SDG&E-CAISO $39 Million Settlement Persists

A long-sought settlement over how to apportion grid operator charges for the Southwest Powerlink transmission line is back on the drawing board. Its fate, however, is muddied by its link to a complex U.S. Court of Appeals, District of Columbia Circuit case in which San Diego Gas & Electric prevailed last month. The impact of the case on the settlement remains unclear, according to parties. However, the settlement directed a $39 million refund to utility shareholders. It may still do so. "SDG&E shareholders have been subsidizing the rest of the market," said Greg Barnes, SDG&E attorney. Powerlink owners SDG&E, Arizona Public Service, and the Imperial Irrigation District filed a settlement with the Federal Energy Regulatory Commission in June. The owners dispute the way the California Independent System Operator charges for control of the Southwestern line. Although the utility is in the grid operator?s control area, the out-of-state utility and the irrigation district insisted that their 15 percent of the line is not under CAISO jurisdiction. The case arises from a time in the late 1990s when the grid operator was green and the details of an open market were still being molded. At the time, CAISO assumed responsibility for not only the utilities that were required to be under its control but, in this case, entities that were not under its control but that shared transmission ownership with the utility. The gray area of grid operator control led to years of wrangling. Throughout, though, CAISO charged for its grid management services to the line irrespective of its nonjurisidictional ownership. In the settlement, CAISO agreed not to treat that portion of the transmission line - - which runs from the Palo Verde substation to the Imperial Valley switchyard - - as part of its control area. A caveat in that settlement nullified the entire deal if, as it happened, the D.C. court sided with SDG&E. On July 12, the court agreed with SDG&E and threw out FERC's tariff order on Powerlink. It deemed that FERC's altering regulations to fit a tariff for the line was "arbitrary and capricious." It remanded the case for further proceedings "consistent with the ISO tariff." In spite of that, both sides agree that the settlement will continue to be implemented. Payments from CAISO to SDG&E are supposed to begin at the end of this year, while the court considers a rehearing. If no rehearing is requested, federal regulators still have nearly a year to act on the ruling. If there is a rehearing, parties agree that it will be months before the court acts. CAISO acknowledges the possibility that the court action could be negated. But in any case, ?no huge checks? are going to be written, according to CAISO spokesperson Gregg Fishman. If money, or a reversal of charge credit, goes to SDG&E, then the utility is responsible for paying Imperial and Arizona Public Service, according to Fishman.

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SDG&E-CAISO $39 Million Settlement Persists

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