Angelides Proposes to Put Power Authority in the Transmission Business

By Published On: December 14, 2003

Defenders of the California Power Authority (CPA) have given the agency?which the governor-elect wants to eliminate?a new mission. State treasurer Phil Angelides proposed midweek that the agency step in and build transmission lines, stressing the necessity to build lines and upgrades to keep the state from experiencing massive blackouts along the lines of August?s Northeastern outage. ?We cannot go down the Pete Wilson highway of deregulation,? Angelides said during a November 4 press conference. Investing public funds in the grid to ensure a reliable flow of electricity, he added, was as necessary as a viable public water system in California. Angelides said he would push for legislation when lawmakers reconvene in January. He wants a bill that allows the power authority to use its $5 billion bonding authority and ability to condemn property to build power lines. The new high-voltage wires would not only curb gaming opportunities for market participants by relieving bottlenecks, but would also allow out-of-state and green power projects to feed more easily into the grid, he said. Angelides also proposes allowing the power authority, which has been running on California Energy Commission (CEC) money, to tap into up to $20 million in loans ?for permitting and engineering? transmission projects identified by the CEC. The amount, which would be paid back with interest through transmission user fees, is a fraction of what is needed to bring the grid up to what Angelides considers optimal. Public investment in the transmission system is essential to give the grid ?a snowball?s chance in hell of functioning? in a competitive market, drawled Dave Freeman, former CPA chair. Transmission ?is a monopoly function,? Freeman added, and one neglected by the utilities. ?There aren?t a bunch of competitors out there fightin? with each other to build transmission lines.? Also backing Angelides?s proposal are consumer groups, who see it as a key to keeping rates in check. The energy commission estimated $30 billion would be needed over the next 20 years for transmission upgrades and expansions. Relatively speaking, it is a manageable number in comparison to the state?s $1.4 trillion state economy, Angelides said. Some see the transmission problem as attributable largely to the state?s unwillingness to properly plan and permit new projects. For example, the California Public Utilities Commission, which has siting authority, declined to permit the Valley-Rainbow project. According to Jan Smutny-Jones, Independent Energy Producers executive director, the lack of transmission upgrades ?is not a financing problem, it?s a land use problem??that is, the ?not in my backyard? syndrome. Utilities can recoup transmission construction costs in rates, he added. Ratepayers are charged about $0.01/kWh for transmission costs. Treading softly, California Independent System Operator spokesperson Gregg Fishman said if the power authority exercises its power of eminent domain and manages to construct lines that otherwise would not get built, ?That is fine by us.? He did wonder how Angelides defined ?new project,? adding that over the past five to six years, there have been ?a lot of additions and enhancements to the grid.? The California Public Utilities Commission has approved more than 100 projects since early 2001. Angelides?s proposal, which the governor-elect had not heard about before the press briefing, would order the energy commission to adopt a detailed 10-year master transmission plan that identifies needed projects. The legislative measure would not alter the transmission siting authority of the CPUC.

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