SDG&E; Files Suit Over Geothermal Contract

Chevron Geothermal Co. of California fraudulently agreed to supply geothermal brines to San Diego Gas & Electric Co.’s Heber demonstration power plant even though top managers at the Chevron subsidiary knew their company could not deliver the hot brines on schedule, according to a lawsuit filed Friday by SDG&E; in San Francisco Superior Court.

Chevron, which contracted to drill geothermal wells at the demonstration geothermal plant, “knew it could not meet its obligations” to provide 7.5 million pounds per hour of the hot brines that were used to power the plant’s electrical generating plant, according to Larry Davis, SDG&E; corporate counsel.

In a separate action, SDG&E; also charged Chevron and Unocal, the two energy companies that own the geothermal reservoirs far below the earth’s surface in the Imperial Valley, with breach of contract for their alleged failure to supply the brines.

Neither of the suits sought monetary damages, but the suit against Chevron and Unocal alleged that the utility has spent $156 million to build, operate and maintain the plant that was shut down in July. The utility also alleged that it is being deprived of an undetermined amount of income that the plant would have been generating had it not been shut down.

SDG&E;’s legal actions followed a suit filed earlier this month by Chevron. That suit asked a San Francisco Superior Court to determine if SDG&E; had illegally terminated its contract to buy geothermal brines.

In a related development, SDG&E; said Tuesday that 17 of 42 workers at the plant will be laid off. A “core of operators” will remain at the plant to perform maintenance, according to Davis.

SDG&E; shut the plant down after alleging that Chevron and Unocal had failed to supply enough brine to run the plant on a cost-effective basis.