FERC Won’t Allow PG&E to Bill Ratepayers $6M for Transmission Planning

Federal energy regulators rejected Pacific Gas & Electric’s request to swiftly recoup $6 million it spent downscaling three transmission projects as directed by the California grid operator. The Federal Energy Regulatory Commission voted 4-0 to deny PG&E permission to collect the money from ratepayers under its transmission tariff because the projects are still alive and have not been canceled.

The California Independent System Operator expects the three scaled-back high voltage projects to be ready for service by mid-decade. That means they aren’t “abandoned,” which is a prerequisite for cost recovery under the rules for transmission charges, FERC concluded in a seven-page decision issued Dec. 21. The agency sided with the California Public Utilities Commission and Transmission Agency of Northern California, which objected to the rate recovery.

PG&E “will determine the appropriate next steps” after completing a review of the decision, James Noonan, utility spokesperson, said.

The investor-owned utility sought to recoup from ratepayers half of the nearly $12 million it asserts it reasonably incurred as “abandoned plant costs.” The other nearly $6 million will come out of earnings and thus be paid by PG&E shareholders.

The three smaller transmission projects at issue are PG&E’s 115 kV Morgan Hill Reinforcement Project, which was initially projected to cost up to $350 million but lowered to $104 million with the downscaling. The second project, Oro Loma, is a 70 kV project originally expected to cost up to $190 million then slashed to $31 million. The third is the 230 kV Lockeford-Lodi Project, with the estimated cost dropping to $89 million from the initial approximate $166 million for a more expansive project.

In other federal news, last month the DC Circuit Court of Appeals struck down FERC’s approval of the California Independent System Operators’ standby rate for generators, which exceeds its standard payment cap.

CAISO makes capacity payments to keep small amounts of energy at the ready to help balance the grid as needed under its Capacity Procurement Mechanism launched in 2010. CAISO sought and was granted approval to pay generators their fixed cost plus an additional 20% profit. FERC approved the higher payment. It was then challenged by the CPUC for being unreasonable.

FERC would not comment on the Dec. 17 ruling nor say whether it will appeal the decision. CAISO also did not comment on the ruling.