SDG&E slashes project savings

Estimates for Powerlink dropped by $362 million

To see the original story as it appeared in the San Diego Union-Tribune

By Craig D. Rose
STAFF WRITER

January 26, 2007

San Diego Gas & Electric has slashed the estimated savings it says would result from the proposed $1.4 billion Sunrise Powerlink, the controversial transmission line it's seeking to build into the region from Imperial County.

In its most recent filing with state regulators, SDG&E said it incorrectly estimated that the proposed line would provide an annual benefit of about $447 million. Correcting for its errors, the utility now says, yields an estimated savings of $85 million per year.
The utility also said in the filing that building modern power plants within the county would be cheaper for meeting regional electricity needs than building the power line.

But SDG&E maintains that the Sunrise Powerlink is the best choice to ensure electric reliability and provide access to renewable sources of electric generation that are planned in Imperial County.

As an additional benefit, SDG&E has said the project would provide savings to utility customers by eliminating the need to run inefficient older power plants in San Diego to ensure reliability.

In its filings to the California Public Utilities Commission, the utility says additional savings would be gained from moving conventionally generated electricity from plants outside the state.

As proposed by SDG&E, the 150-mile-long power line would cross Anza-Borrego Desert State Park and pass through a host of North County communities.

It falls to the PUC to approve or reject the project, with a decision scheduled for later this year.

The project is facing opposition from an array of environmental, community and consumer groups.

The opponents say Sunrise is too expensive, would damage the desert environment and would be used to move power generated from conventional natural-gas burning power plants – including those owned by Sempra Energy, SDG&E's parent company.

The critics also argue that reliability could be better ensured by building additional electric generating resources within San Diego County.

Jim Avery, a senior vice president for SDG&E, said that even with the reduced savings estimate from the project, Sunrise still yields an economic benefit. And he emphasized that saving money was never the primary reason to build the line.

“First and foremost, we need to build this line to ensure electric reliability,” Avery said. “And as an added benefit, Sunrise will bring us access to renewable energy and this added savings.”

Avery added that while building modern power plants in the county might be cheaper overall than building Sunrise, the economics are different for SDG&E customers.

Under state regulations, the cost of transmission projects like Sunrise are shared by all utility customers statewide, he said. That means SDG&E customers would pay just 10 percent of the project's cost.

“But we get the lion's share of the benefits,” Avery said. The SDG&E vice president added that yet another revision to its projection, which it expects to file today, would again change cost projections for the project.

Michael Shames, executive director of the Utility Consumers' Action Network, which raised questions about SDG&E's earlier savings projections, said he had not seen the utility raise the issue of local savings versus cost to the state overall in its filings with the PUC.

“That will be an interesting argument – that the state pays 90 percent of the project and loses money while SDG&E customers pay 10 percent and get a benefit,” Shames said.

A spokesman for the San Diego Regional Chamber of Commerce said SDG&E's reduced savings projections wouldn't affect the group's support of the project.

“The fact that Sunrise isn't going to save as much money as originally claimed is disappointing,” said Greg Parks, a policy coordinator for the chamber. “But it's still economical and it will still provide reliability and access to renewable energy.”

But Diane Conklin, coordinator for the Community United for Sensible Power, a community coalition opposing Sunrise, characterized the lower cost savings as a blow to the project.

“The economics of this project played a big role until it did not work out for them,” Conklin said.

She added that the community coalition also did not believe the reliability argument would hold up.

“Reliability does not come through transmission alone,” Conklin said. Building new generation in the area is a better guarantee, she said.

Craig Rose: (619) 293-1814; craig.rose [at] uniontrib [dot] com