News Roundup: CPUC to Oppose Payday for Transmission Owners

By Published On: August 3, 2020

Updated Aug. 6

State energy regulators are expected to soon ratify their staff’s formal opposition to the Federal Energy Regulatory Commission’s March plan that would give transmission owners handsome payoffs for cybersecurity upgrades. The awards would come even if the businesses were already making the investments without the incentives. FERC proposes the changes to benefit those operators who go beyond standards established by the North American Electric Reliability Corporation.

The grid owners only gain the reward for improvements made to lines that carry conventionally generated electricity, not renewable.

If FERC follows through with the move, the award to transmissions owners would be borne by ratepayers. Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison customer charges for transmission would rise from $75 million to almost $150 million a year, Jonathan Knapp, CPUC staff attorney, warned the regulators in late June. As it is, CAISO’s transmission charges have risen 300% since 2006.

“No incentive is needed to induce basic good utility practice,” states the California Public Utilities Commission staff move opposing the FERC move. “Moreover, like many other utilities around the country, California’s three largest utilities have formula rates that ensure any prudent investments they make in cybersecurity will be recovered.” Thus, the utilities have sufficient financial incentives to make needed cybersecurity investments, it adds.

FERC also issued a White Paper in June detailing the proposed subsidy. It suggests raising utility rates of return on cybersecurity investments and extending the subsides to all transmission assets, CPUC staff warns.

The opposition filings to FERC’s proposed rulemaking on transmission incentives and the White paper, must be filed with federal regulators by Aug.17 and Sept. 1, respectively.

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A failed 110 MW concentrated solar plant in Nevada backed by millions of federal dollars filed for bankruptcy protection at the end of last week. The $1 billion Crescent Dunes thermal plant in Toponah, NV, almost 200 miles northwest of Las Vegas, landed a $737 loan guarantee in 2011 from the Department of Energy. It sought to use molten salt as a primary heat transfer and storage medium. The facility was plagued by technical difficulties.

DOE recently reached a settlement to recover $200 million of the loan, according to news reports.

The developers of the huge plant, built on public land managed by the Bureau of Land Management, signed a 25-year contract with NV Energy at $135 MWh in 2015. The facility includes 17,500 heliostats designed to concentrate solar thermal energy to heat molten salt flowing through a 640-foot tall solar power tower. After numerous problems and non-payment of its loan, DOE declared the developer in default in 2018.

A successful concentrated solar thermal project developed at the same time in California was the 392 MW Ivanpah project. It was backed by $1.6 billion in DOE loan guarantees in 2011.

BrightSource’s Ivanpah, in contrast to Crescent Dunes, “has paid back its DOE loan and is meeting all its contractual output requirements,” Frank Maisano with Bracewell, a consulting firm in Washington DC, said. “My friends at BrightSource that developed Ivanpah were always annoyed that they were lumped with and then watched Crescent Dunes implode.” 

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