SLOCDPB - SAN LUIS OBISPO COUNTY DEPARTMENT OF PLANNING AND BUILDING
SLOCDPB-1.
The CPUC took into account the issues and questions raised in meetings, workshops and letters from interested parties. The CPUC is confident that it has thoroughly and objectively analyzed the potential impacts of the project, and that the Initial Study evaluates the full range of environmental impacts that may reasonably be seen to result from the project.
The description of the Marine Terminal facility and impacts resulting from divestiture indicate clearly in the Initial Study for PG&E on pages 2.6, 4.4.3, and 4.4.8 that: 1) the terminal facility is in a state of deactivation and needs considerable repair to be reactivated for use by either PG&E or a new owner; 2) if the facility were to be reactivated, an environmental analysis would be required at that time, before repairs could be made or the terminal recommissioned; 3) given the Morro Bay plant's current use of natural gas and the disrepair at the terminal, it is highly unlikely (i.e., not reasonably foreseeable) that either PG&E or a new owner would re-permit, repair and operate the terminal; and 4) PG&E is selling the Morro Bay facility as a package, that is the new owner (or PG&E if it retains ownership) will secure title to all PG&E facilities at the plant and the fuel farm(s).
Although it is not reasonably foreseeable, if either a new owner or PG&E were to decide to modify the plant to resume tankering, the owner would have to comply with applicable regulations, including environmental review. Any changes proposed in operations, retrofitting, fueling, etc. would be evaluated at the time an application for such changes is presented for consideration by the owner of the plant. Therefore, the County and other interested parties would have the opportunity to evaluate impacts to land use and other environmental effects at that time.
Regarding the issue of remediation for the marine terminal or other elements of the Morro Bay Power plant, PG&E is liable for any contamination as a result of the operation of those facilities (see response to CCC-2). This would not change with divestiture. The commentor is referred to pages 4.4.9-4.4.11 for additional clarification regarding this issue.
The commentor is referred to the response to SLOCDPB-2 for a discussion of issues involving the PG&E marine terminal. For a discussion of the potential for fuel changes at the plants to be divested please see Section 3.0, page 3.3, of the Initial Study. The comment concerning the Chevron Estero marine terminal is noted.
As discussed in the Initial Study on page 4.5.29, the analysis of exposure of sensitive receptors is divided into two parts: the criteria air pollutants, and the hazardous air pollutants (HAPs). The project was not determined to have an effect on the HAPs because HAPs are generated primarily from the use of fuel oil and the Initial Study indicated that "...no increase in fuel oil use is expected as a result of divestiture" (first paragraph, page 4.5.30; and fourth paragraph, page 3.3 of the Initial Study).
The discussion of criteria air pollution in general and specifically with respect to the Morro Bay Power Plant is presented on pages 4.5.24 to 4.5.28 of the Initial Study. The criteria air pollutant of concern to the San Luis Obispo Air Pollution Control District is NOx, specifically in the role of NOx as an ozone precursor. Because the current Morro Bay plant permit and Rule 429 did not specifically cap emissions, early consultation with regard to this project resulted in part in proposed revisions to Rule 429, which are described on page 4.5.27 of the Initial Study. Mitigation measure 4.5.a.1 (pages 4.5.27 and 4.5.28 of the Initial Study) requires a daily emission cap. The San Luis Obispo Air Pollution Control District has indicated implementation of measures in Draft Rule 429 (which also makes it clear that the rule applies to non-utilities) to be adequate mitigation of air quality issues related to divestiture (fourth paragraph on page 4.5.27 of the Initial Study).
Neither the Initial Study nor correspondence from the San Luis Obispo Air Pollution Control District (SLOAPCD) specifically rely upon the CEQA Guidelines Section 15064(1), The SLOAPCD concern with divestiture was that Rule 429 focuses on volume pollutant concentration limits for each boiler, but does not limit total emissions from the facility. As a result of this concern, Rule 429 will be amended to include a facility-wide mass emission limit of 3.5 tons/day of NOx beginning in year 2000. The Rule 429 amendment requires the facility-wide emission cap to be reduced to 2.5 tons/day NOx on December 31, 2002. The net result of the rule change is to establish a facility-wide mass emission limit that did not previously exist. As stated above, the San Luis Obispo Air Pollution Control District has indicated that implementation of measures in Draft Rule 429 (which also makes it clear that the rule applies to non-utilities) will adequately mitigation of air quality issues related to divestiture (fourth paragraph on page 4.5.27 of the Initial Study).
