Planners of a power cable under San Francisco Bay won federal regulators' approval of rate proposals July 21, clearing the way for financing the $300 million project to deliver additional power to San Francisco as early as 2008. In extending its preliminary approval for the proposal by Trans Bay, the Federal Energy Regulatory Commission okayed a 13.5 percent return on equity, a three-year moratorium on the initial transmission revenue requirement, a 50-50 debt-equity capital structure, and a 30-year depreciation period, the commission said in a statement. FERC said the project has the potential to reduce congestion costs and reliability-must-run requirements in San Francisco. "Overall, we find that based on enhanced reliability, more efficient dispatch and possible environmental benefits, the project will be beneficial," regulators said. The relatively high rate of return is justified because Trans Bay is a start-up entity and can recover costs only when the project begins operating, FERC explained, citing other recent approvals of enhanced returns. Trans Bay is a subsidiary of Babcock & Brown, David Parquet, the company's vice-president, said. The Australian investment firm has a letter of intent with Siemens AG and Pirelli to build the 400 MW underwater high-voltage DC transmission cable linking the supply-tight pocket of San Francisco to power plants located across the bay in Pittsburg. Once it is completed, ownership of the cable will be sold to the city of Pittsburg for a nominal sum and operational control will be transferred to the California Independent System Operator, Parquet said. Babcock & Brown will retain the cable's transmission rights, selling them to provide a return on its investment and operating expenses, he added.