4. Public utility status and requirement to obtain CPCN for LEAPS
Nevada Hydro maintains that Commission generally certificates new market entrants as public utilities as a result of issuing the CPCN, as has been the case for several gas storage facilities, including Lodi Gas Storage and, more recently, Gill Ranch Storage.4 If the CPCN is granted, Nevada Hydro states that it will both own electric transmission facilities and will dedicate these facilities to public use; therefore, it will meet the statutory definition of an electrical corporation (§ 218) and will satisfy the dedication to public use test (§ 216). Nevada Hydro also argues that public policy support this outcome, explaining that FERC has moved toward increased open access and greater competition in transmission.
SCE states that the Commission should treat Nevada Hydro in the same manner as it would any private entity seeking to enter the California transmission market. SCE maintains that, under the assumption that Nevada Hydro will become a public utility if the Commission issues a CPCN, all aspects of the Pub. Util. Code must apply. SDG&E contends that a plan to build is not sufficient; instead, Nevada Hydro cannot be certificated as a public utility until it actually owns or operates electric plant.
Because of the related nature of LEAPS and the proposed Talega-Escondido/Valley-Serrano transmission line, CBD recommends that the Commission defer consideration of the proposed transmission line until the pumped storage project receives approval from FERC and that the Commission should consider both projects together in determining whether a CPCN should be issued. FRONTLINES contends that the Commission effectively rendered this issue moot when it accepted the application for filing. Pecora agrees that Nevada Hydro will become a public utility if the Commission issues a CPCN, but argues that simply submitting an application does not convey public utility status on Nevada Hydro. SAMTF/FOF&P appear to agree that Nevada Hydro will become a public utility if a CPCN is issued, but raise substantive questions as to whether Nevada Hydro has the financial backing to construct and operate the transmission line, including ensuring that it maintains adequate amounts of liability insurance.
As to whether it must seek a CPCN for LEAPS at this Commission, Nevada Hydro contends that because FERC has jurisdiction over hydroelectric power projects, this Commission's jurisdiction is preempted and any requirements under §§ 1001 et seq. must necessarily be superseded. Nevada Hydro explains that while a CPCN was issued for the Helms Pumped Storage Project, it concludes that PG&E voluntarily applied for a CPCN here, but that such action was not required. FRONTLINES argues that the issue of whether or not a CPCN is required for LEAPS is irrelevant to the matter before us; i.e., whether the proposed transmission line should be certificated. FRONTLINES explains that transmission line projects such as TE/VS and pumped storage projects with associated tie-lines, such as Helms and LEAPS are distinguishable. FRONTLINES argues that LEAPS is an independent project that should be considered by the Commission if and when a CPCN for LEAPS is tendered. The proposed line is a stand-alone project and Nevada Hydro represents that it will transmit non-LEAPS power to the public. SAMTF/FOF&P agree that this issue is not ripe, but instead should be determined generically in Order Instituting Rulemaking (R.) 10-12-007, the Commission's rulemaking on electricity storage technologies and approaches. In comments, both FRONTLINES and SAMTF/FOF&P argue that recent FERC action has rendered the LEAPS application moot. These parties urge the Commission to abandon its intent to include LEAPS in the environmental assessment of the TE/VS transmission line. CBD, EVMWD, and Pecora point out that development contracts between Nevada Hydro and EVMWD give Nevada Hydro the right to own all generation produced by LEAPS.
Discussion
Based on Commission precedent, we conclude that if the CPCN is granted by the Commission, Nevada Hydro will become a public utility, pursuant to §§ 216 and 218. It is reasonable to take this approach, which mirrors the natural gas industry, as we recognized in D.00-05-048, in which the Commission issued a CPCN for Lodi Gas Storage (Lodi Gas decision): "The underlying rationale is that upon receipt of a CPCN, an applicant becomes a gas corporation."5 The Lodi Gas decision recognized the importance of the Legislature's guidance regarding independent gas storage providers and D.93-02-013.6 While there is no corresponding Commission decision that promotes competition in the transmission arena, we concur that it would create an uneven playing field were the Commission to require that entities must be certificated as public utilities under §§ 216 and 218 prior to applying for a CPCN. Therefore, we find that if a CPCN is issued for the Talega-Escondido/Valley-Serrano transmission line, Nevada Hydro will become a public utility within the meaning of the Pub. Util. Code.
Section 218(a) defines an "electrical corporation" as including every "corporation or person owning, controlling, operating, or managing any electric plant for compensation within this state, except where electricity is generated or or distributed by the producer through private property solely for its own use or the use of its tenants and not for sale or transmission to others." Here, Nevada Hydro is proposing to construct a transmission line that would be used, for example, to transmit power from the Talega-Escondido line to the Valley-Serrano line and vice versa. In addition, §216(a) states that a "public utility" includes "every common carrier, toll bridge corporation, pipeline corporation, gas corporation, electrical corporation, telephone corporation, telegraph corporation, water corporation, sewer system corporation, and heat corporation, where the service is performed for, or the commodity is delivered to, the public or any portion thereof." If a CPCN is issued, Nevada Hydro acknowledges that it will become an electrical corporation and that it will dedicate its facilities to public use, consistent with the Pub. Util. Code.
Pursuant to §§ 1001 et seq. and General Order 131-D, when the Commission issues a CPCN, it must, among other factors, consider the environmental effects of the project, community values, the cost-effectiveness of the proposed project, and a project implementation plan. As stated in the Scoping Memo Ruling for Phase 1, substantive issues related to the financial viability of Nevada Hydro, the need for the proposed project and the environmental review of the project are questions we will take up in Phase 2 of this proceeding.
Nevada Hydro has requested certification of the proposed project as a stand-alone project. In Phase 2 of this proceeding, the proposed transmission line will be evaluated on a stand-alone basis with regard to the need for the project and the economics of constructing such a project.7
We do not agree that Nevada Hydro must obtain a CPCN for LEAPS prior to constructing the transmission line, as CBD advocates. As we understand it, the future of the LEAPS project at FERC is in question at this time. On July 12, FERC issued an order dismissing the LEAPS application. Parties have 30 days from the date of issuance of that order to appeal this action.8 While we agree that the Federal Power Act reserves jurisdiction over hydroelectric projects to FERC, we also find that states are not precluded from requesting that the applicant voluntarily seek a concurrent CPCN after the project is certificated by FERC. However, based on the lack of action at FERC, we need not address this issue now. We will determine whether or not Nevada Hydro must seek a CPCN for LEAPS, if and when that project is certificated by FERC, assuming that Nevada Hydro owns and sells generation from the LEAPS project.
We do not agree with parties who urge us to drop consideration of LEAPS in our CEQA assessment of the TE/VS transmission line. In reply comments to the proposed decision, Nevada Hydro states that it intends to pursue LEAPS as a project. Consistent with the requirements of CEQA, LEAPS remains a reasonably foreseeable related action of the TE/VS project and the environmental impacts of the whole of the project must be considered.
4 D.00-05-048, 6 CPUC 3d at 232; D.09-10-035 at 3.
5 D.00-05-048 6 CPUC 3d at 234.
6 Id. at 233.
7 As stated in the Scoping Memo Ruling for Phase 1, the CEQA process will include the whole of the action, including LEAPS.
8 http://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=12704739
