Electric Utility Week
California’s utilities and private investors are not meeting the power transmission needs of the state so the California Power Authority will step up to finance and build critical projects to ensure reliability and stable power prices, according to a proposal released by State Treasurer Phil Angelides and consumer advocates on Tuesday.
Those working closely with the state’s grid, however, argue that the state has moved ahead on a slew of projects and does not need the CPA’s help.
According to the proposal, the CPA would proceed with a given project only after a 60-day notice period to allow the state’s utilities and private developers to consider and reject the opportunity to build it. If a project has no sponsors, the agency would be allowed to finance or enter into joint ventures with private sector and public entities to build the improvements or to do the work itself. Financing for the projects would come from transmission rates from those using the lines.
Also under the proposal, the California Energy Commission would adopt a comprehensive and specific 10-year Statewide Master Transmission Plan with updates done annually to identify necessary improvements and additions.
California must move ahead on its own to fix its transmission problems because the private industry under a deregulated system has not been investing, Angelides said at a press conference. He feared that the state would be subject once again to the market manipulation, power outages and price hikes seen in 2001. ”The grid has been left as an orphan….Transmission is a neglected afterthought of deregulation,” he said.
Also at the press conference, David Freeman, who recently resigned as CPA chairman, said the plan is designed to ”energize” the private companies to start investing more in transmission. ”We hope we will not have to build any lines,” he said. The consumer groups involved included The Utility Reform Network, Consumers Union, Resources for Independent Living and Foundation for Taxpayer and Consumer Rights.
To enable the CPA to get involved, Angelides, who is one of its board members, said the agency will seek a short-term loan from the state to pay for preliminary costs to acquire permits so it can quickly react to the state’s transmission needs. He said the loan amount has not been set yet but that it would likely be a ”modest” $10 to $20 million.
Angelides said he will present the plan at a joint CPA, CEC and state Public Utilities Commission meeting on Friday. He will then work with legislative leaders to see a bill introduced in January to reflect the plan. Since its inception in 2001, the CPA has been charged with ensuring power reserves in the state and promoting new generation development but had yet to get involved with
transmission until now.
Angelides said the proposal has yet to be presented to Gov.-Elect Arnold Schwarzenegger, who is expected to officially take office this month. The governor’s energy policy looks to dismantle the CPA to encourage private investment in the state’s energy industry. His office did not return calls for comment on whether the cash-strapped state could fund an expansion of the CPA’s role.
Considering this, Jan Smutny-Jones, executive director of the Independent Energy Producers, said the CPA is merely trying to keep itself alive with its new transmission plan. ”Angelides is just trying to find something for the CPA to do,” he said.
Smutny-Jones denied the claims that private industry is unwilling to invest, saying that the real problem with new construction is the PUC‘s siting process and local opposition as exemplified in the Path 15 and Rainbow Valley cases. ”There has been millions of dollars of investment,” he said. He further noted that developers are encouraged by a good rate of return on their investments from the Federal Energy Regulatory Commission.
The state Independent System Operator had no comment on the plan but noted that the grid operator had approved 21 of the 26 projects submitted by the utilities in 2002 for a total of $700-million in investment. And since its startup in 1998, the ISO has approved 271 projects representing an investment of $2.35-billion.
Sheri Inouye, a PUC spokeswoman, said in an email that since January 2001, utilities have completed 111 transmission projects, including new lines and substations as well as upgrades. They have also received or applied for 120 other projects, it said. She defended the PUC‘s position not to approve some projects such as the Valley-Rainbow and Palo Verde-Devers projects because they were determined not to be needed at the time.
URL: http://www.platts.com
