LADWP Disputes Edison?s Lead Role in Devers Project

By Published On: May 7, 2005

In a bid to shave one-half of a percent off its $2.4 billion a year power operation budget, the Los Angeles Department of Water & Power objected to Southern California Edison?s claim to build a new transmission line from Arizona to California. The department?s challenge came just before Edison asked the California Public Utilities Commission for authority to build the $581 million, 500 kV Devers?Palo Verde 2 line to supply up to 1,200 MW of new power transmission capacity to the state?s grid (<i>Circuit</i>, April 15, 2005). ?We?re in support of additional transmission,? said John Schumann, director of power systems planning for the muni, who hopes for a speedy resolution of the conflict. If LADWP builds and operates the line instead of Edison, it will save the muni $12 million a year by escaping California Independent System Operator?related costs. LADWP would transfer its contract rights for 368 MW of transmission capacity on the existing line to the new line, thus end-running the grid operator. If Edison builds the line, however, CAISO will control it as well as LADWP?s existing capacity on the old line, subjecting the muni to ongoing added costs. CAISO fears ?balkanization? of the transmission system, according to Randy Abernathy, CAISO vice-president of market services. CAISO wants the state to move toward unified grid management to increase economic efficiency and reliability. The new line ?should be a freeway, not a toll road controlled by one city,? he said. ?We really don?t have a preference for who builds the line,? said Chris Davis, a spokesperson for the California Energy Commission, where the conflict publicly emerged last week. ?Our preference is that the controversy does not delay permitting and construction of the line.? Both Schumann and Edison spokesperson Paul Klein acknowledged that the two utilities hope to resolve the dispute without legal action. The dispute revolves around how to interpret the contract that the muni and the investor-owned utility entered when the first Devers?Palo Verde line was built in the early 1980s. Under that agreement, either party can claim the right to build and operate a second line depending upon the circumstances, according to Klein. Edison told LADWP it intended to build the line 20 months ago, and the muni participated in numerous meetings on the project, according to Klein. However, the muni never notified Edison of its intention to build the project itself until it sent a letter on March 29 asking Edison to refrain from seeking permits. Whichever utility builds the second line, both will still share its cost and ownership, with the department financing and owning 30.7 percent and Edison the remaining 69.3 percent. Schumann said the line will be potentially useful for the muni to import geothermal and solar thermal power from the Imperial Valley to help meet its renewables portfolio standard goal. CAISO approved Edison?s plan to build the Devers?Palo Verde 2 line in February (<i>Circuit</i>, Feb. 25, 2005). The independent system operator said the line would increase reliability in Southern California by allowing the state to tap idle gas power plants in Arizona, which, according to Klein, would prevent price volatility on peak-demand days. The existing Devers?Palo Verde line is near maximum capacity during peak periods, according to Klein. The Arizona Corporation Commission, as well as the CPUC, must approve the project. The Los Angeles City Council must sign off on the department?s participation in the project. The utilities hope to finish building the 230-mile-long line?which will parallel Interstate 10?by 2009.

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