Pacific Gas & Electric Co. wants to develop and construct a 560-megwatt natural-gas fired power plant in Eastern Alameda County near the border of San Joaquin County, on the site of the proposed Tesla Generating Station.

Tesla, so-named for its proximity to PG&E's Tesla substation one-half mile away, was approved by the California Energy Commission in June 2004 as a project of Midway Power LLC, a subsidiary of the big Florida utility FPL Energy.

PG&E, a subsidiary of San Francisco PG&E Corp. (NYSE: PCG), recently agreed to acquire Midway Power to obtain the rights to develop the plant, according to the company. David Eisenhauer, a manager in the utility's media relations department, said PG&E expects to spend $850 million to acquire, develop and construct the plant. At press time, it was unclear if the acquisition was pending or already closed.

Tesla is the fourth power plant project PG&E is undertaking, all of which sharply increase the utility's owned and operated power generation assets. In addition to Tesla, it is two-thirds finished with the construction of 530-megawatt Gateway Generating Station in Antioch; earlier this year it received approval to take over and complete construction of the 660-megawatt Colusa Generating Station near Williams in unincorporated Colusa County; and it is seeking approval from the energy commission to rebuild its Humboltt Bay power plant, a project that will increase that plant's capacity to 163 megawatts from 105.

In total, the three new projects will increase PG&E's owned and operated power generation assets by 28 percent, to 8,021 megawatts, up from 6,271 at year-end.

And even as PG&E steps up its acquisition of renewable-energy contracts to meet California's renewable-portfolio standard, it is increasing its ownership of fossil-fuel-burning generation assets to almost 1,900 megawatts, up from 105 megawatts at the end of 2007.

Tesla was approved as a 1,120-megawatt plant in 2004. At the time, Midway estimated total capital costs for the plant would be $600 million and $700 million, according to documents filed with the energy commission. Midway never secured a power purchase agreement, which hindered its ability to raise financing for the project, and so it languished. The project has a deadline to begin construction by June 2009, which now looms over PG&E. Over the next 11 months, it must secure approval from the California Public Utilities Commission as well as approvals from the energy commission for the sale to PG&E from Midway. It must also secure from the energy commission an approval to amend the project to the reduced output from the original proposal, according to Percy Della, a spokesman for the commission. That approval will require energy staff technical work to review the new proposal, Della said. PG&E has not yet sent in anything to the energy commission, he added.

As it was proposed by Midway, the Tesla project would entail a 23-month construction schedule and would employ a peak labor force of 974 workers for two months and an average work force 485 workers over the construction period.

PG&E said it expects the project to come online by the end of 2011 if it receives PUC approval in January and all construction schedules are met.

Separately, the utility filed a proposal with the CPUC for its 2009-2011 energy efficiency program with an expected revenue requirement it would recoup from ratepayers of $1.9 billion. That amount is more than double the $867 million the CPUC authorized to fund PG&E's 2006-2008 energy efficiency program.

The increased authorization request is due to a combination of factors, PG&E said, including higher energy savings targets, an enhanced focus on more costly long-term savings measures such as heating, ventilation and air conditioning retrofits, and increasing difficulty in capturing savings.