Desalination Bill Produces Tug of War : Legislation: Backers say it could speed building of plant in Chula Vista. Foes say it’s an attempt to avoid laws on public bidding.

Officials at San Diego Gas & Electric Co. and the San Diego County Water Authority view a bill proposed by Assemblyman Steve Peace as a non-controversial plan to clear away a regulatory barrier that could stymie a proposed desalination plant at an SDG&E; power plant in Chula Vista.

But opponents of the bill, introduced in Sacramento in May by Peace (D-Rancho San Diego), argue that the bill (A.B. 1013) is an attempt by the two utilities to make an end run around state regulations that require electric utilities to submit planned generation projects to a public bidding process.

The disagreement centers on a desalination plant that the utilities have proposed at SDG&E;’s aging South Bay power plant on San Diego Bay in Chula Vista. The utilities have tentatively agreed to fund a $250,000 feasibility study that would determine if the plant is viable from economic, environmental and engineering perspectives.

If built, the desalination plant would annually treat 10,000 to 30,000 acre-feet of brackish water that would be drawn from wells drilled at the power plant, said Byron M. Buck, the County Water Authority’s resources planning director.

Water from the plant would be more expensive than water imported from outside Southern California, but the plant would help buffer San Diego County against droughts and water-line breaks, Buck said.

The proposed desalination plant would be powered by excess electrical power from SDG&E;’s South Bay generating plant. The excess energy would become available for sale to the water authority if state regulators approve SDG&E;’s proposed upgrading of the aging power plant, said Bruce Williams, SDG&E;’s manager of generation projects.

While SDG&E; has applied to the state Public Utilities Commission for permission to upgrade the plant, the utilities also are drumming up support in Sacramento for A.B. 1013, which would expedite the permit process. The bill would apply only to the South Bay upgrading, Peace said, and not to any other utility projects in the state.

Utility officials maintain that the expedited permit process proposed in the Peace bill is not an end run around the PUC’s competitive bidding process.

Rather, the Peace bill would let SDG&E; and the county water authority “take advantage of a narrow window in time” and begin construction of the desalination plant--if the feasibility study uncovers no unexpected environmental, economic and engineering problems, Buck said.

Both SDG&E; and Water Authorities believe that the timing--and public acceptance--is right for the project. However, they fear that the window of opportunity will soon close.

Independent power producers, the unregulated and privately owned companies that now sell about 10,000 megawatts of power to utilities in California, generally are opposed to Peace’s legislation.

Opponents of A.B. 1013 are expected to raise objections during a state Senate Appropriations Committee hearing on Thursday in Sacramento.

“A.B. 1013 is basically an attempt by SDG&E; to circumvent the (PUC’s) competitive bidding process,” said Jan Smutny-Jones, executive director of the Independent Power Producers, a Sacramento-based trade association. “If SDG&E;’s project is the bona fide lowest-cost project, then competitive bidding will prove it. . . . This is a bad precedent.”

Smutny-Jones called it “somewhat amazing” that Peace introduced the enabling legislation “when the feasibility study is not yet done. . . . Let’s let the utility put it out for competitive bid.” Smutny-Jones said firms from San Diego and Orange counties have prepared competing proposals that might prove to be cheaper than the proposal by the utilities.

Utility officials said the proposed power-plant upgrading and the desalination plant are supported by the cities of Chula Vista, Coronado and National City as well as the County Board of Supervisors.

The Peace bill would allow the utilities to chop one year off construction by expediting the lengthy permit process, Williams said. Even with that year eliminated, the plant wouldn’t become operational until 1996, Williams said.

Even with the relatively cheap electricity and steam from the power plant, water from the proposed desalination plant would not be inexpensive, Buck acknowledged.

Preliminary figures suggest that the water would cost $900 to $1,300 per acre-foot delivered to the customer. That contrasts with imported water from the Colorado River and Northern California that costs about $400 per acre-foot delivered to the customer.

However, Buck described the water that the proposed plant would generate as “probably the cheapest” that could be produced in San Diego County. Buck also maintained that the price of water is likely to continue rising.

The Water Authority approached SDG&E; several months ago, after learning that SDG&E; was seeking state regulatory approval to upgrade the aging South Bay power plant, Buck said. The Water Authority has in the past studied the possibility of building a desalination plant tied to an SDG&E; electric-generating plant.

SDG&E; wants to install state-of-the-art electrical generating equipment at the plant that would help the utility meet growing customer demand for electricity. The planned upgrading at South Bay would add about 450 megawatts of the 1,300 megawatts that SDG&E; will need by the year 2000 to meet customer demand, Williams said.

Williams said independent energy producers, who now sell about 10,000 megawatts of electricity to utilities in the state, would be free to bid on the additional projects that SDG&E; will need to generate electricity by the year 2000.