12. Assignment of Proceeding
Commissioner Duque is the Assigned Commissioner and ALJ Cooke is the assigned ALJ in this proceeding.
1. To determine whether a reliability problem exists, WECC/NERC reliability criteria require that SDG&E be able to meet its one-in-ten year peak demand when its most critical transmission segment is out of service and the single largest in-basin generator is out of service.
2. SDG&E forecasts demand for five-year periods.
3. The ISO transmission planning exercises cover a five-year period.
4. Forecasts of both generation supply and demand are more uncertain when moving beyond five years; the longer the planning horizon utilized, the greater uncertainty exists.
5. For purposes of N-1/G-1 reliability criteria planning, existing in-basin generating units should be assumed to continue to be available during the critical planning period in the absence of specific convincing evidence to the contrary.
6. Removal of the RAMCO units from generation forecasts is inconsistent with SDG&E's treatment of other combustion turbines and industry standards.
7. No documentation was provided regarding the Navy's purported decision not to renew the leases for 67 MW of combustion turbines located on Navy property.
8. Under standard industry practice, proposed generating units that are under construction or have received regulatory permits are included in the resource mix for transmission planning purposes, unless there is compelling evidence that the future of such plants is in question.
9. Otay Mesa has received all regulatory approvals and is under construction.
10. The obligation to make "commercially reasonable" efforts to develop Otay Mesa is a separate contractual obligation from delivering power to CDWR and is not eliminated when the power delivery obligation is met.
11. Although it is a low probability event, based on the current design of the Otay Mesa plant, all three units can be forced offline as a result of a complete condenser failure without the installation of bypass stacks.
12. The current Path 44 non-simultaneous import limit is 2,500 MW.
13. Proposed plants in western Baja California, Mexico, if built and connected with SDG&E's system in the vicinity of Otay of Miguel, could help meet SDG&E's reliability needs.
14. Significant amounts of new generation capacity are under construction in eastern Baja California, Mexico.
15. CFE's load center is in western Baja California, Mexico.
16. Through-flow is the ability of the CFE 230 kV transmission system to transfer power that normally flows over SWPL directly between Imperial Valley and Miguel Substations between those same points when that SWPL line segment is out of service.
17. La Rosita-Rumorosa is the critical limiting line segment for east to west flow on the CFE transmission system.
18. CFE will soon have a strong incentive to upgrade the capacity of its east-west transmission lines in order to make room for its own east-to-west transfers.
19. Upgrades on the CFE transmission system will increase the ability of SDG&E to rely on through-flow and exports from Mexico in the future.
20. SDG&E experienced its largest one-year decline in load in 50 years during 2001.
21. There is no historical precedent to provide direction about how load will rebound from the 2001 level.
22. The evidence supports a significant rebound in demand in SDG&E's service territory from 2001 levels.
23. Electricity consumption between October 2001 and April 2002 exceeded SDG&E's October 2001 forecast by 2.1%.
24. The annual carrying charge for the Valley-Rainbow Project using SDG&E's cost estimates is $60.7 million in 2005 dollars and $56.8 million in 2001 dollars.
25. In nine of the ten economic benefit scenarios studied, the project costs over the 2005 through 2010 time frame exceed SDG&E's estimate of economic benefits.
26. Project benefits only exceed SDG&E's projected project costs if six consecutive years of one-in-35 year drought conditions occur, all new generation in California is constructed in SDG&E's service territory or northern Baja California, Mexico, and the transmission capacity on Path 15 is expanded.
27. Five of the six median hydro scenarios result in gross benefits of less than $9 million over the 2005 to 2010 time period.
28. The sixth median hydro scenario results in gross benefits of $33.2 million over the 2005 to 2010 time period.
29. The economic analysis assumes various generation scenarios but did not analyze the likelihood that the generation assumptions would come to pass.
30. In all the scenarios where average hydro year conditions are assumed, the annual benefits of the proposed project are less than the costs, with the project costs exceeding benefits by at least $51.3 million/year or more, regardless of the level of new generation assumed.
31. The vast majority of the gross benefits that SDG&E's economic study identified were attributable to generation units coming online, rather than the construction of the Valley-Rainbow Project.
32. The market power mitigation value of the proposed project has not been quantified.
1. The Commission has jurisdiction over the proposed transmission project pursuant to Pub. Util. Code §1001 et seq.
2. Because of the uncertainty of new generation and potential expansion of existing transmission after five years, were we to adopt a ten-year planning horizon we would always find a need for a transmission capacity expansion because we could never count on new resources coming online.
3. Adoption of the ISO's milestone approach to the appropriate planning horizon could result in SDG&E pursuing construction of the proposed project more than 10 years after the environmental review for the project occurred.
4. It is reasonable to adopt a five-year planning horizon for this proceeding.
5. It is reasonable to include 80 MW associated with the RAMCO units in the existing generation forecast.
6. It is reasonable to exclude 67 MW associated with the Navy units in the existing generation forecast.
7. The reasonable forecast of existing in-basin generating capacity is 2,348 MW.
8. It is reasonable to assume Otay Mesa will come online in 2005, and therefore to include 510 MW of new generation in the forecast.
