put a large industrial facility that close to residents,” he said. “It’s inconsistent with the general plan for the area. It’s absolutely an inappropriate location for a facility of that scale and that level of emissions.”
But Calpine officials counter that the plant is far less harmful to the environment than traffic, gas appliances and heaters.
Gilroy Dispatch reporter Matt King can be reached at mk***@gi************.com or 847-7240.
