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Court Asked To Re-Examine Controversial Otay Mesa Power Plant Decision

The Calpine power plant in Otay Mesa is pictured, June 21, 2016.
Megan Wood
The Calpine power plant in Otay Mesa is pictured, June 21, 2016.

A Del Mar energy firm is suing San Diego Gas & Electric, accusing the utility of fraud, negligence and interference in a bidding process that brought this region its two largest power plants.

Without that interference, the energy picture in San Diego County might be quite different, Richard Hertzberg of the Enpex Corporation alleges.

Electricity that serves 3.6 million people might flow from a 727-megawatt, gas-fired power plant at Miramar Marine Corps Air Station, plus additional renewable sources. Instead it comes from two more expensive gas power plants, one in Escondido, the other on the border at Otay Mesa, according to the lawsuit filed in San Diego Superior Court on Oct. 6.

“This was a roughly $200 million expenditure of public funds that was unnecessary and was all caused because they cut a self-serving deal,” said Vincent J. Bartolotta, a lawyer representing Enpex.

Sempra, the parent company of SDG&E, contends the prices paid for the power stations were fair and history has proved that both have helped SDG&E meet customer needs. Inewsource reported on this earlier this year.

The statute of limitations normally would bar such a complaint since the bidding dates back to 2003. But an attorney with inside knowledge of the process, Kelly Foley, came forward in testimony before the legislature last year

She said she was on a conference call in which the chief of the California Public Utilities Commission was strong-arming the San Diego utility. Commissioner Michael Peevey was telling SDG&E that if it wished to purchase a power plant from its sister company, which would otherwise be prohibited, then it also must sign a power contract with Otay Mesa, for which it had no appetite. Why the head of the California regulator would have such an interest in that contract is not known.

According to the Enpex complaint, Latimer Lorenz, SDG&E vice president of electric and gas procurement, said in a meeting on July 28, 2003, that the Enpex bid was the lowest cost and best fit under consideration. Enpex had obtained the right to develop the plant at the military base in 2002 under a federal appropriations bill.

Yet the company was soon told it was out of consideration.

The lawsuit seeks unspecified damages, including punitive damages and attorneys fees.

In a response filed Monday, SDG&E requests the case be dismissed. It says Enpex cannot challenge a final decision of the California Public Utilities Commission in superior court; the commission has exclusive jurisdiction.

SDG&E says the claims were argued and settled back at the time of the bid and, even if they were not, a 13-year-old round of bidding cannot be reopened.

“The plaintiff has had more than a decade to contact the Public Utilities Commission about their complaints and never once did they take advantage of multiple opportunities to voice their concerns,” said SDG&E spokeswoman Christy Ihrig.

“They claim that new information was brought to light; however, this same information was made available to them in open, public proceedings,” Ihrig said.

Matthew Freedman, staff attorney with the consumer advocacy group The Utility Reform Network, said this week the group never took a position about whether the Enpex project should be chosen. But he said, “it seems clear that this facility did not receive adequate consideration in the original solicitation.”

A hearing is scheduled for 9 a.m. Jan. 6 before Judge Joel R. Wohlfeil in San Diego Superior Court.