9. Beginning in 2005, an outage at Otay Mesa should be considered the G-1 event for purposes of this reliability analysis.
10. The Path 44 non-simultaneous import limit rating should not be modified for purposes of assessing SDG&E's reliability need.
11. Because CFE has not begun internal transmission system improvements and we have limited information on when they might occur, it is reasonable to exclude resources from Mexico from our reliability analysis.
12. It is reasonable to adopt SDG&E's demand forecast for our reliability analysis.
13. Utilizing reasonably foreseeable but conservative supply and demand forecasts (existing in-basin generation of 2,348 MW, new in-basin generation of 510 MW in 2005, a Path 44 import limit of 2,500 MW, no resources from Mexico, and SDG&E's demand forecast), SDG&E will have a capacity deficiency in 2008 under N-1/G-1 conditions.
14. These assumptions are reasonable but conservative because they do not include any generation resources that do not already have all required permits or are not already online, even though there are more than 2,000 MW of generation units (500 MW Palomar, 500 MW AEP Resources, 925 MW repowering of Encina, 340 MW new facilities at South Bay) that may be developed or receive their regulatory permits in the near future.
15. These assumptions are reasonable but conservative because they assume that CFE will not upgrade its east-west transmission system even though the evidence demonstrates that it is in CFE's interest to do so to serve its own load.
16. These assumptions are reasonable but conservative because they assume that Otay Mesa will become the G-1 event even though the evidence indicates that modifications will likely be made to eliminate the possibility that a condenser failure will cause all 510 MW to go offline.
17. These assumptions are reasonable but conservative because they utilize SDG&E's peak demand forecast which forecasts an extremely strong rebound in demand in the next several years.
18. The Valley-Rainbow Project is not needed to meet WECC/NERC reliability criteria in the relevant five-year planning horizon and cannot be justified on the basis of reliability need.
19. An annual cost of $56.8 million (in 2001 dollars) for the proposed project is a reasonable placeholder against which to measure the forecasted benefits of the project and to calculate net project benefits.
20. The generation assumptions that we must make to find any level of economic benefits are completely contrary to those promoted by SDG&E and the ISO in our reliability analysis.
21. It is not reasonable to assume there will be six consecutive years of one-in-35 year drought conditions, and all new generation is built in SDG&E's service territory or northern Baja California, Mexico, and Path 15 is expanded.
22. The proposed Valley-Rainbow Project is not cost-effective to ratepayers.
23. SCGC's recommendation to eliminate the existing Sempra-wide natural gas rate that was adopted in D.00-04-060 is procedurally improper and lacks a nexus to the question of whether the Valley-Rainbow Project is needed.
24. Because SDG&E will continue to meet the WECC/NERC reliability criteria during the relevant planning horizon and the Valley-Rainbow project cannot be justified on the basis of providing economic benefits to ratepayers, SDG&E's request for a CPCN should be denied without prejudice.
25. Because a project is not needed at this time, the Energy Division should halt its preparation of the DEIR/DEIS for the Valley-Rainbow Project.
IT IS ORDERED that:
1. San Diego Gas & Electric Company's request for a certificate of public convenience and necessity to construct the proposed Valley-Rainbow Project is denied without prejudice.
2. Energy Division shall cease its preparation of the Draft Environmental Impact Report/Draft Environmental Impact Statement for the proposed Valley-Rainbow Project.
3. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
ATTACHMENT 1
TABLE OF ACRONYMS
A. |
Application |
AFUDC |
Allowance for Funds Used During Construction |
ALJ |
Administrative Law Judge |
CA ISO |
California Independent System Operator |
CDWR |
California Department of Water Resources |
CEC |
California Energy Commission |
CFE |
Comisión Federal de Electricidad |
Commission |
California Public Utilities Commission |
CPCN |
Certificate of Public Convenience and Necessity |
CPUC |
California Public Utilities Commission |
D. |
Decision |
DEIR/DEIS |
Draft Environmental Impact Report/Draft Environmental Impact Statement |
EGA |
Electric Generator Alliance |
G-1 |
outage of most significant in-basin generator |
ISO |
California Independent System Operator |
KV |
Kilovolt |
MW |
Megawatt |
N-1 |
outage of most critical transmission network element |
NERC |
North American Electricity Reliability Council |
ORA |
Office of Ratepayer Advocates |
PHC |
Prehearing Conference |
PTO |
Participating Transmission Owner |
R. |
Rulemaking |
RT |
Reporter's Transcript |
SCE |
Southern California Edison Company |
SCGS |
Southern California generation Coalition |
SDG&E |
San Diego Gas & Electric Company |
SONGS |
San Onofre Nuclear Generating Station |
SSRC |
Save Southwest Riverside County, City of Temecula, Pechanga Development Corporation |
SWPL |
Southwest Power Link |
WECC |
Western Electricity Coordinating Council |
WSCC |
Western Systems Coordinating Council |
(END OF ATTACHMENT 1)
