The need for more transmission is pressing. Lines to Tehachapi Pass are at full capacity, according to SCE's Charles Adamson. Yet developers want to build additional wind projects. The bottleneck occurs because generators must pay transmission costs up-front to connect a specific project to the grid. That works in the case of a gas fired plant building close to the existing grid, but renewable resources, like at Tehachapi, can be miles from the nearest grid. And the cost of building a transmission line to a remote location can easily outstrip a single developer's pocketbook -- or tolerance for risk. It is a classic chicken-or-the-egg story.
Enter SCE. The utility seeks to build three transmission lines in the shape of a "Y" at Tehachapi. The two branches of the "Y" were submitted as "network upgrades," a category of transmission investment that the Federal Energy Regulatory Commission (FERC) has routinely allowed under the rules, so it came as no surprise when the agency approved those segments. The trunk of the "Y" was a different story. SCE called this a "Renewable Trunkline Facility," a new concept recognising the need for transmission for wind to meet the state's RPS goals.
The utility made three arguments in favour of the new category of transmission. First, that in building transmission to renewables sites, large capital outlays add unacceptable financial risk. Second, that incremental transmission upgrades are not effective where renewables tend to locate. Third, that developers are not likely to join forces in applying for interconnection, which would spread the costs among a group.
In essence, SCE was asking FERC to establish a new category of transmission, one that recognised the particularities of renewables. SCE argued that because the transmission line would help achieve the state's goals for the development of renewables, the costs should be recovered from all users of the grid.
In July, FERC ruled that a "renewables trunk line" is not an officially recognised category of transmission and that the trunk of the "Y" was a generation tie-in, which must be paid for by the developer. That leaves most of the wind resource stranded more than 25 miles away from the connection. And leaves SCE back at square one.
During preliminary rulings, however, the California Public Utility Commission (CPUC) decided that if FERC did not allow SCE to recover costs from ratepayers using the "renewables trunk line" designation, the CPUC would. According to the commission, the Tehachapi area contains the largest wind resource in the state and could be counted on to meet a large part of California's RPS. Currently the RPS calls for 20% of the state's energy to come from renewables by 2017, but that date is widely expected to be revised to 2010.
While supporters found the decision disappointing, it may have come as a disguised blessing. SCE's petition had drawn opposition from numerous others, including the Northern California Power Agency, the National Grid, the Public Service Electric & Gas and others, all of whom filed comments against the proposal. Had FERC approved the new category of transmission, the matter could easily have wound up dragging through the courts. Instead, SCE has the opportunity to file an amended request in September. Adamson declined to comment directly on the utility's next step, saying only that SCE is working with all stakeholders to "Develop alternatives that can still get this built."