SDG&E; Negotiating to Sell Heber Geothermal Plant

San Diego Gas & Electric Co. is negotiating with several parties that are interested in acquiring the $188.5-million Heber demonstration geothermal power plant, which closed in June, 1987, after a funding shortfall developed.

“We feel that we’re close to having a deal,” said Tiff Nelson, project manager for the electric generating plant near Heber in the Imperial Valley. “We’ve pretty much narrowed the field and are in negotiations right now.”

SDG & E could reach a preliminary agreement within a couple of months, Nelson said. However, “there are a lot of contingencies and it would take some time to clear all of them up,” Nelson said Wednesday.

Any agreement would have to address a tangled web of lawsuits involving Unocal Corp. and Chevron Geothermal, the two energy companies that drilled wells to provide the extremely hot geothermal brines that power the demonstration plant.

SDG & E closed the unique demonstration plant when it became apparent that operating costs would exceed the budget previously approved by the state Public Utilities Commission. SDG & E alleged that the brines were not hot enough to make the electric generating plant economical to operate, a claim that Unocal and Chevron Geothermal have disputed.

Further Cuts Decided

Consequently, potential buyers would first have to determine if brines pumped from large geothermal pools beneath the Imperial Valley will be hot enough to make the project economically feasible.

Despite the ongoing negotiations, SDG & E has decided to further cut expenses at the plant by reducing an already lean staff and placing the facility in long-term storage. SDG & E had been staffing the plant in order to ensure a quick return to service.

SDG & E has spent about $60 million on the demonstration plant. Its partners, including Southern California Edison, the federal government and the state of California, provided the remainder of the $188.5 million. All have agreed to sell their stakes in the plant.

Any profit realized by SDG & E would be returned to utility customers because ratepayer funds were used to cover the utility’s share of plant costs.

Nelson described the plant as “a success from a research point of view because even though we didn’t get to operate the plant at full load we learned a lot about geothermal energy.”