Hot Air Blows over Transmission Upgrade Tab

Southern California Edison asked a Los Angeles appellate court to require wind and other green power developers to pay for transmission upgrades in order to have the renewable supplies hooked into the grid. The November 5 writ is attempting to overturn a state regulatory decision that put the financial onus for high-voltage interconnections on the utility. The argument highlights the ongoing dispute over upgrade costs intensified by the new state law requiring utilities, such as Edison, to incorporate a higher percentage of renewables into their supply portfolios. In the Tehachapi Mountains, which sit at the southern end of the San Joaquin Valley, for example, wind projects could produce 4,000 MW of power, satisfying about one-tenth of the state?s power demand and half of its renewable resources requirement. In spite of that potential, the wind will continue to blow in the blustery region without producing much electricity for the state unless there are extensive upgrades to the transmission lines that would feed the wind-generated power into the grid. Currently the region produces about 600 MW of wind energy. There is no disagreement that $1 billion should be spent to upgrade Edison?s transmission lines in the Tehachapis. But there is much debate over who should pay the upfront costs for the interconnections in this and other areas?the utility or generators. ?It is a gray area,? said Nancy Rader, head of the California Wind Energy Producers. Whoever pays the upfront costs will likely get reimbursed from fees on transmission users and ratepayers. But the crux of the matter is who should bear the risk of a project not being completed and costs of high-voltage line upgrades, with the full recovery of the latter not being guaranteed by state and federal regulators. Edison asked the state Second District Court of Appeal to overturn the California Public Utilities Commission?s ruling requiring investor-owned utilities to pay the initial transmission upgrade tab for projects hooking to the lines sending power into the grid. It asserts the CPUC?s July 2003 decision placing the financial burden on utilities is preempted by the Federal Energy Regulatory Commission ?policy permitting the utility to require the generator, for whose benefit upgrades will be made, to pay for such upgrades in the first instance, and be refunded over time.? Edison also notes that requiring wind and other power project developers to pay the cost will provide a greater incentive to complete a given project. Generally, wind developers lack the financial wherewithal to round up upfront costs, including the $1 billion needed in Edison territory. But the utility, which has long resisted interconnections with wind projects, argues its ratepayers should not be on the hook for the hefty and potentially unrecoverable transmission interconnection costs. Federal regulators will approve collecting costs from transmission users for grid expansions and improvements unless a new line connects to a power project that was abandoned?perhaps because the developer went belly up or concluded that the going rate for electrons was below the cost of the plant, making the facility uneconomic. In the 1980s, Edison built a line from Phoenix to Palm Springs, but FERC allowed it to recover only 50 percent of its costs because a given project did not come on line, according to Edison. The CPUC will approve recovery of ?prudent? transmission costs not covered by FERC via ratepayer utility bills if the project brings in more power to the state?s transmission system, providing a ?network benefit.? Recovery of costs is limited to those that are reasonable, that is, not in excess of the benefit?the cost of the new power?they produce. For many moons, wind generators and Edison have battled over interconnection agreements, including who designs the upgrade that will essentially determine the extent of the network benefit, which includes reducing congestion and boosting overall capacity on the grid. ?To us, who has the authority to make the design decision of the lines will determine how much of the cost gets reimbursed,? Rader said. In addition, making a grid?power project interconnection work for both the utility and generators is principally a timing issue. The goal is to have the line upgrade in place close to the time the new power project comes on line so neither facility sits idle.

Over 11K Stories!

| Independently Powered Energy News

Hot Air Blows over Transmission Upgrade Tab

vdharadmin

Related Posts

Auld Lang Zine

PacifiCorp to Join ISO’s Proposed Expanded Day Ahead Market, Adding Regional Grid Momentum

Regulators Require Edison to Pay $100M for Shoddy Efficient Light Bulb Program

Regulators to Appeal FERC Ruling on Energy Pacts