CARLSBAD — The city of Carlsbad may be nearing a deal with NRG Energy and San Diego Gas & Electric to secure a permanent location for SDG&E’s new service center and largely fulfill the obligations of a partnership agreement nearly 10 years past due.
The City Council on Dec. 12 directed staff to continue negotiations regarding NRG’s latest proposal offering the city approximately 6 acres of the utility’s property located at the corner of Carlsbad Boulevard and Cannon Road, roughly half the acreage stipulated under the original agreement.
Known as the “seaside option,” the plan would shift SDG&E’s new North Coast Service Center toward the eastern portion of the existing SDG&E property, away from Carlsbad Boulevard and the coastline. This option would also give the city undeveloped property along Agua Hedionda Lagoon’s northern shore and access to a proposed trail along the lagoon.
The council asked staff to return by the end of March 2023 with a fully vetted and formalized agreement that outlines the details of the “seaside option.” If an agreement is not reached by the March 31 deadline, the council will decide whether to terminate or extend negotiations.
The city appears close to wrapping up what SDG&E’s environmental services director called a “complex regulatory transaction” that has frustrated residents and local officials for years.
After the San Onofre Nuclear Generating Station ceased operations in 2013, SDG&E initiated an agreement the following year with the city and NRG to address the urgent need to secure a long-term purchase power tolling agreement with Carlsbad Energy Center, a smaller 632-megawatt “peaker plant” that replaced Encina Power Station.
The agreement delineated specific obligations, responsibilities and terms among the parties related to energy operations and developments within the city, particularly concerning energy facilities, land use and potential land transfers.
The deal also highlighted the need to relocate SDG&E’s North Coast Service Center from its current location, near the northeast corner of Carlsbad Boulevard and Cannon Road. Under the agreement, the city of Carlsbad is responsible for helping find a new service center site by collaborating with NRG and SDG&E to find a mutually agreeable location.
As previously reported by The Coast News, the original agreement stipulated that the new service center must be situated west of El Camino Real with good freeway access. The parcel must be 10 to 12 acres and relatively flat to allow for a new 30,000 to 32,000-square-foot building. Additionally, NRG would pay the city $10 million if it was unable to relocate the center, per the agreement.
All three parties were responsible for agreeing upon a final location for the new service center by 2016. Once the new service center is established and other conditions are met, SDG&E will transfer the site of the existing service center, Cannon Park, and an additional plot known as the Agua Hedionda North Shore Bluff Parcel to the city.
From 2014 to November 2022, the city explored alternative sites for the service center, including The Shoppes at Carlsbad site and Lot 11, a roughly 20-acre parcel on SDG&E’s property located several hundred yards east of the Carlsbad Strawberry Company’s farmland along Cannon Road.
However, none of these options proved viable for relocation. Deputy City Manager Gary Barberio previously said Lot 11 was removed from consideration for environmental concerns, land use compatibility, timing, cost concerns and difficulty obtaining necessary permits.
On Nov. 15, 2022, the City Council directed staff to discontinue efforts to include Lot 11 in negotiations and explore a new option referred to as the “Against the Tracks” option, which involved constructing a new service center on the eastern part of the existing site, closer to the railroad tracks.
By March 7, 2023, negotiations for the “Against the Tracks” option hit a roadblock due to the construction costs surpassing available funding from NRG and SDG&E. To allow NRG time to select a development partner, an additional six months were granted to explore alternatives. On Aug. 31, 2023, NRG proposed the “seaside option” as an alternative.