Decision clears path for Kirkwood power plant

An appeal aimed at requiring Kirkwood Meadows Public Utility District to consider replacing a diesel-fired power plant with something other than a diesel-fired power plant was shot down on Friday.

Members of the Great Basin Unified Air Pollution Control District Board denied an appeal by Raejean Fellows, the founder of a group called Kirkwood SMART Energy, to rescind the utility district's permit for construction of a new diesel power plant in Kirkwood Valley.

The board made the decision Friday afternoon at Alpine County Administrative Offices in Markleeville. More than 50 people attended.

A New Year's Day fire destroyed the valley's previous diesel power plant, which was the lone source of electricity to Kirkwood Mountain Resort and surrounding homes. Portable diesel generators have powered the area ever since.

Utility district officials hoped to have a new diesel power plant built near the remnants of the old one prior to the start of the 2010-2011 ski season. Fellow's appeal scrapped a projected Nov. 1 completion date, but getting a new plant operational before the end of the year remains possible, said Tom Henie, the utility district's general manager.

On Friday, Fellows, joined by environmental lawyer Jan Chatten-Brown, argued the utility district should not be allowed to build the power plant under emergency exemptions to the California Environmental Quality Act because the situation is no longer an emergency.

Creating an environmental document would allow the utility district to examine potentially cleaner and cheaper options for providing power to Kirkwood Valley, including a power plant partially powered by liquefied natural gas, Chatten-Brown said.

"It was one thing to build that power plant 30 years ago and another to build it today," Fellows added.

Proponents of the new diesel-fired power plant argued that the lack of reliable power in the valley still represents an emergency, a natural gas power plant won't necessarily be less expensive than diesel and the natural gas option will only provide marginal air quality improvements.

Nearly all of the people identifying themselves as Kirkwood homeowners at Friday's meeting said they supported the construction of a new diesel-fired power plant in the valley.

The process is likely to find a new diesel power plant is the best option for the area, while adding hundreds of thousands of dollars and at least a year to the construction process, said Richard Shanahan, the attorney representing the utility district.

"At the end of the day all of the money is going to come out of the ratepayers," Shanahan said.

While diesel storage tanks survived the fire, construction of natural gas storage tanks would also add millions to a new power plant's bottom line, Shanahan said.

The uncertainty surrounding approval of and funding for a power line project to connect the Kirkwood Valley to the national power grid means the power plant built in the valley needs to be designed as a permanent power solution, Henie said.

But anything built in valley should also be available as back up system if the power line project does come to fruition, Henie added.

A natural gas power plant is not viable as a back up system, said Brian Powers, the assistant vice president of operations for Clean Energy Fuels, a major provider of natural gas in North America.

Fellows expressed serious doubts about the success of the power line project and said a power plant in the valley should be constructed as a primary power source.

The possibility that Kirkwood could be on temporary power for months, or even years, loomed following the board's Friday decision.

Chatten-Brown said she and Fellows will discuss the possibility of filing a lawsuit in response to construction of the power plant.

The utility district is struggling to obtain financing for the power plant and a legal challenge could cause further borrowing problems, Shanahan said.

A lawsuit could push a construction of a power plant back until 2013 or later, Shanahan said.

California law prohibits the use of portable diesel generators for longer than a year in the Kirkwood Valley, and what will happen if the generators are still in use at the start of 2011 is unclear.

Henie said he didn't think the pollution control district would allow the valley to go dark, but said he wasn't exactly sure how the district would handle such a situation. The pollution control district has the option to impose fines, Henie said.

The general manager said the prospect of heading into the 2010-2011 ski season using solely temporary generators as "pretty scary."

The draft environmental document for the power line project to connect Kirkwood to the power grid is expected to be released in the next 45 days, Henie said.

The draft document will give the utility district a better idea of the cost of the project, which would likely be paid initially through the issuance of bonds, Henie said. A 2006 estimate put the cost of the project at more than $35 million. Utility district ratepayers would likely be required to pay debt service on the bonds for the next 30 years if the power line project is constructed.