Wind Developers Call for Cost Assurance

By Published On: October 1, 2004

The state’s renewables policy may be thwarted if cost recovery for transmission projects needed to allow new green projects to interconnect is not ensured, warned wind developers. This message comes on the heels of a recent California Second District Court of Appeal ruling that the California Public Utilities Commission can’t order investor-owned utilities to pay up-front costs for these high-voltage transmission projects (Circuit, September 10, 2004). Wind suppliers are not putting in interconnection requests for renewables projects, fearing they may be “trapped” if they make big investments that can?t be recovered, said Hal Romanowitz, president of Oak Creek Energy Systems, at a Tehachapi Transmission Study Group workshop September 20. “If the state wants renewable energy in its energy mix,” it?s crucial the CPUC ensures that transmission upgrade costs will be folded into rates, Romanowitz added later. With regulatory assurance, he predicts, utilities will be willing to front these costs. If the only projects able to get transmission built are large enough to pay up-front costs for upgrades, many players could be lost, predict renewables advocates. Commissioner Loretta Lynch called for Tehachapi wind transmission planning to move ahead while thorny financing matters are sorted out. She told Circuit the appeals court move won?t necessarily stymie renewables contract negotiations and wind transmission planning if the Federal Energy Regulatory Commission clarifies that either generators or utilities are responsible for up-front costs. Meanwhile, on September 15, the CPUC filed for rehearing of the Second District court?s ruling. Among other things, the petition argues that the commission has, since 1976, regulated interconnection of small “private energy producers,” some of which use renewable fuel. State regulators argue that this counters the court’s assertion that these generators are subject only to federal regulation. While declining to spell out specifics, Michael Mackness, Southern California Edison staff attorney, pointed out at the workshop that Edison met with the CPUC but failed to agree on a financing scheme for transmission upgrades. The utility has not taken a position on Oak Creek?s proposal to fold transmission upgrade costs into rates, said Paul Klein, Edison spokesperson, after the meeting. Noting that the Tehachapi region lays claim to a potential 4,500 MW peak capacity, the lion?s share of the state?s wind resources, the CPUC has ordered Edison to file a plan for the first phase of upgrades to tap the region’s green power in December. Though it is working as fast as it can, Mackness said, the utility will file an incomplete plan on December 9. Locations of transmission towers are among details that must be worked out, according to the attorney. Workshop leader Rich Ferguson said it appears that Edison will file enough components of the plan for work to get started. Edison maintains it will not release a short list of winning bidders, or terms and conditions of its interim renewables solicitation, before the CPUC approves or denies the contracts later this year. Unlike Pacific Gas & Electric and San Diego Gas & Electric, Edison did not participate in the renewables portfolio standard solicitation and has made its renewables procurement privately. PG&E and SDG&E say they will make public a short list of bidders this month. The standard requires that one-fifth of the investor-owned utilities’ power portfolios be green by 2017. –Lisa Weinzimer

Share this story

Not a member yet?

Subscribe Now