Regulator breathes life into Sunrise Powerlink
He says line is 'critical' to green-power mandate
By Onell R. Soto

San Diego Gas & Electric's controversial proposal to build the Sunrise Powerlink got a boost yesterday when a top regulator said it is needed to spur development of solar, wind and geothermal power.

California Public Utilities Commission President Michael Peevey said the 1,000-megawatt line would play a “critical role” in meeting the state's renewable-energy goals.

Peevey's move gives SDG&E a viable option for building the line just 2½ weeks after it appeared that the PUC had narrowed its choices to rejecting the line or setting conditions that SDG&E considered deal-killers.

Peevey said conditions requiring how the line will be used are unnecessary because existing regulations are enough to make SDG&E use the line for “green” power.

The five commissioners could decide on the project as early as Dec. 18. They can choose from three proposed decisions: Peevey's, one by an administrative law judge killing the line and one from Commissioner Dian Grueneich setting conditions.

SDG&E proposed the 123-mile line in 2005, saying it is needed to make the electricity system more reliable, lower electric prices and bring in renewable power required by law.

In a statement, SDG&E said it is “pleased” that Peevey “agrees the line is needed to transport the renewable energy supplies to meet California's greenhouse-gas-emissions reduction and renewable-energy goals.”

On Monday, Gov. Arnold Schwarzenegger signed an executive order committing the state to assuring that its three biggest utilities get at least one-third of their electricity from renewable sources.

Peevey said his proposed Sunrise decision dovetails with that goal.

“It is well-recognized that the lack of transmission is the single biggest barrier to meeting renewable power goals and thus lowering greenhouse gas emissions,” he said in a statement, calling Sunrise “a new renewable energy superhighway.”

Peevey said the line is expected to cost the state's electricity users $1.9 billion, nearly double the estimate when it was proposed.

Opponents say the line is unnecessary, would damage the environment and could result in the production of more, not less, electricity by fossil-fueled plants that emit greenhouse gases.

Their efforts to prevent the line from going across the Anza-Borrego Desert State Park and scenic rural communities in North County have succeeded.

Now the line, if built, would roughly parallel Interstate 8, crossing parts of the Cleveland National Forest, skirting Indian reservations and passing close to Cuyamaca Rancho State Park. In places, it would run close to the Southwest Powerlink, which skirts the U.S.-Mexico border.

Critics of the line were dismayed by Peevey's proposal and said it would allow SDG&E to skip on its promises.

“SDG&E has been selling this as a renewable energy project for years,” the Sierra Club's Micah Mitrosky said. “Now that it's time to sign on the dotted line . . . they're saying to the commission, 'Just trust us,' and that's not good enough.”

Peevey's decision takes sides with SDG&E and the California Independent System Operator, which runs the state's power grid, said Michael Shames of the Utility Consumers' Action Network.

“Peevey has chosen to adopt facts in the record that were effectively rebutted,” Shames said.

During years of debate over the economic feasibility of the line, experts from many organizations – the ISO, SDG&E, UCAN and the PUC's Division of Ratepayer Advocate, or DRA, among others – cited dozens of numbers.

Using economic models, they tried to predict future electricity prices, government mandates and fuel supplies and how that would affect whether companies would put up wind turbines, build solar arrays or geothermal plants or rely on more fossil fuels.

The three proposed Sunrise decisions, each about 300 pages, reflect the complexities of analyzing those numbers.

The two decisions issued Oct. 31 said the line doesn't make economic sense under existing requirements that SDG&E use 20 percent renewable energy by 2010. Administrative Law Judge Jean Vieth and Grueneich of the PUC concluded SDG&E could get renewable electricity cheaply enough that it doesn't need the line to transport it to San Diego.

Vieth decided the commission doesn't have the authority to force SDG&E to get a larger share of renewable energy, and said the line isn't viable.

Grueneich said it might be viable – that is, result in cheaper power than if it's not built – if SDG&E is forced to get 33 percent of its electricity from renewable sources.

That's because the more such power the utility buys, the more ratepayers are charged per kilowatt-hour.

At 33 percent from renewables, the line pays for itself and increasing the amount of such power from the Imperial Valley, making it cost-effective to build renewable-energy plants there, Grueneich concluded.

The net benefit came out to more than $100 million a year.

But the models pointed out a different problem.

“The record shows that Sunrise could facilitate the development of new fossil-fueled generation in the western United States,” Grueneich wrote in her proposed decision.

She said the PUC is now allowing utilities to buy renewable-energy credits instead of entering into contracts for such power. In essence, that would allow SDG&E to meet statewide renewable goals without using Sunrise for solar, wind or geothermal power.

And that's why conditions on SDG&E are needed to ensure the line is used for renewable electricity, Grueneich said.

Grueneich initially proposed making the utility prove where and how it would get renewable power before allowing the construction of Sunrise. SDG&E officials said they couldn't go along with that, calling it a “chicken and egg” problem.

Yesterday, Grueneich changed her mind.

She proposed a condition that SDG&E deliver 8,000 gigawatt-hours a year over Sunrise – about 91 percent of the line's capacity – by 2015. It would also require SDG&E to adopt a 33 percent renewable-energy goal and not sign contracts for coal-powered electricity.

Counting on different economic assumptions, Peevey figured the state's ratepayers would save more money, $125 million, once 33 percent of power is green.

He disagreed that Sunrise would be used for fossil-fueled electricity because, he said, it will make development of new wind, solar and geothermal projects viable.

“Without the Sunrise Powerlink, there is a substantial likelihood that only a fraction of the potential generating capacity in the Imperial Valley will come online,” he said.

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