In a regular business session, the commission voted unanimously to approve a license for the 500-megawatt project, the company said.

As the project developer, the utility has overseen the licensing process for the proposed plant. Once the state process is complete, Calpine Corp. will assume ownership of the Otay Mesa project and will construct and operate the plant.

PG&E will contract for up to 250 megawatts of the project's output available upon commercial operation. The project, which is expected to begin construction in the third quarter, will produce enough electricity to power about 500,000 homes.

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