Developers of a pumped storage facility and transmission project in Riverside County reapplied for cost recovery to the California Independent System Operator. After being rejected for complete recovery of the project\u2019s billion dollar-plus cost, the company, Nevada Hydro, is now seeking to recover only the $350 million needed to build the transmission component of the project. \u201cWe\u2019re in discussions with them on how we\u2019re going to work the transmission line into the grid,\u201d said Chris Wysocki, Nevada Hydro spokesperson If the company can recover the cost of the north-south transmission line through the grid operator\u2019s transmission access charge, he said, the \u201cnumbers still pencil out.\u201d That is, as long as Nevada Hydro can enter into power sales agreements with local utilities, he added. The proposed facility--known as Lake Elsinore Advanced Pumped Storage (LEAPS)--would use surplus power to pump water out of Lake Elsinore to a higher elevation reservoir and release it to create hydroelectricity during times of peak consumption. The capacity is estimated at to 500 MW. CAISO is reviewing a revised application from Nevada Hydro, confirmed Gregg Fishman, grid operator spokesperson. He explained that the grid operator\u2019s staff will be reviewing the proposed transmission line to see if it bolsters the network and has reliability and economic benefits. Nevada Hydro\u2019s new tack on cost recovery comes after it entered into a $1.1 billion financing agreement with Morgan Stanley. Under the deal, the two companies created a new entity, known as LEAPS Hydro, which will build, operate, and own the facility. The project\u2019s planned line would be able to move up to 1,500 MW of power from Southern California Edison territory to San Diego Gas & Electric, explained Wysocki. It could be constructed in 18 months. The company also said that the pumped storage component will be able to store surplus renewable energy, such as wind power generated at night. By comparison, the Sunrise Powerlink 500 kV transmission line proposed by SDG&E could move 1,000 MW into the utility\u2019s service territory and would cost more to build, maintained Wysocki. SDG&E estimates that its Sunrise line could cost as much as $1.4 billion and Nevada Hydro estimates its project would cost $1.1 billion, although the Federal Energy Regulatory Commission found the cost to be $1.3 billion. In a recent letter to the California Public Utilities Commission, CAISO indicated that SDG&E will face reliability concerns as early as 2010 unless new facilities are constructed to meet the county\u2019s growing demand for power. Earlier, Nevada Hydro sought to recover the whole cost of the project--including funds both for the transmission lines and the pumped storage facility. The grid operator, however, found that the total cost was ineligible for recovery through transmission charges (Circuit, April 20, 2007). Meanwhile in Washington D.C., FERC is nearing a decision on whether to grant a license for the LEAPS project. The final federal environmental impact statement is complete and a decision is expected by sometime this fall, said Greg Morrison, Elsinore Valley Municipal Water District director of legislative and community affairs. A wide array of state utilities are opposing the LEAPS project as uneconomic at FERC. A draft California Environmental Quality Act analysis is due this fall. Sometime after that, Morrison said, the water district board would have to give final approval for the project before it could be built. The CPUC also must give its seal of approval for any cost recovery of the transmission project\u2019s cost, noted Wysocki. A State Water Resources Control Board permit is needed too.