XVI. CONCLUSION

We have exhaustively considered every allegation UCAN and CBD/Sierra Club raise in their applications for rehearing. The applications for rehearing have identified particular areas where modifications to the Decision are warranted and we will order modifications as detailed below. There is no legal error in the Decision as modified, and accordingly we deny the applications for rehearing. Any holdings in the Decision that are inconsistent with our holdings today are hereby superseded.

Therefore IT IS ORDERED that:

1. CBD/Sierra Club's March 26, 2009, June 16, 2009 and July 1, 2009 motions requesting judicial notice are granted.

2. The last sentence on page 6 continuing on page 7 of the Decision beginning with "In contrast, the higher ranked alternatives..." is modified to state:

In contrast, the higher ranked alternatives are not estimated to facilitate as much renewable development.

3. Footnote 91 on page 39 of the Decision is modified to state: "SDG&E Phase 2 Opening Brief, pp. 178-79."

4. The second sentence of the second full paragraph on page 138 of the Decision beginning with "As discussed in Section 4.3..." is modified to state:

As discussed in Section 6.10, the evidence in this case suggests that significant renewable development in and around the Imperial Valley will be facilitated by Sunrise, even if the RPS remains at 20%.

5. The third bullet point on page 157 of the Decision is deleted, and replaced with the following:

We subtract $368 million (2010$) from the assumed capital cost of the All-Source Generation Alternative in each scenario to address the 37 MW of solar PV already paid for in the California Solar Initiative program

6. The second sentence of footnote 446 on page 157 of the Decision beginning with "However, as discussed in note 108 above..." is modified to state:

However, as discussed in note 92 above, SDG&E assumes that SDG&E's firm capacity under the California Solar Initiative will be between 70 MW and 150 MW.

7. The second sentence of footnote 447 on page 157 of the Decision beginning with "Assuming SDG&E's estimated..." is deleted.

8. The discussion in section "12.1.2 Discussion" on page 170 of the Decision is deleted, and replaced with the following:

    We adopt the construction-related CO2 emission estimates in the EIR/EIS. We also agree with SDG&E that the construction-related CO2 emission estimates in the Draft EIR/EIS are conservative given the lack of a reference case in which additional transmission is built to meet the RPS targets. However, as noted by SDG&E, there is insufficient information in the record to support a modification of these estimates.

    We agree with Conservation Groups that construction-related GHG emissions should be mitigated to the maximum extent possible, and we have addressed that in the EIR/EIS mitigation measures.

    While we agree with DRA and UCAN that GridView modeling has a number of faults, we do find it provides useful high level information. In the Compliance Exhibit, CAISO did not update its 2015 GridView modeling, but it did correct the emission rate errors from Phase 1. Its final quantification of GHG emissions matches that of the Final EIR/EIS and is within 5 tons of SDG&E's own correction.467 However, although we anticipate that such reductions will eventually result from Sunrise, as the Final EIR/EIS notes, this benefit must be considered uncertain. (Final EIR/EIS D.11-55.)

    CAISO modeling has shown that Sunrise could potentially carry significant fossil fueled power because of its projected availability and cost, and a portion of this power may be coal fired. However, as noted above, CAISO modeling also indicates that whether Sunrise carries renewable energy from the Imperial Valley or energy from fossil-fired generators, Sunrise in combination with renewable penetration of 26.5% results in reductions in operational CO2 emissions relative to the base case in 2015. The range of GHG savings relative to the base case runs from 8,950 tons CO2 per year if Imperial Valley renewables are developed to 23,325 tons of CO2 emissions per year if Imperial Valley renewables are replaced instead with renewables developed elsewhere.468 Again, although we do not consider these figures dispositive, we note they strongly contradict the assumption that there will be any GHG benefit to requiring Sunrise to carry renewables. We, therefore, do not think it reasonable to impose the "Minnesota approach" offered by Conservation Groups as a solution, at least not on the basis of the CAISO analysis, given the speculative nature of the problem this solution purports to solve. As our discussion of the CAISO's modeling has shown, the determinant of whether operational GHG emissions reductions will be realized is not how Sunrise is used but whether or not the 33% RPS is met.

