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Power Plant Juggernaut Slowed by Internet Giant


COYOTE VALLEY, Calif.-In its push to provide California an 8,000-megawatt fix, the Calpine Corp. has traveled border-to-border hawking and building its newest model of power plant, encountering scarcely a bump on the long road.

Then it arrived in this gentle valley where the electricity-guzzling Internet is seeking to make its own great stand.

Now Calpine's proposal for a new power plant here, one of the bulwarks in the state's massive buildup to grow California out of its current energy crisis, has been derailed by a giant of even bigger girth--Cisco Systems, the world's leading e-commerce provider.

Efforts to revive the project, whose merits are being debated before the California Energy Commission, have captured the attention of Gov. Gray Davis and power plant builders statewide who have, until now, gotten their projects approved with little opposition.

Although the controversy surrounding the proposed Metcalf Energy Center has been swirling through this green valley for more than a year, the state's electricity crisis has made it a matter of urgency for Californians everywhere.

"This might seem like a local battle between giants, but it's an important fight that has broad implications for the state's response to the electricity crisis," said V. John White, director of the Center for Energy Efficiency and Renewable Technologies in Sacramento.

"On one hand, we are being pressured to build more new power plants that are clearly cleaner and more efficient but they still pollute the air and water. On the other hand, we have this Internet giant leading the opposition at the same time that it and the rest of the Silicon Valley are increasing their demand for electricity. It's troubling."

Before landing here, Calpine had grown from a tiny energy recycler into a powerhouse now poised to become the single biggest supplier of electricity in the state. It didn't know defeat, at least not in the wild and liberated marketplace of deregulation.

Most other communities where Calpine had proposed a new power plant were too impoverished, too feckless or too resigned to put up much fight. Ask the residents in the town of Pittsburg, across the bay from San Francisco, where Calpine is now trying to build its 12th plant.

"When you have mandates from the governor saying you will put these power plants in . . . then what hope does a little community like us have?" said Paulette Lagana, who fears environmental fallout.

But here, 15 miles south of downtown San Jose, Calpine came across an opponent that it could not win over with its deep pockets and soft pedal--behemoth Cisco. Or, to put a finer point on it, this is where Calpine and its building partner, Bechtel, met their match in Cisco and its building partner, Sobrato Development, on a knoll called Tulare Hill.

For months now, both sides have been engaged in a rancorous fight over two competing visions for this valley, and the outcome could influence the tone and direction of state electricity policy as it wends it way through crisis.

One vision proposes a power plant to serve a larger Silicon Valley that has emerged as one of the biggest consumers of electricity in the state. The other vision foresees a new $1.3-billion worldwide headquarters for Cisco that would house 20,000 employees and possibly open the floodgates for thousands of new houses and strip malls.

Like any battle between big boys accustomed to getting their way, it has been long and bloody, and no winner has yet emerged. So much is at stake in a state where nine power plants have been approved and 14 sit in the pipeline that Davis and the Energy Commission have been drawn into the fray. Davis has called the new push for plant building the pillar of his solution to the problems unleashed by deregulation.

As a result, the state's energy commission finds itself in the middle of a highly charged political and economic dispute laden with symbolism.

The panel--with the echo of Davis saying all Californians must share the pain--must decide whether to overrule a recent zoning vote by the San Jose mayor and City Council. That vote killed Calpine's $300-million, power plant in favor of Cisco. The Internet king had argued that the power plant would harm the aesthetics of its huge campus-like headquarters.

What happens next will probably turn on a fundamental question of fairness now being asked in Sacramento and in public hearings before the Energy Commission in San Jose:

Why shouldn't Santa Clara County, the home of Cisco and the biggest electricity-consuming firms in the West, be willing to carry its fair share of power plants? Why should Pittsburg and Antioch and Kern County shoulder it all? And will the state Energy Commission exercise the muscle it has rarely used before and override a local community's desire to say, "Not in my backyard?"

Off the record, both sides throw colorful barbs at each other. On the record, they prefer to argue their case in the parlance of single and double turbines and nitrogen oxide loads.

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