The commentor is referred to pages 4.7.4 and 4.7.5 of the Initial Study for a discussion of potential impacts to endangered, threatened and rare species and in particular the issue of intake and discharge effects on marine organisms.
The commentor is referred to the response to SLOCDPB-6. The issue of marine organism entrainment has been evaluated by the Initial Study. There are some marine organisms that do not survive the water cooling loop at the Morro Bay power plant. What is pertinent is the impact on endangered, threatened or rare species and if there is a significant number of these marine organisms that are injured or killed as a consequence. The current information available does not indicate that any endangered, threatened or rare species are significantly impacted due to the water intake system or operations at the Morro Bay Power Plant. Therefore, the impact of the project is less than significant, even if generation at the plant increases. Nor does the project contribute to significant cumulative impacts to marine organisms as well.
We refer the commentor to the response to SLOCDPB-2. As stated earlier, under divestiture it is not considered likely or foreseeable that the PG&E marine terminal will be repaired and reactivated. If the marine terminal is reactivated, it will have to undergo extensive repairs, and any reactivation will require environmental review. Because the likelihood that a resumption in the use of the PG&E marine terminal is not reasonably foreseeable under divestiture, the impact of the resumption of tankering operations in Estero Bay was appropriately not evaluated in the Initial Study. While the announcement by Chevron to potentially close its terminal in the Estero Bay is of interest and could have a beneficial impact regarding the local marine environment in the Estero and the region (Monterey Bay National Marine Sanctuary), Chevron's action would not alter or affect the conclusions of the Initial Study regarding impacts to marine life.
We refer the commentor to the responses to SLOCDPB -2, SLOCDPB-6, SLOCDPB-7, and SLOCDPB-8 for a detailed discussion of the impacts of divestiture on thermal changes to the marine environment, marine organism entrainment and the potential reactivation of the PG&E marine terminal. The analysis of these issues contained in the Initial Study concludes that there are no significant impacts as a result of divestiture and, therefore, an EIR is not required.
The commentor is referred to pages 4.11.5 and 4.11.6 of the Initial Study. A determination of the consequences of the sale of the plant to a new owner that is as yet unknown and what possible revenue impact(s) might occur and how that would affect San Luis Obispo County is highly speculative at best. The State Board of Equalization has not determined how utility plants will be treated for tax purposes with restructuring and the issue is one of restructuring and not of divestiture. It is just as likely that revenues from the Morro Bay Power Plant could increase as decline under a new owner. If PG&E were to retain ownership of the plant under restructuring, there is no indication that revenues from that facility would change in any substantial way from current levels. The same is true with divestiture. Again, the potential economic impacts that are a concern to the commentor are not reasonably foreseeable under divestiture.
While CEQA does require that economic impacts (Guidelines, §15131) be evaluated when a physical change resulting from the project is shown to occur, the Initial Study indicates that there is no basis for concluding that economic impacts will result, to begin with, or that any economic effects would lead to environmental impacts.
Divestiture does not affect the decision whether or when to close the Morro Bay Power Plant. The market forces that will determine the viability of the Morro Bay facility, as well as most other generators, arise primarily from restructuring itself, not divestiture. As discussed in response to CCC-1, the legislation enacting restructuring is exempt from CEQA requirements. Attachment C, at page C.16, discusses how the incentives to repower (or implicitly, to retire) the facilities proposed for divestiture will not differ between existing and new owners substantially in a reasonably foreseeable manner over the next decade. As a result, the Initial Study concludes that Morro Bay will likely continue to exist in its current configuration under reasonably foreseeable conditions. There is no basis for concluding that the Morro Bay plant will close; thus, that remote and unforeseeable occurrence need not be evaluated.
The commentor should note that PG&E will recover its "uneconomic" investment in Morro Bay and other generation plant through the Competition Transition Charge (CTC) whether these plants are divested or not. PG&E will recover a portion of its investment either from the sale of the plant or from Power Exchange market revenues. The difference between the remaining book value and the net revenues from either source is the amount to be collected via the CTC. By the end of the transition period in 2002, the CTC will no longer be collected, and PG&E would depend on power market revenues to recover its investment in these plants, should it retain them.
The commentor is referred to the response to SLOCDPB-10 regarding economic effects of the project. The Initial Study has evaluated cumulative impacts based upon those projects that are reasonably foreseeable in section 4.16 of the Initial Study. A list of cumulative projects in Morro Bay was included in the evaluation. The incremental effects determined to arise from these projects were found to be less than significant. There is no evidence that the sale of the Morro Bay plant would have any incremental economic effects that might combine with other projects to produce significant cumulative impacts.