    We note that, in accord with the Final EIR/EIS, we must consider the GHG impact of Sunrise to be a significant adverse impact of the project. This finding is based on the direct GHG emission impacts of the project which could be evaluated - specifically the GHG emissions associated with construction and non-transmission O&M activities of the Sunrise line. Thus, in approving Sunrise in accordance with the CEQA requirements, we must override the impact of these additional GHG emissions and find that any environmentally superior alternatives are infeasible. We do both of these in today's decision.

    Yet, notwithstanding this holding, we also find that, although not fully quantifiable, it is likely that the Sunrise line will facilitate longer-term GHG emission reductions, in accord with CAISO's projections. Although these benefits are too uncertain to be quantified fully in the EIR we are convinced, based on CAISO modeling, that the Sunrise project will assist California to meet and exceed its RPS and GHG reduction goals.

    We remain fully committed these goals. While we decline to mandate specific requirements about what types of energy Sunrise should carry, we believe it is appropriate to adopt measures aimed at ensuring that the investment in Sunrise supports achievement of the RPS and the AB32 GHG reduction targets. The record before us clearly demonstrates that one of the main goals of Sunrise is to access renewable resources - much of which are base load geothermal resources - that otherwise would not be available without transmission upgrades. We want to be certain that construction of Sunrise will facilitate the development of renewable resources in the Imperial Valley.

    Section 17 outlines our approach, which relies upon three elements. First, we expect SDG&E to follow through on specific commitments made by its CEO Debbie Reed at the November 7, 2008 Oral Argument.469 We will also implement increased scrutiny of the renewable procurement process and, if needed, adopt specific requirements to ensure that all of California's IOUs contribute to timely development of Imperial Valley renewables. Finally, we issue a directive to the assigned commissioner in R.08-08-009, the proceeding addressing implementation of the RPS program, to propose programmatic reforms that will support this objective.

9. The last sentence is the first paragraph on page 175 on the Decision, beginning with "We also agree..." is deleted and replaced with:

While we adopt the conclusions in the Final EIR/EIS regarding the GHG impacts of the alternatives, we note that these conclusions only provide a partial view of the impact of these projects. In addition to the inherent difficulties of comparing the emission impacts of transmission versus generation alternatives, we note the there is no WECC-wide GHG emissions analyses for the alternatives.

10. The first paragraph in section "15.4.3. Discussion" on page 232 of the Decision is deleted and replaced with:

The All-Source Generation Alternative largely meets the first Basic Project Objective, to maintain reliability. While the EIR/EIS indicates that this alternative also meets the second Basic Project Objective, to reduce energy costs, further analysis has shown that this alternative will not reduce energy costs to as great an extent as Sunrise assuming compliance with a 33% RPS mandate. (See Table 15.) In addition, although this alternative promotes renewable energy to some extent, it does not facilitate as large an amount of renewables as Sunrise does, and it does not facilitate delivery of power from new renewable sources in the Imperial Valley. Therefore, the All-Source Generation Alternative does not fully meet the third Basic Project Objective.

11. The following sentence is added to the end of the first full paragraph on page 234 of the Decision:

Moreover, as stated earlier, we note that, due to the uncertainties of the GHG analysis, these conclusions provide only a partial view of the GHG impacts of this alternative.

12. The first paragraph in section "15.5.3. Discussion" on page 240 of the Decision is deleted and replaced with:

The In-Area Renewable Alternative, like the All-Source Generation Alternative, largely meets the first Basic Project Objective - reliability. While the EIR/EIS indicates that this alternative also meets the second Basic Project Objective, to reduce energy costs, further analysis has shown that this alternative will not reduce energy costs to as great an extent as Sunrise. With respect to the third Basic Project Objective, although this alternative promotes renewable power development in the in basin San Diego area, it does not facilitate delivery of power from new Imperial Valley renewables and it does not facilitate as large an amount of renewables as Sunrise does. Therefore, this alternative does not fully meet the third Basic Project Objective.

