August 15, 2006

Mountainview Power Plant, Redlands, California

Laszlo von Lazar, Bechtel Power Corp.

Rug pulled out

A compelling chapter of Mountainview's success story involves the chain of events preceding the plant's reapproval and completion. Kudos to SCE and Bechtel for hurdling all the obstacles encountered en route to start-up and recovering some of the project's lost time via an aggressive construction schedule. Remember, the project began at the height of the combined-cycle building boom in 2001. At the time, Mountainview was touted as one of the solutions to Southern California's chronic capacity shortage, which had recently given the state's ill-conceived retail electricity deregulation experiment a black eye with the one-two punch of routine, widespread blackouts and brownouts.

Mountainview's winding road ironically begins and ends with SCE as its owner. In 1998, Thermo EcoTech purchased the old San Bernardino station with its retired Units 1 and 2 from SCE and changed the facility's name to Mountainview. Thermo EcoTech then was purchased by AES Corp. in 2001. AES continued developing the site, hiring Bechtel Power in the summer of 2001 as the EPC contractor. For Bechtel, the challenges at Mountainview began at the outset, starting with the need to bid the half-billion-dollar, lump-sum project in little more than two weeks, which left scant time for the normal estimating and review processes.

Storm clouds were gathering, however, that cast doubt on Mountainview's future. By 2002 the energy crisis in California had eased, ending the capacity-construction boom. At that point, Enron's collapse in late 2001 was still sending shock waves throughout the industry. AES, feeling the financial heat, was forced to suspend the project in April 2002 with construction only 15% complete—although engineering was 85% finished and equipment procurement was 80% done. This forced Bechtel into estimating suspension costs under multiple scenarios and negotiating with AES regarding hundreds of vendors and subcontractors—all while demobilizing the project on an accelerated basis.