The commentor is referred to the responses to SLOCDPB-1 through SLOCDPB-12, regarding the commentor's contention(s) that the Initial Study: 1) did not evaluate and address the environmental issues raised by the commentor; and 2) did not reduce all potential impacts to a less than significant threshold. After reviewing the comments and further analysis of the project, the CPUC is satisfied there is no substantial evidence before the agency of a fair argument that the project may have a significant effect on the environment, either directly or indirectly.
As to the commentor's contention that the proposed project evaluated in the Initial Study is the subject of serious public controversy and, therefore, §15064 (h)(1) of the CEQA Guidelines requires the preparation of an EIR, the commentor is in error. In May of 1997, the CEQA Guidelines were amended so that the issue of public controversy alone is not sufficient to trigger the preparation of an EIR, without significant indication of potential environmental impacts caused either directly or indirectly by the project. The CEQA Guidelines have been amended to say, "The existence of public controversy over the environmental effects of a project will not require preparation of an EIR if there is no substantial evidence before the agency that the project may have a significant effect on the environment." Because no such substantial evidence exists, any public controversy over the project's effects would be irrelevant.
The commentor has also raised the issue of a disagreement between experts as giving rise to a requirement to prepare an EIR. CEQA Guidelines § 15064 (h) states:
After application of the principles set forth above in §15064 (g) [regarding substantial evidence of significant impacts], and in marginal cases where it is not clear whether there is substantial evidence that a project may have a significant effect on the environment, the Lead Agency shall be guided by the following principle: If there is disagreement among expert opinion supported by facts over the significance of an effect on the environment, the Lead Agency shall treat the effect as significant and shall prepare an EIR.
As is clearly documented in the Initial Study, the CPUC has considered a wealth of information submitted by a wide array of public agencies and organizations as well as the information provided by the applicants.
Having applied the principles in CEQA Guidelines § 15064 (g), the CPUC has determined that the project will not result in significant impacts that cannot be readily mitigated. For instance, CEQA Guidelines § 15064 (g) (5) and (6) state:
(5) Argument, speculation, unsubstantiated opinion or narrative, or evidence that is clearly inaccurate or erroneous, or evidence that is not credible, shall not constitute substantial evidence. Substantial evidence shall include facts, reasonable assumptions predicated upon facts, and expert opinions supported by facts.
(6) Evidence of economic and social impacts that do not contribute to or are not caused by physical changes in the environment is not substantial evidence that the project may have significant effect on the environment.
The speculative and unsubstantiated opinions submitted by the commentor are thus not substantial evidence of any impacts. Also, since the Initial Study indicates that there is no evidence that any economic changes (which themselves are speculative and not based on reliable evidence) will contribute to physical changes, the commentor's opinions are not substantial evidence of any significant impacts.
Furthermore, this is not considered a marginal case. Thus, the issue of disagreement among experts does not come into play. Finally, even if it did, the commentor's concerns are not considered to be "expert opinion supported by facts."
As noted in the Initial Study on pages 4.11.5 and 4.11.6, the CPUC believes the socio-economic concerns raised by the commentor are speculative and not foreseeable as a result of divestiture. With respect to the study conducted on behalf of the San Luis Obispo County Board of Supervisors and as stated in the second paragraph on page 4.11.6 of the Initial Study:
"The study conducted by San Luis Obispo County makes assumptions that are not expected or reasonably foreseeable under restructuring or divestiture."
The analysis on which San Luis Obispo County relied to determine that divestiture of the Morro Bay plant would potentially cause a dramatic drop in County revenues was based upon assumptions which have not been borne out in recent electrical industry sales in other parts of the United States (see page 4.11.6 of the Initial Study) and in other countries such as Australia (see Attachment C, page C.12). The CPUC does not consider the speculative socio-economic arguments proposed by the commentor to implicate an environmental effect, therefore, there is no requirement by the Lead Agency to prepare an EIR.
The Commentor suggests that the Lead Agency has segmented the "project" into smaller projects in order to avoid impacts and by so doing avoid performing an EIR. The commentor is referred to SAEJ-2, and SAEJ-3. Further, it would be inaccurate and inappropriate to analyze PG&E's and Edison's applications in the same environmental document. Their plants are geographically in different areas and there are different local issues for each company. Both company's divestiture plans are being analyzed at the same time for efficiency and to facilitate comment by agencies and others that may have overlapping interests between the two companies. This is not being done in order to "piecemeal" a project, as alleged, or to avoid impacts. The cumulative impact analysis in the Initial Study (see pages 4.16.2-4.16.14) addresses the combined impacts of PG&E's and Edison's applications.