13. The last sentence in the last full paragraph of page 240 of the Decision beginning with "Because..." is deleted.

14. The first paragraph in section "15.10.3. Discussion" on page 253 of the Decision is deleted and replaced with:

Our conclusions with respect to the All-Source Generation and In-Area Renewables apply here. The fossil fired and renewable in-area generation identified in these EIR/EIS alternatives is neither unrealistic nor unduly speculative and sufficient levels of both can be brought online in time to meet SDG&E's reliability needs, which we find to be less urgent than SDG&E asserts. Since only about 1,000 MW of in basin generation or transmission import capacity is necessary to replace the Proposed Project, and since a combination of the two top ranked alternatives can provide that amount, the No Project Alternative has adequate resources. Therefore, it largely meets the first Basic Project Objective. It does not fully meet the third Basic Project Objective because it does not facilitate delivery of power from new Imperial Valley renewables and does not facilitate as large an amount of renewables as Sunrise does. Given the CPCN record, however, the No Project Alternative may not reduce the cost of energy in the region, which is the second Basic Project Objective. Unlike the parties, we do not factor development of the LEAPS Transmission-only Alternative into our assessment of likely development under the No Project alternative because as discussed in Section 17.6, we find that the CPCN record renders the LEAPS Transmission-only Alternative less attractive economically than the EIR/EIS suggests.

15. The second sentence of the second paragraph on page 255 of the Decision, beginning with "The three top ranked alternatives..." is deleted and replaced with the following:

The three top ranked alternatives would not facilitate the amount of renewable development that the Final Environmentally Superior Southern Route will facilitate.

16. The first full paragraph on page 256 of the Decision, beginning with "The All-Source Generation Alternative..." is deleted.

17. The following sentences are added to the discussion on page 270 of the Decision, at the end of the last full paragraph:

The significant unavoidable impacts of the Environmentally Superior Southern Route are listed in Appendix G attached to this Decision. The impacts include impacts on Biological Resources, Visual Resources, Land Use, Wilderness and Recreation, Agriculture, Cultural and Paleontological Resources, Noise, Air Quality, Water Resources, and Fire and Fuels Management. We are aware of each and every one of the impacts listed in Appendix G.

18. The word "will" on page 270 of the Decision, on the third line from the bottom, is deleted and replaced with the word "could."

19. Finding of Fact 28 on page 280 of the Decision is deleted and replaced with:

The Final Environmentally Superior Southern Route is the highest ranked Alternative that will facilitate Commission policy to achieve GHG reductions through renewable procurement at 33% RPS levels in the shortest time possible with the greatest economic benefits.

20. Finding of Fact 13(c) on pages 284 and 285 of the Decision is deleted and replaced with:

subtracts $368 million (2010$) from the assumed capital cost of the All-Source Generation Alternative in each scenario to address the 37 MW of solar PV already paid for in the California Solar Initiative Program;

21. References to Section 17.6 throughout the Decision in footnote 583 on page 208, the first full sentence on page 254, and in footnote 652 on page 256 are modified to refer to Section 15.6.

22. References to Section 17.11 throughout the Decision in footnote 4 on page 3, the third sentence on page 261, and the first sentence of the first paragraph on page 270 are modified to refer to Section 15.11.

23. Rehearing of Decision 08-12-058, as modified herein, is denied.

24. Any holdings in the Decision that are inconsistent with our holdings today are hereby superseded.

This order is effective today.

Dated July 9, 2009, at San Francisco, California

Comr. Grueneich will file a dissent.

/s/ DIAN M. GRUENEICH

Dissent of Commissioner Dian M. Grueneich

on Order Denying Sunrise Rehearing Applications

The "Order Modifying Decision 08-12-058 and Denying Rehearing of Decision, as Modified" (Order Denying Rehearing) that this Commission approves today perpetuates the basic internal inconsistency in the Commission's decision 08-12-058 (Sunrise Decision) approving the Sunrise Powerlink transmission line (Sunrise). As explained in my dissent to the Sunrise Decision, my Alternate Decision for granting a certificate of public convenience and necessity (CPCN) for Sunrise avoided these inconsistencies and other legal errors in the Sunrise Decision.

467 CAISO's Compliance Exhibit finds Sunrise would reduce CO2 emissions in 2015 by 8,949 tons.

468 CAISO Exhibit I-16.

469 SDG&E reiterated these commitments in comments filed November 20, 2008 and December 8, 2008.

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