SDG&E; Will Sell Demonstration Geothermal Plant

The San Diego Gas & Electric Co. will sell its $188.5-million demonstration plant to generate geothermal power in the Imperial Valley, the company said Tuesday.

SDG&E; did not reveal the proposed buyer or the sale price, but a formal announcement is expected during a press conference this morning at the plant in Heber, Imperial County. In June, SDG&E; said it was shutting down the unique demonstration plant because two companies had failed to drill wells that supply the hot “brines” that drive the electrical generating plant.

At the time, SDG&E; Vice President Gary Cotton said that Unocal Corp. and Chevron Geothermal of California have fallen more than two years behind on a contract to complete wells that extract brines from underground reservoirs in Heber. SDG&E; was unable to operate the plant at full power without the brines, which drove up operating costs, Cotton said.

Cotton said SDG&E; would “run out of money” to operate the plant if it was unable to agree on a new drilling schedule with Unocal and Chevron Geothermal.

SDG&E; has spent about $60 million in ratepayer funds to build the plant, which attracted additional funds from the Department of Energy, the state, Southern California Edison, Pacific Gas & Electric and the Edison Electric Institute.

The utility had received approval from the state Public Utilities Commission to spend up to $94 million in ratepayer funds to build and operate the demonstration plant. However, SDG&E; said a $25-million funding shortfall was created when Unocal and Chevron Geothermal failed to drill required wells.

The proposed sale would require “some kind of review” by the PUC, according to a commission spokesman.

“We’d want to make sure they sell it for the right price, to ensure that ratepayers are getting their investment back,” the spokesman said.

In a related development in early July, Southern California Edison sold its interest in a 10-megawatt geothermal plant near the Salton Sea to Unocal’s Earth Energy Inc. subsidiary.

Edison used ratepayer funds to build the pilot plant but subsequently decided to sell it rather than increase its size and operate it as a PUC-licensed power plant.

Earth Energy is expected to boost the plant’s size to 30 megawatts of electrical power, which would be sold to Edison.