IN THE MATTER OF THE APPLICATION OF MIRANT DICKERSON DEVELOPMENT, LLC FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY

CASE NO. 8888

On May 23, 2001, Mirant Dickerson Development, LLC ("Mirant") filed an application for a Certificate of Public Convenience and Necessity ("Certificate") (i) to upgrade existing simple cycle peaking units known as Station H, located at the Dickerson Generating Station site in Montgomery County, Maryland, by converting the existing units to combined cycle electric generation units through the construction of additional facilities, and (ii) to construct new combined cycle units at the site. The project, if approved, would increase the electrical generating capacity of the Dickerson Generating Station by 740 MW.

On July 16, 2001, the Sugarloaf Citizens Association, Inc. ("Sugarloaf") filed a motion to intervene in the captioned proceeding, noting the significant impact that Mirant’s proposed facilities would have upon the environment and the surrounding area, which is a part of the Montgomery County Agricultural Reserve. Although the Public Service Commission ("PSC" or "Commission") has not yet acted on Sugarloaf’s motion to intervene, Sugarloaf assumes that the Commission will ultimately grant such motion. Therefore, Sugarloaf hereby submits its Response in opposition to Mirant’s request for waiver of the statutory requirement that an application for a Certificate be filed at least two years prior to commencing construction of an electric generation facility under PUC Article § 7-208 (hereinafter "two-year requirement"). Mirant’s request must be rejected as a clear attempt to frustrate a thoughtful and comprehensive review of its Certificate application.

Mirant’s request for a waiver is included in its May 23, 2001 Application for a Certificate. Under PUC Art. § 7-208(b), Mirant has the burden of demonstrating that "good cause" exists warranting a waiver of the statutory two-year requirement. Rather than providing such justification in its application, Mirant launches a collateral attack on the State’s policy with regard to the siting of electric generation facilities. Initially, Mirant argues that the application of PUC Art. § 7-208(b) with respect to non-utility generators is inconsistent with the nascent competitive electric market. Second, Mirant asserts that the Commission’s review process set forth in COMAR 20.79.01.04 provides a sufficient amount of time to allow participation by interested parties in the Certificate process. This attempt to enlist the Commission to de facto overrule the provisions of PUC Art. 7-208(b) through the categorical granting of waivers for non-utility generators must be rejected. Mirant is obligated to demonstrate why it is entitled to a waiver of PUC Art. § 7-208(b)’s mandates.

PUC Art. § 7-208(b) sets forth the two-year filing requirement:

Even though the language of the statute is unambiguous, Mirant erroneously asserts that the Certificate process is an unfitting vestige of a regulated marketplace. Specifically, Mirant states that PUC Art. § 7-208(b) "is inappropriate in this context–as opposed to the more complex regulated electric company proceedings for which it was originally enacted." Application at 4. Rather than demonstrating that "good cause" exists for waiver as required by the statute, Mirant simply asserts that PUC Art. § 7-208(b) is more "appropriate" for a different "context." Mirant advances this argument despite its recognition in its application that in adopting SB 50 this year, the "Maryland General Assembly has recently clarified that the Public Service Commission’s CPCN authority under PUC Art. §§ 7-207 and 7-208 includes non-utility generators such as Mirant." Application at 2. The Department of Legislative Service’s "Fiscal Note" accompanying SB 50 also highlights the General Assembly’s specific intent to clarify the applicability of the two-year requirement, noting that SB 50 "requires a person to apply for a certificate of public convenience and necessity at least two years before constructing a generation station." (Emphasis in original)

Further, the Maryland General Assembly revisited Certificate procedures in the context of electric utility restructuring in adopting the Electrical Customer Choice and Competition Act of 1999 and undeniably understood the new regulatory context in which it was acting. Chapter 3, Acts of 2001. In fact, with regard to Maryland’s restructuring law, the preamble indicates that the legislation altered "certain criteria for obtaining a certificate of public convenience and necessity for a generating station." See SB 350 at 3, lines 10-11. Therefore, Mirant’s suggestion that the two-year requirement set forth in PUC Art. § 7-208(b) is unwarranted in a deregulated environment is immaterial to the present proceedings.

