MEG/tcg 5/22/2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation into Implementation of Assembly Bill 970 Regarding the Identification of Electric Transmission and Distribution Constraints, Actions to Resolve Those Constraints, and Related Matters Affecting the Reliability of Electric Supply.	Investigation 00-11-001 (Filed November 2, 2001)
Conditional Application of PACIFIC GAS AND ELECTRIC COMPANY (U 39 E) for a Certificate of Public Convenience and Necessity Authorizing the Construction of the Los Banos-Gates 500 kV Transmission Project.	Application 01-04-012 (Filed April 13, 2001)

ADMINISTRATIVE LAW JUDGE'S RULING
REGARDING FURTHER HEARINGS ON PATH 15 THIS SUMMER
AND NOTICE OF PREHEARING CONFERENCE AND
FALL HEARINGS ON OTHER TRANSMISSION PLANNING ISSUES

On May 15, 2002, I held a further prehearing conference (PHC) to determine the scope and schedule for additional evidentiary hearings on transmission constraints. In referring to the various phases in this proceeding, some of which are being conducted concurrently, I will be using the following "phaseology":

· Phase 1: Transmission Projects For Summer 2001 (completed per D.01-03-077.)

· Phase 2: Southwest Power Link Reliability Need (completed per D.01-10-070.)

· Phase 3: Miguel-Mission/Imperial Valley Economic Need (submitted-issuance of proposed decision pending.)

· Phase 4: Path 15 Economic Need (ongoing)

· Phase 5: Development of Generic Methodology for Evaluation of Economic Need of Transmission Projects (ongoing)

We discussed the status of several transmission projects and the development of a generic methodology for evaluating economic need at the start of the PHC, in order to identify what issues would be appropriate to examine during evidentiary hearings this summer and fall. I provide a brief update on the status of these projects, below.¹

Path 45

San Diego Gas & Electric Company (SDG&E) reports that the scope of further upgrades to Path 45 is still not defined in enough detail to develop cost estimates or discuss the environmental review requirements with Energy Division. Studies are underway that should provide enough information to establish the scope of this project. The goal is to complete the studies by August 2002. SDG&E notes that this project relies, in part, on whether the Miguel-Mission upgrade is ultimately approved by the Commission. We will revisit the status of this project at the fall PHC, scheduled below.

San Francisco-Peninsula Area

The stakeholder group continues to meet to discuss upgrades to the Jefferson-Martin 230 kV line. Pacific Gas and Electric Company (PG&E) plans to file a certificate of public and convenience (CPCN) application at the Commission in September of 2002. The City and County of San Francisco expressed interest in seeing that the completion date of the project be advanced to a point prior to the summer of 2005. I directed PG&E to communicate directly with Energy Division staff (contact: Ken Lewis), beginning immediately, on the contents of the PEA to ensure that the document is complete by the time it is filed. As discussed at the PHC, PG&E should also contact communities in the area of the proposed line and communicate with them about the project, without delay.

PG&E should file its CPCN request in September by separate application, with notice of its availability on all appearances and the state service list in this proceeding. A complete hard copy of the CPCN application should be served on Energy Division and any party requesting one in response to the notice.

Greater Bay Area

This project continues to be in the early stages of planning, and is not a candidate for summer or fall hearings. We will revisit the status of this project at the fall PHC.

Techachapi

Southern California Edison Company (SCE) has conducted an initial phase of the conceptual study that has been paid for by wind developers, and is in the process of developing a second phase study that will narrow the scope down to specific projects that are more likely to be built. There have been no final arrangements made on which developers will participate in this second phase study. Any further evaluation of the alternatives that were identified in the initial phase study will depend upon the specific location of the wind projects developed in the area. SCE anticipates that it will know which wind developers plan to participate in (and fund) the second phase study by the middle of June. SCE will provide that information to me, with service to all appearances and the state service list, in the form of a status letter. The status letter should describe the scope of the second study and the participants. SCE is seeking agreement from the wind developers to release the initial conceptual report to the public. In the meantime, a copy has already been forwarded to Energy Division. We will revisit the status of this project at the fall PHC.

Southwest Power Link

SCE indicates an interest in evaluating transmission upgrades from Southern California to Arizona based on economic need. This would be a longer-term project, perhaps considered sometime during 2003, once the generic methodology for evaluating such projects has been evaluated and approved (see below).

Path 26

The California Independent System Operator (ISO) submitted a status report on the assessment of options to upgrade Path 26 on December 13, 2001, and provided an update in its prehearing conference statement. It is evaluating both short-term and long-term options. The short-term options would add between 250-400 MW of transfer capability and include tripping generation and bypassing some of the series capacitors on the Midway-Vincent 500 kV #3 line. The ISO is also evaluating longer-term options to increase the capability of Path 26 by approximately 1000 MW.

A study of the reliability aspects of the short-term options is underway and will be submitted in the form of a report to the Western Electric Coordinating Council (WECC). An economic assessment of both the short-term and long-term options for upgrading Path 26 is being considered as a test case for the generic methodology to assess the economic benefits of transmission upgrades (see below). Reliability-related studies for the long-term rating increase will be completed after the economic need is determined.

The ISO should file copies of all reports on these options, including the reliability reports to the WECC, in this proceeding with a Notice of Availability to the appearances and state service list. A hard copy of the reports should be sent to me and Xuguang Leng of the Energy Division.

Further consideration of this project will be addressed during evidentiary hearings on the generic methodology, as discussed below.

Path 15 (Phase 4)

Per my ruling dated December 28, 2001, the Commission's consideration of the economic need for this project began with an evaluation of the economic benefits associated with the stand-alone project, i.e., without consideration of how project participation was structured. Evidentiary hearings have been held, and briefs filed, on this aspect of economic need. An expedited review of final project costs and the allocation of costs and benefits is to commence once the Commission receives more details on the specific implementation arrangements among project participants.

On April 30, 2002, the Western Area Power Administration (WAPA) filed a letter agreement at the Federal Energy Regulatory Commission, describing who will own the land, the lines and the transmission rights on the Path 15 upgrade (Los Banos-Gates line) and seeking pre-approval of a proposed ratemaking treatment for the project participants. Those project participants are identified as WAPA, PG&E, and Trans-Elect, Inc. (Trans-Elect).

As discussed below, further evidentiary hearings on this project will be held during the summer.

During the PHC, ORA raised the issue of taking administrative notice of additional documents in Phase 4, related to the issues addressed during the February/March evidentiary hearings. The ISO and ORA will file and serve a letter describing the documents that the Commission may wish to consider, and interested parties will have three workdays to respond. A hard copy of all the documents described in the letter should be sent via overnight mail to me and to Xuguang Leng of Energy Division.²

Development of Generic Methodology (Phase 5)

The consultant developing the generic methodology to assess the economic benefits of transmission upgrades, London Economics, will have a completed product by the end of July or early August, 2002. This product will include an application of the methodology to the Path 26 short-term and longer term upgrade options discussed above.

Evidentiary hearings to evaluate this methodology, with Path 26 as the test case application, are scheduled for this fall.

¹ See my July 19, 2001 ruling in I.00-11-001 for further background on each of these projects.

² The hard copies should be sent to me at 21496 National Street, Volcano, California, 95689.