Not All of Huntington’s Power Plant Retrofit May See the Light

More than a year ago, the state gave energy giant AES “fast-track” approval to restart two mothballed generators in Huntington Beach, allowing the company to streamline lengthy environmental reviews.

In exchange, AES predicted that the plants would begin providing electricity by last summer--just when officials thought California’s energy crisis would be most severe.

But today, both generators remain idle.

The refurbishing project that was supposed to take a few months has run into a string of delays, in part because the generators needed far more extensive repairs than the company had expected.

AES officials now say that one of the generators will go on line in July.

But with California’s power shortages solved for now, they question whether the second generator should be restarted.

“We don’t think there will be a demand for the power,” said Ed Blackford, a manager for AES. “Right now, we don’t see it possible to get that [second unit] on line this summer.”

In the past year, California’s energy shortage has eased considerably. Nine additional plants have fired up, producing more than 1,800 megawatts of power since the crisis peaked last summer. At the same time, price caps and other regulations have reduced the ability of energy companies to manipulate the market.

Huntington Beach residents strongly opposed AES’ fast-track approval, arguing that environmental and health studies on the effects of restarting the generators should be done before the plants resume operating.

But state regulators granted permission to AES to restart the generators as soon as possible while completing a $1.5-million study of environmental impacts.

Some residents said the situation shows that government regulations aren’t the only factor in delaying new power sources.

“AES didn’t live up to their part of the bargain,” said John Scott, a resident of southeast Huntington Beach, where the plant is located.

“The whole reason to give them this fast track was so they could meet the energy needs of California.”

AES officials said their original plans for the generators were ambitious but realistic. “It was an aggressive schedule, no doubt about it,” Blackford said. “We were looking at a best-case scenario for just about everything.”

But the project was immediately beset by problems.

The boilers were the biggest setback because they needed far more work than the engineers had originally thought. “Even though this was a retrofit,” Blackford said, “you have to remember this was a 1960s-vintage [boiler], and an entire new instrumentation and control panel had to be installed.”

AES used some nonunion workers for the project, a move that sparked criticism from officials of organized labor who contended the company was accepting substandard work.

The general contractor filed for Chapter 11 bankruptcy in March, prompting dozens of liens totaling about $50 million to be filed against AES.

The contractor, PMSI, contends that AES still owes the company $62 million. But Blackford disputes this: “We’ve paid in full for the contracted work ... as well as approved change orders.”

Last summer, AES estimated the work on the two generators would cost about $120 million. But the project is now about $40 million over budget, Blackford said.

State energy regulators said AES won’t be penalized for the delays because the company does not have a contract with the state.

Roger Johnson, a California Energy Commission manager, said AES will eventually resolve its problems and generate power from Huntington Beach.

Even though energy prices are less than they were a year ago, AES will still need revenue from the sale of electricity to justify the millions it spent to repair the generators.

“It would be nice to have that [power] this summer,” Johnson said.