The General Assembly had the opportunity to revise the two-year requirement in recognition of a changing marketplace, but did not do so. See generally Creighton v. State, 520 A.2d 382 (Md. App. 1987)(setting forth the principle that if the Legislature had an opportunity to amend or otherwise alter a statute and did not, it made an implicit decision to preserve its legitimacy). To suggest that the law is now inappropriate is disingenuous at best.

Mirant contends in its application that a two-year "delay" in beginning construction of the proposed generation facilities from the time its application was filed "could" result in increased costs and hinder the addition of generation capacity in the PJM region. Application at 4. The justifications provided by Mirant are as obvious as they are fatuous. If these reasons were accepted as a surrogate for "good cause," the two-year requirement would effectively be rendered inoperative. Indeed, a one-year review process could always be said to "potentially" lower costs, based upon elementary economic principles, such as inflation. Similarly, it could also always be asserted that an abbreviated procedure could add capacity at a quicker rate than adhering to a complete procedure.

Furthermore, Mirant does not provide any evidence that the costs would in fact increase, or that the Commission has made a determination that streamlining siting procedures to add capacity to the PJM area is warranted. Mirant has not committed to sell power for consumption by consumers in Maryland. It is clear that the Commission’s primary duty is to protect the public’s interest in the State of Maryland.

A preliminary review of Mirant’s application indicates that the potential impacts of its proposal warrant close scrutiny. Perhaps the most significant harm of the proposed project may be its massive appropriation of water from the Potomac, a river that is already severely taxed and subject to regulation by the State to protect water supplies in the Washington Metropolitan Area during periods of low flow. COMAR 26.17.07. Mirant’s planned appropriation is compounded by the fact that several more power plants are in the development stages for siting nearby, and they may also draw upon the Potomac’s waters.

On June 18, 2001, Duke Energy Frederick, LLC ("Duke") applied for a Certificate to construct a 640 MW generation facility, on a site just upstream from the Dickerson Generating Station. PSC Case No. 8891. Other projects involving Dynegy, Sempra, Trachtabel and Standish are being actively pursued by project developers from those companies for siting along the Potomac. Five of the six proposed Potomac projects of which Sugarloaf is aware would be sited in Maryland. It is likely that some or all of these will be the subject of Certificate applications during the pendency of the Mirant proceeding. All of the proposals can be expected to involve a commonality of issues with those raised by Mirant’s application in this proceeding - issues most appropriately addressed together, or at least at the same time. These issues include the cumulative impact the proposed power plants could have upon not only the Potomac, but also upon the Chesapeake Bay, by withdrawing massive quantities of water from the Potomac. Accordingly, it would be inappropriate for the Commission to grant a waiver of the two-year requirement to Mirant and prematurely cut-off its own ability to fully consider all of the issues in the public interest.

It is clear that Mirant’s proposed facilities will also have an impact on the air quality in the region and will increase the emission of regulated pollutants into the ambient air. These air quality issues are also compounded by the prospect of several more electric generation facilities in the development stages. As such, Mirant’s proposed facilities as well as those proposed by Duke and the others that are in the development stages will have a cumulative impact on air quality in Maryland, and should be carefully examined. In addition, the proposed facilities will involve the construction of additional smoke stacks that would be seen from the agricultural reserve surrounding the site, Sugarloaf Mountain and the Chesapeake and Ohio Canal National Historic Park; would increase noise levels emanating from the existing facilities; and would impose additional adverse impacts upon the surrounding area and its residents during and after construction of the proposed facilities. The Commission should proceed cautiously.

WHEREFORE, Sugarloaf respectfully submits that Mirant’s request for a waiver of the statutory two-year requirement should be denied.

Respectfully submitted,

_______________________________________

James R. Choukas-Bradley

Attorney for the Sugarloaf Citizens Association, Inc.

August 3, 2001