D0305083
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D.03-05-083

I.00-11-001, A.01-04-012 (PATH 15)

Commissioner Kennedy, concurring:

Today, after two years of delay and inaction, a majority of the PUC finally voted to fix the critical transmission constraint at Path 15. This notorious bottleneck between northern and southern California compromised electric reliability during the electricity crisis by preventing the state from dispatching the lowest cost power where it was needed, and allowing market manipulators to gouge ratepayers by taking advantage of regional shortages.

In 2000 and 2001, Californians experienced eight days of rolling blackouts, thirty-eight days of mandatory power interruptions and more than 100 days of emergency conservation when reserves dropped dangerously low. A number of those blackouts and power shortages occurred in northern California while available power sat idle in southern California because of our inability to transport power through the Path 15 corridor. The Independent System Operator estimated that congestion on the corridor cost state electricity consumers as much as $222 million between September 1999 and December 2000 alone. The cost to consumers and economic damage to California's economy from hundreds of hours of power outages is in the hundreds of millions, if not billions, of dollars.

Let's be clear: Path 15 has been recognized as a critical weakness in the backbone of California's electric transmission system by every relevant federal and state energy agency, including the Independent System Operator, California Energy Commission, Federal Energy Regulatory Commission, U.S. Secretary of Energy, and the California Public Utilities Commission:

"...constraints on Path 15 contributed most to major reliability problems in the past year and [are] likely to continue to cause problems in 2002."

"It is necessary for the Commission to pursue relieving the constraints on Path 15 now to ensure electric reliability and lowest cost dispatch"

"The expansion of Path 15 is a critical component in solving the long-term power crisis in this state"

"The record strongly supports proceeding with the Path 15 upgrade. By reducing the ability of suppliers to exercise market power, the upgrade would pay for itself within four years in the most likely scenarios. Moreover, the upgrade provides a cost-effective hedge against significant consumer harm ...."

"It is generally recognized that serious transmission congestion plagues California's energy markets, particularly along Path 15..."

"Path 15 has been determined to be one of the highest priority projects."

This Commission ordered PG&E to upgrade the Path 15 transmission line in 2001, but the financially strapped company sought to withdraw it's application more than 18 months ago - the utility has been in bankruptcy for two years. The Federal government asserted jurisdiction in 2001 to move the project forward. Federal and state environmental reviews were completed more than a year ago. PUC hearings on the matter were completed more than a year ago.

This Commission denied PG&E's application to withdraw and then sat on the proceeding for 18 months.

In June of 2002 FERC offered financial incentives in transmission rates to TransElect to ensure project financing and finally move the Path 15 upgrade forward.

This Commission opposed FERC's action saying the incentives were "premature" because the California PUC had not developed a sufficient record to determine if the project was needed.

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