Discussion

Commission staff has obtained and evaluated data from the utilities and the ISO regarding transmission constraints and has reviewed the filings in this proceeding. Staff's report, "Relieving Transmission Constraints: An Overview In Response to AB 970," is presented in Attachment 1. Table 1 summarizes the system constraints and Table 2 presents staff's recommendations for transmission that can be implemented in 2001, with particular emphasis on projects to relieve system congestion by this summer.

As indicated in Table 1, staff concurs with the projects proposed by the utilities with one exception. PG&E is planning to add a new bank of capacitors (which increase voltage and power flow under certain circumstances) to Martin Substation (Project #17), through which San Francisco's power flows. Staff further recommends that PG&E upgrade existing capacitors, which will increase the project's additional capacity by 50%, increasing still further PG&E's ability to raise both voltages and power deliveries.

Staff also recommends a line capacity monitoring system for the transmission link connecting the southern part of PG&E's territory to the rest of PG&E's transmission system. (Project #26.) This project was not mentioned in the ISO or PG&E filings, but is currently being tested by PG&E. Since the project gives the transmission operator real-time line capacity information and will reduce some of the economic constraints identified in the report, staff believes it should move forward for Summer, 2001. In addition, staff recommends two projects that would address constraints on the distribution system as new growth materializes in south San Jose and northeast of Fresno. (Projects #6 and #15.) As indicated in Table 2, these projects are recommended by the utilities, but are not on the ISO's list of approved projects.

Based on our review of the filings in this proceeding and staff's report, we find that the thirty-one transmission projects listed in Table 2 are high priority candidates for relieving transmission constraints on the electric system during 2001. We direct the utilities to proceed with these projects expeditiously. In particular, the twenty-seven projects designed to address summer congestion (see Table 2) should be completed no later than August 1, 2001. None of these projects require further Commission action with respect to environmental review or siting, based on the requirements (and authorized exemptions) to General Order 131-D. The utilities should continue submitting monthly status reports on these transmission projects and interconnections with new generation facilities until further notice.

The ISO recommends that the Commission also order the implementation of several Remedial Action Schemes (RASs), which will allow increased power flows on transmission lines for this summer. These RASs usually involve dropping load automatically, thus relieving overloads when a contingency occurs on the system, and therefore allows increased power flows in the absence of such contingencies. Staff's report did not address RASs, since it focused on the types of physical upgrades described in AB 970. Nothing in today's order is intended to preclude the ISO and utilities from identifying and implementing RASs, and potentially other remedial actions, to improve transmission access and the system's ability to meet electricity demands for summer, 2001. We direct the utilities to report progress on such remedial schemes in their monthly updates to the Commission.

In its report, staff identifies several longer-term transmission planning issues for Commission consideration, including the cost-effectiveness of options for improving transmission links between northern and southern California, strategies for addressing "reliability must run" constraints¹, and projects to address stability or overload problems expected in the 2002-2005 timeframe. We intend to explore these and other longer-term transmission planning issues during Phase 2.

Pub. Util. Code § 399.15 specifies that the Commission shall "include the reasonable costs involved. . .in the distribution revenue requirements of utilities regulated by the commission, as appropriate." Consistent with this language, we direct the electric utilities to increase their distribution revenue requirements, without modifying current rates, to reflect the costs of the upgrades authorized today by filing Advice Letters for this purpose. The Advice Letters should be filed within 30 days of the effective date of today's decision, and copies should be served on all appearances and the state service list in this proceeding.