G1 SDG&E (now Sempra Energy) has proposed changes to the project description for the divestiture of the Encina Power Plant. These changes are described in Letter H and response to Comment H1. The newly proposed project description would allow sale of the Encina Power Plant to proceed without any lot line adjustment process with the City of Carlsbad. While this revision eliminates the need for approval from the City of Carlsbad for the lot line process prior to the sale of the power plant, it does not avoid the disclosure or mitigation of any environmental impacts related to divestiture of the plant. This revision would not result in any adverse environmental impacts as the new owner and SDG&E would continue to use the subject properties in the same manner as they would have with the pre-sale processing of the lot line adjustments that were described in the Initial Study. With the possible exception of the reconfiguration of existing fencing within the existing SDG&E properties, no physical changes to the environment are anticipated to result from the sale of the power plant. Refer to response to Comment H1 for additional information regarding the City’s role in any subsequent lot line adjustment process.

There is no indication that the sale of the Encina Power Plant and the associated lot line adjustments will have an impact on the Agua Hedionda Local Coastal Program (LCP). The City of Carlsbad has not been granted authority from the State of California to implement the Agua Hedionda LCP. In May of 1982 the City of Carlsbad adopted the Agua Hedionda Land Use Plan, which includes the SDG&E property. Despite the lack of any updates (the Coastal Act requires an evaluation of the plan for effectiveness and the impact of changing conditions, at least every five years) or concurrence from the Coastal Commission, the 1982 adoption of the Land Use Plan was the first step towards the adoption of an LCP for the Agua Hedionda segment. The Agua Hedionda Land Use Plan states that "the Land Use Plan, together with the Implementation Program, will comprise a complete Local Coastal Program." The City of Carlsbad’s 1996 Local Coastal Program indicates that the Agua Hedionda Lagoon area represents an area of "deferred certification," an indication that no Implementation Program for a Local Coastal Program covering the SDG&E properties has been adopted by the City of Carlsbad or the California Coastal Commission. The California Coastal Commission, therefore, retains Coastal Development Permit authority for the San Diego Gas & Electric properties. There is no evidence that the sale of the Encina Power Plant will preclude the adoption or implementation of the Agua Hedionda LCP. SDG&E has indicated an intent to continue the processing of lot line adjustments with the City of Carlsbad subsequent to the sale of the Encina Power Plant.

G2 It is not possible for either the CPUC or SDG&E to require the affected resource agencies to provide such a written confirmation. However, since Mitigation Measure 4.7.a.1 will require the new owners affirmatively agree to abide by the existing permits and to submit to the jurisdiction of the permitting agencies, there should be nothing to prevent such agencies from using their enforcement powers. Furthermore, such an interim period (before the non-transferable permits are reissued) should not be of long duration.

G3 The following reference is added at the beginning of the list of cultural resources references on page 4.14-8 of the Initial Study:

See also response to Comment G4.

G4 The City of Carlsbad’s Cultural Resource Guidelines describe that "the key elements of archaeological/historical studies needed for CEQA compliance include field surveys and literature reviews (record searches, historical documents, etc.) to identify the presence of, or potential for, cultural resources within a project under discretionary review…" Based on a review of the National Register of Historic Places and California Historic Landmarks, and a records search by the South Coast Information Center (SCIC), the Initial Study (page 4.14-2) identifies known archaeological resources at the Encina Power Plant and associated Agua Hedionda Lagoon properties. Though no formal field surveys were conducted at the power plant site, the Initial Study further acknowledges the potential presence of additional undiscovered archaeological resources at the site and the potential to disturb such resources during any project construction actitivies. In recognizing the sensitivity of these cultural resources, the Initial Study identifies two mitigation measures (pages 4.14-6 and 4.14-7) for all soil remediation or minor construction activities (e.g., relocating fences to separate divested properties from retained properties) related to the proposed divestiture. In summary, these measures require that a qualified archaeologist be on-site during all earthmoving activities and that all information related to known archaeological resources be forwarded to the new owner. These measures would sufficiently mitigate any potential impacts to known or unknown archaeological resources. Furthermore, it should be noted that the overall amount of earthmoving activities is expected to be minimal and that the location of such activities on the project site is unknown. Based on the anticipated level of construction in conjunction with the proposed mitigation measures, an extensive archaeological field survey of the entire 671-acre site, as suggested by the commenter, is not warranted.

