Oakley: PG&E Terminates Contract With Radback, Power Plant’s Future Up in the Air

The City of Oakley announced Thursday that PG&E has decided not to continue with the agreement to purchase the proposed power plant that has been in the works since 2009.

According to the City of Oakley, who made the announcement via Facebook, it is not clear if another owner/operator will take over the project, or if there are other options Radback Energy may pursue.

If completed, the Oakley Generating Station would bring 600-700 jobs to Oakley along with deepening the City of Oakley general fund with $3 million in reoccurring revenue while making available $250k in funds to local non-profits.

In a response from Keith Stephens, PG&E, they do not have any comment about the decision to terminate, however, he did provide what was in their 10-Q filing this past week

Oakley Generation Facility

As previously disclosed, in February 2014, the California Court of Appeal issued a ruling that annulled the CPUC’s December 2012 decision to approve the amended purchase and sale agreement that the Utility had entered into with a third-party developer for the construction and acquisition of the 586-megawatt natural gas-fired facility in Oakley, California. The agreement permits the Utility to terminate the agreement if final non-appealable CPUC approval was not received by July 1, 2014. On October 15, 2014, the Utility notified the third-party developer that the Utility was exercising its right to terminate the agreement. On October 17, 2014, the Utility received a notice of dispute from the third-party developer starting the dispute resolution process.

Radback Energy has not responded to an email sent Thursday afternoon.

Power Plant Timeline

The project was first brought to life in 2009 when Radback Energy applied to the California Public Utilities Commission (CPUC) for permission to construct a new 586-megawatt natural gas-fired power generation facility with operations set to begin. At that point, Radback would then sell the plant to PG&E.

That then started a chain of legal decisions that delayed the project:

• 2009 – Application filed by Radback to CUPC
• July 2010 – application denied by CPUC stating no need for additional power by 2014
• August 2010 – PG&E filed Petition for Modification, making the change PG&E would not purchase until 2016. Approved 4-1.
• March 2012 – California Superior Court of California overturned CPUC decision on a technicality. PG&E then resubmitted the project with operations to begin in 2016.
• December 2012: CPUC adopted the proposal by PG&E
• February 2014: a California Court of Appeals overturned the CPUC’s December 2012. The court decision used “hearsay” as the reason to nullify an earlier CPUC ruling. The court concluded that there was an evidentiary processing shortcoming during the CPUC hearings, in that the court concluded that CPUC should not have relied on CAISO testimony that was not supported by a live witness, and so corrective action will be needed.
• October 15, 2014, PG&E notified Radback that they were exercising its right to terminate the agreement.

After the February 2014 3-0 decision, Radback and Wellhead Electric issued the following Statement:

We are disappointed in the Court’s decision, especially since project financing was expected to close in April. We remain committed to the Oakley project and seeing it through to its successful completion.

We believe strongly that Oakley is a good project and that it is needed both for electric grid reliability and to support the large amount of wind and solar energy that is coming on line in California over the next few years. Oakley uses new GE technology that is designed to reduce greenhouse gas emissions and be able to take into account the variability of wind and solar energy, and still keep the grid reliable.

We also take confidence in the fact that so many prominent people, agencies and organizations who understand electrical energy continue to strongly support the Oakley Project. Even with this additional delay, appointed and elected leaders of energy policy in California have expressed strong support for this project as well as all of the major regulatory agencies, environmental groups, the local communities in Oakley and Contra Costa County, the working men and women of California, PG&E and the financing parties whose confidence is needed to build a project of this size and importance. That tells us that we are doing the right thing to continue to work hard to get the Oakley project approved and operational for the ultimate benefit of PG&E Customers and all Californians.

In February, after the ruling, Tamar Sarkissian, PG&E Spokesperson, said PG&E is still reviewing the decision but explained the project is needed.

“This project is exactly the kind of flexible, efficient, new generation resource that is needed in California, and has support from the Oakley community, including from city, state, and national officials.  It will also provide valuable jobs and tax support in the region,” said Sarkaissian. “This project is exactly the kind of flexible, efficient, new generation resource that is needed in California, and has support from the Oakley community, including from city, state, and national officials.  It will also provide valuable jobs and tax support in the region.”

According to Oakley Councilman Kevin Romick, he wrote on his blog yesterday “This has been a long and somewhat tortuous process that provided enough ups and downs, twists and turns to cause motion sickness in the most seaworthy of us.”