SDG&E errors threaten its $1.3 billion project

By Craig D. Rose, Staff Writer
San Diego Union-Tribune July 19, 2007

A concession by San Diego Gas & Electric that it made "significant" errors in estimating the economic benefits of its proposed Sunrise Powerlink project led an administrative law judge yesterday to postpone further hearings into the proposal.

The SDG&E concession also prompted the Division of Ratepayer Advocates, a unit of the California Public Utilities Commission, to call for a dismissal of the case, which would derail a $1.3 billion project that SDG&E has characterized as the cornerstone of its electricity reliability planning.

Steven Weissman, an administrative law judge for the PUC, which has been conducting hearings here into the proposal, deferred ruling on the dismissal motion.

"The question is still on the table," Weissman said yesterday.

In the meantime, the judge postponed all hearings after today until July 30. The hearings, now in their second week, had been scheduled to run continuously through the end of next week.

SDG&E said it would correct errors it has identified by the end of this week and complete a review of its economic case for Sunrise by next Wednesday. Weissman scheduled a conference for July 26, when the parties will discuss how to proceed.

The Sunrise Powerlink would originate in Imperial Valley, cross Anza-Borrego Desert State Park and sweep across North County. SDG&E has said the line will help ensure electric reliability, provide access to renewable energy projects and save local customers money.

Critics say the line is unneeded, is too expensive and would be environmentally damaging.

In testimony Tuesday, SDG&E said it had identified three errors it made in the so-called base case, or the scenario against which the cost of Sunrise and alternatives to the line are being evaluated in the PUC proceedings.

The utility says those mistakes involved a misplaced decimal point and other errors regarding the availability of coal-fired power plants in 2020. Jan Strack, SDG&E's grid planning manager, said he became aware of "significant" errors after hearing questions on the opening day of the hearings from PUC Commissioner Dian Grueneich.

The errors, Strack said, left him feeling uncomfortable about the case the utility has presented and necessitated the "top-to-bottom" review.

This is not the first time SDG&E has reworked the purported benefits of Sunrise.

Earlier this year, SDG&E twice revised the annual savings it said would result from building the power line. In the first revision, the utility's estimated annual savings from the power line fell from $447 million to $85 million. A subsequent estimate raised the projected annual savings to $220 million.

Joe Como, an attorney with the Division of Ratepayer Advocates and a critic of the project, said SDG&E's concession was a bombshell.

"This eviscerates their case," Como said. "This is extremely unusual. You might get a witness saying there are small areas requiring change here and there, but usually mistakes are trivial. This time the witness says this upsets the whole apple cart."

Como said the division had devoted hundreds of hours to its analysis of SDG&E's case and now faces the prospect of duplicating much of that effort, which could delay consideration of the power line.

The PUC has said it plans to issue a ruling on the transmission proposal by early next year.

The motion for dismissal was supported by the Nevada Hydro Project, a party in the case that is proposing to build a stored-water electric generating project near Lake Elsinore.

Michael Shames, executive director of the Utility Consumers' Action Network, said it was too early to determine if a motion to dismiss the Sunrise application was appropriate.

"We know the three errors SDG&E has acknowledged and we know of 10 other significant errors," said Shames, who emphasized that the models used to estimate Sunrise's benefits can be extremely sensitive.

"The slightest changes can have dramatic effects. If it's just those errors, we can probably survive. But if they find additional errors, a maelstrom breaks loose."

Scott Crider, a spokesman for SDG&E, said the utility was confident that Sunrise would prove superior to all other alternatives, even after the modeling changes.

"The benefits of the benchmark case against which Sunrise and all the alternatives . . . will be judged will rise," Crider said. "Sunrise will still be the most cost-effective option."