Shock Treatment

California eats lots of power, but it doesn't like growing its own power plants. Instead, Arizona is becoming the new power farm for the Coast.

Also during this time, El Paso essentially sold the remaining available capacity on its lines to its own merchant subsidiary. Critics say this move gave El Paso control of all the noncontracted available space on the pipeline and, so, complete control of all available natural gas in California.

For Arizona, the deal, collusion or not, also had a profound impact. Tenneco's lines would have taken cheap gas into northern Baja. With the pipeline, attorneys in the case say, northern Baja would have been the easiest and cheapest location to build new natural gas-fired plants to feed Southern California.

But when the pipeline died, leaving Baja with expensive SoCalGas fuel, power companies needed a new power farm.

Tim Hogan has led the push for increased scrutiny of power plants.
Paolo Vescia
Tim Hogan has led the push for increased scrutiny of power plants.
Councilman Mike Evans was the only Gilbert official to speak out against the location of the San Tan plant.
Paolo Vescia
Councilman Mike Evans was the only Gilbert official to speak out against the location of the San Tan plant.

Where could they get facilities planted quickly next to major pipelines? Where was land and labor cheap?

"Arizona," says Astrella, a top energy attorney and one of the lead attorneys in the California class action suit.

"Basically, Mexico made the most sense for plants, followed by Arizona and Nevada," he tells New Times. "When that pipeline was cut, all eyes turned to Arizona. You would not be seeing this rush to your state if that pipeline had remained."

In 1998, as deregulation was rolling into effect in California, power companies began flooding the Arizona Corporation Commission with plant proposals. Arizona, with loose regulation, cheap land and labor and a penchant for tax breaks, was the most fertile ground for a quick crop of plants.

The plants were nearly identical in concept: Prefab buildings with several natural gas turbines, essentially engines like those on a 747 jet. Plants would produce an average of 800 megawatts of power. (One megawatt generally serves about 1,000 residents.)

Most would sit along an El Paso Natural Gas main line, which would allow them to avoid gas-delivery charges of subsidiary companies such as Southwest Gas.

Four plants are being constructed next to the Palo Verde Nuclear Plant west of Phoenix. The spot allowed plants easy access to the power grid and put them just outside the highly regulated Phoenix air shed.

Other companies looked for land anywhere in rural Arizona with infrastructure, organized support for economic development and, critics argue, unorganized opposition to questionable economic development.

As the proposals flowed into Arizona, so did company representatives, lobbyists and public relations people. Tax incentives, sketchy environmental impact studies and company-controlled public polling followed. And nobody, including the Arizona Corporation Commission or state government, seemed to be asking two critical questions:

What is the cumulative effect of all these plants?

And do we really need all this power?

"This rush for plants is all unprecedented," says Tim Hogan, director of the Arizona Center for Law in the Public Interest. "But even with all the unknowns, we keep blithely approving them. Beyond the critical environmental issues, I still have yet to hear any convincing argument that this whole mess will ever benefit the average Arizona customer."


The first three merchant plants sailed through the Corporation Commission quickly and quietly early last year. Consumer and environmental advocates were caught off guard.

Griffith Energy L.L.C. was the first to apply for approval from the Commission. It wanted to build a massive merchant plant up by Kingman in Mohave County.

Reliant Energy followed. Then two from Pinnacle West (APS' parent), then Harquahala Generating Co., Duke, Panda Gila, Caithness, Mesquite, Gila Bend Power Partners, SRP (twice) and Sundance Energy. Several other companies and utilities are expected to present proposals to the Commission in coming months, according to industry analysts.

Never in its history has the Commission seen so many proposals being filed so quickly.

"The dam broke," says Dennis Sundie, an official with the Arizona Department of Water Resources who sits on the Commission's Power Plant and Transmission Line Sighting Committee, which, like a planning and zoning board, evaluates proposals before passing them on to the three corporation commissioners for a vote. "We hadn't seen a new power plant since the early 1980s. Then boom."

As the permit applications arrived at the Commission's office in Phoenix, plant supporters began pushing their projects through local public hearing processes. They needed the megawatts to get in on the California boom, which they knew government regulators would eventually stop. And the first companies to get plants approved and operated would have the best arguments that they were offering a much-needed product.

Last spring, Hogan and other consumer advocates began to ask questions about the power plants. Hogan's group sued the Corporation Commission, alleging it was not following Arizona law that required the Commission to balance the need for a power plant against the plant's environmental impact.

The power companies intervened in the case, and a settlement was reached.

As part of the settlement, power plant owners had to guarantee that power would be available to Arizona customers during peak periods over the next two years. Subsequent plants will also have to prove they are needed.

Hogan and others also want a comprehensive study of the cumulative impact of these new plants, particularly the cumulative effect of the four plants locating themselves just upwind of the Valley near the Palo Verde Nuclear Plant, about 30 miles west of Phoenix.

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