Sunrise Powerlink Project Suffers Setbacks Before CPUC

By Published On: July 27, 2007

Amid growing questions about the economic and environmental viability of a major San Diego Gas & Electric transmission project, a California Public Utilities Commission administrative law judge July 26 indefinitely suspended evidentiary hearings on whether to approve the $1.3 billion line. The decision marked the second setback this week for SDG&E’s Sunrise Powerlink line. On July 24, a CPUC commissioner abruptly halted release of a draft environmental study that was slated for August 3 because of a possible new route preference for the project, which came to light in recent weeks. Both delays came after CPUC administrative law judge Steve Weissman halted evidentiary hearings on the proposed project last week in response to errors in an economic modeling study needed to justify the line (Circuit, July 20, 2007). Weissman had intended to resume the hearings July 30. However, he decided July 26 to hold off in order to give parties in the proceeding more time for discovery and testimony. “We really need to take this a step at a time,” said Weissman. He added that he hopes evidentiary hearings can resume in September. His decision to further delay the hearings came after ratepayer advocates charged the latest problems with the utility’s economic study might just be the tip of the iceberg. “We’ve already identified inconsistencies that raise additional questions,” said Joe Como, Division of Ratepayer Advocates attorney. He said that many of those questions relate to how the use of coal power factors into the study for the line. Consumer advocates said many errors and questions remain even after SDG&E submitted a corrected analysis to the CPUC July 25. However, SDG&E legal counsel Gregory Barnes said the remaining alleged deficiencies are not really errors, but disagreements about the assumptions behind the economic modeling analysis. The utility’s corrected study shows that the proposed line–which would bring power from the Imperial Valley over the mountains into San Diego–still is the best alternative for meeting much of its future power needs. Yet, the corrections also show the line would enable the utility to import more coal power, in addition to the renewable energy it promises from the abundant wind, geothermal, and solar resources in the low desert area near the Salton Sea. One of the errors in the economic modeling study was that SDG&E assumed a coal power plant that will supply electricity ran on natural gas instead of coal. Correcting it showed increased economic benefits to ratepayers since coal is cheaper. Correcting other errors increased the estimated cost to ratepayers. For instance, one correction increasing the estimated cost was the utility’s low balling of the number of new power plants it would need within San Diego County through 2020. The initial economic study assumed only three would be needed, but the corrected version said four would be necessary. This would raise the cost of providing power to SDG&E customers. On balance, the corrected study showed narrower economic benefits of the project compared to the earlier erroneous May 7 study. The Utility Consumers’ Action Network contended it has found even more errors the utility must address. These include, the exclusion of the impact of the California Solar Initiative on neighboring utilities and how it might free up existing transmission facilities to bring more power into San Diego without building a new line. “Unfortunately, SDG&E’s errata suffer from blatant cherry-picking,” said Michael Shames, UCAN executive director. “It has selected a small subset of errors.” He argued that the utility should be required to redo the economic modeling study after correcting all the known errors. “We think the impacts are rather dramatic,” he said. “It cuts SDG&E’s [latest estimate of] savings in half to about one quarter of what initially was estimated.” The corrected SDG&E study pegged annual savings from the project, under UCAN assumptions, at more than $75 million. In the version containing the errors, SDG&E projected the line would save consumers more than $200 million a year. SDG&E’s Barnes characterized the errors the utility now has corrected as “narrow,” adding that they did not undermine the basic benefits of the proposed transmission line. He said “each and every” additional error raised by UCAN is “a dispute about assumptions.” While it remains uncertain when Weissman ultimately will resume the evidentiary hearings, the Division of Ratepayer Advocates is seeking an additional eight months in the full proceeding. Under a schedule it proposed, evidentiary hearings would not resume until late October and a full commission decision on the line would be delayed from January 15, 2008, until August 1, 2008. The delay on releasing the environmental impact study came after a ruling by CPUC commissioner Dian Grueneich, who is overseeing the licensing proceeding for the project. She ordered those preparing the study to delay the release of a draft version from next week until January 8, 2008. She said they will need the extra time to consider the impacts of an alternative route for the line that SDG&E supported during recent testimony in the proceeding. That new route would take a more northerly path, allowing the line to interconnect with the Southern California Edison and Imperial Irrigation District power systems. SDG&E filed a CPUC license application for the Sunrise Powerlink project last summer after the California Independent System Operator approved the line (Circuit, Aug. 11, 2006). The 500 kV line would run about 150 miles from the Imperial Valley into San Diego. It would be capable of moving 1,000 MW of power into San Diego. The company hopes to build the line by 2010.

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