CARLSBAD — Several council members expressed frustrations this week over San Diego Gas & Electric’s lack of progress in finding a new permanent home for its North Coast Service Center, ultimately giving the utility just under three months to find a viable option.
The council approved the 11-week time frame during its July 26 meeting after nearly one hour of discussion with SDG&E and NRG Energy officials.
The hunt for a new maintenance yard location, roughly six years past its deadline, stems from a council-approved settlement agreement between the city of Carlsbad, SDG&E and NRG Energy in 2014.
Terms of agreement
Under the terms of the agreement, NRG Energy was required to facilitate the decommissioning and demolition of its Encina Power Station and the construction of the Carlsbad Energy Center, a 632-megawatt natural gas peaker plant.
NRG Energy, a Texas-based energy company, is the current landowner of 90-plus acres adjacent to the SDG&E service center, including Agua Hedionda Lagoon.
The agreement also calls for SDG&E to move its service center, allowing the city to take ownership of the current service center location along Cannon Road and a parcel on Agua Hedionda Lagoon’s northwestern shore.
The agreement stipulates that the new service center, used for fleet maintenance, repairs, emergency services and training, must be situated west of El Camino Real with good freeway access.
In addition, the parcel must be relatively flat, with at least 10-12 acres to allow for a 30,000 to 32,000-square foot new building, according to Gary Barberio, Carlsbad’s deputy city manager for community services.
All three parties were responsible for agreeing upon a final location for the new North Coast Service Center by 2016.
Supposing all three parties agree to a new site, NRG Energy would fund up to $22.5 million for the public utility to construct a new service center, and the city would take ownership of SDG&E’s land adjacent to the former Encina Power Station, Barberio said.
If a new site is not agreed upon, NRG Energy will pay the city $10 million and forgo its financial obligation to SDG&E.
In 2021, SDG&E and the city had suggested relocating the service center to the parking lot of The Shoppes at Carlsbad. However, Joe Gabaldon, public affairs manager for SDG&E, said a full year of analysis revealed the site was unacceptable due to flooding concerns from Buena Vista Creek.
“Along the way, many issues were identified and addressed,” Gabaldon said. “SDG&E hired leading consultants to review varying engineering studies. These experts and our staff have determined that the site and associated access with continue to have significant risks to flooding.”
The council and staff expressed frustration with SDG&E over its perceived inability to identify potential service center sites, noting that the. city hasn’t received incentives (such as land ownership) outlined in the agreement after hosting the power plant’simpact on the community.
“We agreed to do something we were adamantly opposed to only because we were supposed to get this bundle of benefits, which we haven’t got yet,” Barberio said.
The council’s discussion turned to a potential site at “Lot 11,” a roughly 20-acre parcel several hundred yards east of the parking lot at the Carlsbad Strawberry Fields along Cannon Road. In addition to Lot 11, Gabaldon said SDG&E had identified two other sites west of Interstate 5 along Cannon Road.
In addition to the two other sites, Mayor Matt Hall stressed the continued site analysis must be focused on Lot 11, saying if SDG&E does not go with the parcel, “they better have more than one excuse.”
“I think there is a real willingness for this council to work toward a future where somehow all of that moves off that site,” Hall said of the current service center location. “That has huge value in many different ways.”
In addition to finding a suitable location, another challenge for the involved parties is rising construction costs.
Adam Smith, SDG&E’s corporate real estate portfolio manager, said while the company has already completed site plans and renderings, preliminary analysis projects a higher price than initially estimated, creating a significant — but unspecified — funding gap.
According to Smith, the construction cost on Lot 11 exceeded $22.5 million in 2019.
During the conversation, the frustration amongst elected officials was evident.
Councilwoman Teresa Acosta lambasted the utility company for allegedly dragging its feet, arguing the city did not agree to cover the funding gap associated with the relocation and construction of the utility’s service center.
Barberio confirmed the city is not obligated to allocate any funds for relocation or construction of the new service center under the agreement.
“The agreement was forged with the idea that we’d find a place to relocate the facilities,” Acosta. “It’s why the city of Carlsbad has been working so hard. I want to be clear that the city of Carlsbad is not signing up for that gap. The taxpayers of Carlsbad are not signing up for that.”
Councilman Keith Blackburn said it appears that any time the city identified a potential site, SDG&E rejected it. Gabaldon noted the city has also rejected proposed sites, and all three entities must agree on a final location.
Blackburn urged SDG&E to return with a good location in approximately three months so the process could move forward with all parties in alignment.