G5 To the extent that earthmoving and soil remediation activities would trigger local permitting requirements, including grading permits, SDG&E or the new owner would complete and file all appropriate application materials. If applicable, permitting agencies would, at that time, have the opportunity to include their own conditions of approval. Regardless of local permitting, the proposed mitigation measures identified in the MND and the Initial Study would sufficiently mitigate any potential impacts to known or unknown archaeological resources at the Encina Power Plant site.

G6 The commenter objects to the assumption regarding increased import through increased transmission capacity under both 2005 analytical scenarios on the grounds that it is unrealistic. The second paragraph on page 3-13 of the Initial Study states the full assumption:

The projects that would, in the aggregate, increase import capacity by 480 MW are expected to be installed by the end of 2002. Only one discretionary permit will be required for these various projects, and that one permit lies within the jurisdiction of the California Public Utilities Commission.

G7 The commenter objects to Variant 2 as implausible on economic grounds. Variant 2 is based upon the assumption that the Port of San Diego purchases the South Bay Power Plant. It is the stated purpose of the Port to buy the South Bay plant in order to replace the existing facility with a new plant, probably at Otay Mesa. The Port has put forward several reasons for this projected course of action. One is that the Port wishes to utilize the land for other waterfront-related uses, which include commercial development. To be able to use the property most effectively, the Port would need to remove the existing power plant and related facilities. It is entirely plausible that the value of such uses would exceed the cost of both the purchase of the South Bay plant and the installation of the SCRs.

In order to defray the costs of acquiring and operating the South Bay plant, the Port has been allocated 14 million dollars by the California Legislature towards the purchase and environmental clean-up of the power plant. In addition, the Port would contract with a power generation firm to operate the plant, and that firm would pay the Port a fee to operate the facility. Finally, the South Bay Power Plant is considered a must run facility and, as such, will have a contract with the ISO which will guarantee that the plant will have an income stream.

The second reason that the Port has provided for purchasing the plant is to enable the aging plant and equipment, which it believes produces substantial water and air related pollution, to be closed and a new, more efficient and less polluting power plant be built to replace the South Bay plant. The Port has stated that it wishes to remove the South Bay Power Plant as soon as a feasible replacement can be built. In this regard, the Port is currently negotiating with several power generation firms in order to select a partner that would operate the South Bay plant for the Port until the plant can be replaced. The Port has also stated that such a partner would, as a part of such agreement, site and build a new plant to replace South Bay. It is the Port’s contention that it has an obligation to lower air pollution in the San Diego area if possible. The purchase and decommissioning of the South Bay Power Plant and its replacement by a new and less polluting plant would accomplish this goal. The Port of San Diego has stated its intention to meet the requirements of the air district, which include retrofitting the facility with SCRs.

G8 Please see response to Comment G7.

G9 The commenter requests power plant baseline and analytical maximum emissions estimates for the three threshold years under SDAPCD Rule 69, i.e., 1997, 2001, and 2005, not just 1999 and 2005. With respect to 1997, there is no point in developing hypothetical emissions estimates for a year that has already passed.

With respect to 2001, emissions estimates have been made in response to this comment by combining the annual capacity factors shown in the Initial Study for the 1999 Analytical Maximum with the emissions factors shown for the 2005 scenarios. Use of Year 2005 emissions factors is appropriate since, under SDAPCD Rule 69, the new owners would be required to operate the plants in compliance with boiler-specific standards as described in the fourth full paragraph on page 4.5-11 of the Initial Study by 2001 and since these standards would be the same in 2005 as in 2001. For this hypothetical 2001 scenario, emissions estimates also reflect low use of fuel oil consistent with Mitigation Measure 4.5.b.1, which would take effect beginning in that year. Unlike the 2005 cumulative scenarios analyzed in the Initial Study, the Year 2001 emissions scenario reflects no increase in transmission capacity to San Diego County.

