Issues Raised by SCE's Applications

In A.04-12-007, SCE states that Segment 1 of the Antelope Transmission Project is needed to eliminate "expected thermal overloads in excess of maximum allowable limits on the existing system after the inclusion of a new wind generation project as identified in the corresponding System Impact and Facilities Studies." (SCE Opening Testimony, p. 5.)

SCE also states that it filed this conditional application pursuant to Ordering Paragraph 8 of Commission Decision (D.) 04-06-010, which required SCE to "file an application seeking a certificate authorizing construction of the first phase of Tehachapi transmission upgrades consistent with its 2002 conceptual study and the study group's recommendation within six months of the effective date of this order."¹ Ordering Paragraph 8 was based on Finding of Fact 18, which found that the "magnitude and concentration" of renewable resources identified in the California Energy Commission's (CEC's) Renewable Resources Report justified a "first phase of Tehachapi transmission upgrades" to facilitate achievement of goals required by Public Utilities Code Section 399.11.

In addition to directing SCE to file applications for the first phases of the Tehachapi upgrades, D.04-06-010 required that a collaborative study group be convened to develop a comprehensive transmission development plan for the phased expansion of transmission capabilities in the Tehachapi area. SCE, acting on behalf of the study group, filed the Tehachapi Collaborative Study Group (TCSG) Report on March 16, 2005. Opening and Reply comments on the TCSG Report were filed on April 6, 2005, and April 20, 2005, respectively.

SCE states that its requests for CPCNs for Segments 1, 2, and 3 of the Antelope Transmission Project are conditioned on the establishment of clear cost recovery mechanisms in advance of construction. SCE has filed a petition with the Federal Energy Regulatory Commission (FERC) for a declaratory order finding that the costs of Segments 1, 2, and 3 of the Antelope Transmission Project are eligible to be recovered in transmission rates.² Alternatively, if the FERC determines that the cost of Segments 1, 2, and 3 of the Antelope Transmission Project are ineligible for recovery in transmission rates, SCE requests that the Commission find that the prudently incurred cost of Segments 1, 2, and 3 the Antelope Transmission Project are eligible for recovery in retail rates under Section 399.25(b)(4).

With respect to Segment 1 of Antelope Transmission Line Project, the Commission has previously determined in D.04-06-010 that the "magnitude and concentration" of renewable resources identified in the CEC's Renewable Resources Report justified a finding that "[T]he first phase of Tehachapi upgrades should be considered necessary to facilitate achievement of RPS goals established in Public Utilities Code Section 399.14." (D.04-06-010, mimeo., p. 44.) However, in D.04-06-010, the Commission stated that "the need determinations in individual CPCN proceedings will relate to the particular projects and upgrades associated with that specific proceeding. In this decision, we are making an initial need determination overall with respect to the necessary contribution of Tehachapi wind in general to meeting RPS goals. Thus, these need determinations are separate and severable." (D.04-06-010, mimeo., p. 17.)

The Commission further stated that, "when a utility files a certificate application for Tehachapi upgrades, we will consider at that time the exact ratemaking treatment contemplated under Section 399.25 and will also address project financing, as well as any additions to the record regarding need, as necessary." (Id., p. 18.) An initial review of SCE's applications reveals that additional testimony will likely be necessary.

We direct SCE and request the other parties to address the following matters in PHC Statements in order to expedite the conduct of the PHC:

1. The status of SCE's Petition for Declaratory Order at the FERC.

2. SCE states that it has received an interconnection application, and has completed a System Impact Study and a Facilities Study for a potential alternative energy project totaling 201 MW which will require Segment 1 of the Antelope Transmission Project. SCE's testimony should provide further information regarding the project, including whether it has received an RPS contract, the project's permitting status, and an estimate of the likelihood of the identified project coming on line.

3. As SCE notes in its comments on the TCSG Report, "any development schedule for the Tehachapi conceptual plan should, at the very least, take into account the results of the RPS process." Should SCE be required to submit additional testimony on its RPS status, including its RPS Plan for 2005-2014 filed on March 7, 2005 in R.04-04-026 and a report on the current RPS procurement status, including contracts signed, advice letters filed, and identification of the location, technology, size, expected on-line dates, and permitting status of renewable resources acquired under the RPS process?

4. In discussing need-related issues, should we solicit testimony on the results of Pacific Gas and Electric Company's (PG&E) and San Diego Gas & Electric Company's (SDG&E) RPS solicitations, and the status of PG&E and SDG&E's RPS compliance efforts generally, in order to identify any projects under contract with other utilities that are dependent upon Segments 1, 2, or 3 of the Antelope Transmission Line Project.

5. Consistent with the initial findings of the TCSG Report, should the Commission consider adopting a "trigger" mechanism whereby approval or construction of each phase of the Tehachapi upgrades would be triggered.

6. Given that the TCSG Report indicates that the full development of the identified wind energy resources at Tehachapi is likely to require additional new transmission, beyond what is proposed in the Antelope projects that are the subject of these applications, to what extent should the Commission's environmental review of these projects address the potential impacts of the development of all transmission projects that may be necessary to bring Tehachapi wind power to load.

7. SCE should also be prepared to discuss project economics and cost-effectiveness, including cost comparisons between alternative routes, as well as a proposed cost recovery mechanism.

8. Should the Commission request that the California Independent System Operator (CAISO) submit testimony on Tehachapi-area projects that have submitted requests for interconnection?

9. Who is responsible for considering any indirect costs that may be associated with the interconnection of large amounts of wind generation through the Antelope Transmission Projects? Are those costs to be included in the Commission analysis?

10. Would SCE's proposed projects necessitate amendments to the CAISO's tariffs to allow approval of transmission facilities not needed for reliability or economic purposes?

11. Any other issues raised in Public Utilities Code Sections 1001 and 1002 or Commission General Order 131-D.

12. If evidentiary hearings are necessary for Segment 1, what should be the scope of the hearings and what additional evidence is necessary?

13. If evidentiary hearings are necessary for Segments 2 and 3, what should be the scope of the hearings and what additional evidence is necessary?

14. Should hearings on the non-environmental issues raised by A.04-12-007 and A.04-12-008 be consolidated?

¹ By Assigned Commissioner's Ruling dated October 21, 2004 in Investigation (I.) 00-11-001, SCE was directed to file two separate CPCN applications for the Tehachapi upgrades: one CPCN application for Segment 1 and one CPCN application for Segments 2 and 3.

² See Southern California Edison Company Petition for Declaratory Order in FERC Docket No. EL05-80, March 23, 2005.