1. Background

In this application, The Nevada Hydro Company (Nevada Hydro) requests a Certificate of Public Convenience and Necessity (CPCN) for the Talega-Escondido/Valley-Serrano (TE/VS) 500 kilovolt (kV) Interconnect Project.

Nevada Hydro previously filed Application (A.) 07-10-005 and A.09-02-012 seeking the same authorization. These applications were dismissed without prejudice by Decision (D.) 09-04-006, because Nevada Hydro failed to prepare a complete Proponent's Environmental Assessment (PEA), as required by the California Environmental Quality Act (CEQA).

On July 6, 2010, the instant revised application was accepted for filing. On August 5, 2010, Commission staff determined that the PEA was complete for purposes of CEQA. At the request of Commission Staff, Nevada Hydro amended its PEA on February 25, 2011. The Notice of Preparation was filed on March 14, 2011 at the Governor's Office of Planning and Research. By this action, Commission staff began an independent evaluation of the proposed project, including public scoping meetings to develop alternatives to the proposed project, and the potential environmental impacts of the proposed project and alternatives, as required by CEQA.

Timely protests were filed by the Division of Ratepayer Advocates (DRA), Southern California Edison Company (SCE), San Diego Gas & Electric Company (SDG&E), John Pecora (Pecora), Forest Residents Opposing New Transmission Lines (FRONTLINES), Fresian Focus, LLC, Linda Lou and Martin Ridenour, the Elsinore Valley Municipal Water District (EVMWD), and jointly by the Center for Biological Diversity, Friends of the Forest (Trabuco District) and the Santa Rosa Plateau, and Santa Ana Mountains Task Force of the Sierra Club. We refer to these intervenors as Joint Intervenors. Nevada Hydro filed its reply on August 16, 2010.

We issued D.11-07-036 on July 28, 2011 to address several threshold issues in Phase 1 of this proceeding. In D.11-07-036, we determined that, consistent with precedent, Nevada Hydro would become a public utility under Pub. Util. Code §§ 216 and 218, if a CPCN were to be issued in Phase 2 of this proceeding. In addition, because it was not certain that a CPCN would be issued for this project and because we must harmonize the various statutes that are incorporated in the Pub. Util. Code, we ordered Nevada Hydro to guarantee payment for those intervenors who meet the requirements of Pub. Util. Code §§ 1801 et seq. and for consultants hired by DRA, regardless of the outcome of this application. Therefore, we directed Nevada Hydro to post a surety bond or performance bond in the amount of $550,000 to cover the anticipated costs of eligible intervenors who make a substantial contribution to this proceeding, consistent with the requirements of the Pub. Util. Code. We also ordered Nevada Hydro to enter into a reimbursable contract arrangement that would cover the costs of DRA's expert consultants, approximately $450,000, assuming Phase 2 went forward. We concluded that these are reasonable costs of doing business for an entity proposing to be certified as a public utility and proposing to build a project originally estimated to cost $353 million (in 2007 dollars), and now anticipated to cost $684 million.

Pursuant to Rule 16.6, on August 22, 2011, Nevada Hydro requested an extension of time from the Executive Director to comply with Ordering Paragraphs 2 and 3 of D.11-07-036. On August 25, 2011, the Executive Director granted a 60-day extension and required Nevada Hydro to provide the appropriate bond by October 28, 2011. On October 28, 2011, Nevada Hydro filed a motion for acceptance of a bond and cashiers check made payable to the California Public Utilities Commission. On November 9, 2011, as directed by the assigned Administrative Law Judge (ALJ), Nevada Hydro filed a petition for modification of D.11-07-036 to request that a letter of credit with cash backing be accepted in lieu of the bond. FRONTLINES and Joint Intervenors filed timely responses to the petition.

On November 10, 2011, the assigned ALJ convened a prehearing conference in Phase 2 of this proceeding. On December 1, 2011, the assigned ALJ issued a ruling that required the parties to file and serve comments on whether or not the Commission should dismiss A.10-07-001 and, if it is dismissed, whether or not the application should be dismissed with prejudice.

Nevada Hydro, DRA, SCE, SDG&E, EVMWD, Joint Intervenors, Pecora, and FRONTLINES filed and served timely comments on the ruling. No reply comments were accepted. On January 3, 2012, Nevada Hydro filed a motion requesting leave to file reply comments and January 4, 2012, SCE filed a motion to strike portions of Nevada Hydro's comments.