Year 2005 cumulative power plant emissions estimates are provided in the Initial Study, which concludes that such emissions would not be significant for the reasons listed on page 4.5-38.

G10 The emissions estimate cited by the commenter as a 1999 "baseline" value (i.e., 3,264 tons) is not a baseline value but is an estimate of the "excess" emissions over that assumed for power plants in that year in the 1998 Regional Air Quality Strategy. The discussion in the fourth paragraph on page 4.5-38 of the Initial Study compares the "excess" emissions in 1999 with the "excess" emissions estimated in 2005 (388 tons) under Variant 2 and points out that the latter would be an order of magnitude less than the former.

The comparison of 2005 conditions with 1999 is appropriate. The recently revised CEQA Guidelines Section 15126.2 indicates that the lead agency should normally limit its examination to changes in the existing physical conditions in the affected area as they exist at the time the notice of preparation is published, or where no notice of preparation is published, at the time environmental analysis is commenced. However, since 1999 will be the first full year under the restructured electricity market in California, it represents a better "existing" case than 1998 (the year environmental analysis commenced) from which to evaluate potential project effects.

In addition, it is noted that a new electricity generating facility would require project-specific environmental review, including approval of new air quality permits by SDAPCD and approval of a certification to construct from the California Energy Commission (CEC), as well as local building permits. During such review, cumulative impacts would be re-considered in light of the more highly-defined, specific power plant project then subject to review and approval.

G12 In the sixth paragraph on page 4.5-38, the Initial Study does not simply state that SDAPCD could implement more stringent controls in the future, but rather, the Initial Study acknowledges a review process that is mandated by the California Clean Air Act for updating and refining the regional air quality plan (in this case, known as the Regional Air Quality Strategy). This plan review process is a current regulatory requirement and, thus, is properly taken into consideration in evaluating the potential for significant long-term air quality impacts, particularly due to changes in emissions from stationary sources (like power plants) that operate within the direct control of SDAPCD. Stationary sources like power plants are subject to a much greater level of control by SDAPCD than are mobile sources, which are generated largely by land use development projects over which SDAPCD has no authority. The triennial plan review process provides a mechanism whereby, through revisions to the SDAPCD’s Regional Air Quality Strategy, SDAPCD rules can be amended or new rules added to address actual conditions and probable pollutant trends rather than the hypothetical worst-case scenarios used for CEQA analysis. The process of review and revision of the Regional Air Quality Strategy lends support to the conclusion that the cumulative changes in power plant emissions would not be significant.

G13 The fifth paragraph on page 4.5-36 of the Initial Study indicates that consistency with emissions forecasts in the regional air quality plan was used as the basis for identifying a significant effect and as the basis for development of a mitigation measure that would reduce the impact to less than significant. This same issue is included in the evaluation of cumulative impacts in 2005 (see paragraph 4 on page 4.5-38).

G14 The commenter apparently is referring to the Environmental Quality section of Chapter 4.16, Mandatory Findings of Significance, of the Initial Study. The Initial Study concluded that the project would not result in a significant impact as related to dredging of the Agua Hedionda Lagoon or the subsequent placement of the dredged sand. The commenter did not identify an impact that the suggested mitigation measure would address. The City of Encina is currently in a dispute with SDG&E over the placement of sand removed from the lagoon, with the City wanting the utility to place more sand on beaches to the north of the lagoon mouth, and the utility wanting to place more sand to the south of the mouth because, it asserts, sand placed to the north has a tendency to re-enter the lagoon. The new owner of the Encina plant is free to propose a new dredged sand disposal plan, and the City of Encina is free to contact the new owner and attempt to negotiate a mutually agreeable dredged sand disposal plan.