MEMO

To: Energy Working Group
Re: UCAN's Observations on SDG&E Responses to Energy Working Group Questions about the Sunrise Powerlink Transmission Project
Date: October 13, 2006

Literally every response offered by SDG&E to the EWG questions were either incomplete, misleading or, in some cases, flat out wrong. UCAN offers the following observations so as to provide the EWG a more complete basis upon which to assess the answers posed to the company. The observations are presented in blue type.

1. Please provide a comparative table on the alternatives to transmission in meeting the goals of the Regional Energy Strategy (RES) adopted by SANDAG in 2003.

The RES called for the addition of transmission. Goal 5 states:
"Increase the transmission system capacity as necessary to maintain required reliability and to promote better access to renewable resources and competitively priced supply." (RES page 32)

Specific implementation strategies under this goal were to "identify a project as soon as possible and complete construction by 2008." The strategies also called to "complete the necessary upgrades to the transmission system to improve reliability and access new generation in Baja California [This was only half done; SDG&E never upgraded path 45, it just built radial lines from Mexican export generators to the CAISO at Imperial Valley] as well as interconnections with renewable energy development in Imperial County and Eastern San Diego County."

So the addition of transmission was considered and is an integral part of the RES.

2. Is it possible to meet renewable energy goals without transmission lines coming into the
San Diego region?

Assuming the phrase "without transmission lines" should read "without new transmission lines" SDG&E responds as follows:

It is theoretically possible, but at a higher cost to customers. Without new transmission, the increases in the costs of accessing renewable energy and other efficient generating sources in the desert Southwest are projected to saddle our customers with hundreds of millions of dollars of additional costs. [Again, not fully true. In general, congestion costs are not desirable. However, any congestion costs associated with access to SWPL take the form of revenues to the CAISO which are then rebated to SDG&E as the owner of SWPL, and in turn rebated to ratepayers. So congestion on SWPL is actually good for ratepayers, as shown on Table IV-2, where CAISO congestion rents reduce consumer energy costs]

It is also notable that SDG&E's evaluation of in-basin generation substantially inflates local costs of generation, while it substantially undervalues cost of generation in nearby states. Its very skewed numbers leads to a self-fulfilling conclusion that importing power is more cost-effective than local generation. The evidentiary record developed in the case is expected to refute SDG&E's claim.

3. Is the building of new transmission lines related to reliability of energy delivery in the
San Diego region? Are there existing or proposed transmission projects elsewhere in Southern California which might cover San Diego's needs?

Yes, the line is targeted to meet SDG&E's grid reliability needs. But it is also proposed to lower energy costs and expand access to renewables. No other transmission line proposal can do all three. [True but irrelevant. There is no reason why all three stated goals must be addressed with a single project, transmission or otherwise. It is increasingly evident that SDG&E's goals might be achieved through a multiple set of strategies, not just one transmission line, that are far less expensive than the single line.]

4. What are the overall benefits of a new transmission route?

A new transmission route will improve system reliability by reducing the risk that a wildfire or other event would cause the San Diego area to lose its only 500 kV connection to the WECC grid during a critical time period; for example, when loads are very high and the largest in-area generator is out of service. [SDG&E system is already designed to be reliable under that exact situation. The loss of SWPL during peak loads when the largest in-area generator is also out. SDG&E has operated its system for over 20 years with only one 500 KV link to the WECC grid. SWPL outages occur far under 1% of the time]

 

5. What alternatives to the proposed project exist, and how can we as a region evaluate them and recommend to the California Public Utilities Commission (CPUC) which is our preference? What are the routes associated with those alternatives, the costs, and the relation to the RES?

Chapter VI of SDG&E's August 4, 2006 filing with the CPUC discusses alternatives to the Sunrise Powerlink. However none of the identified alternatives will meet the reliability needs of San Diego while also providing access to renewables and reducing system costs. Alternatives have been studied by the CAISO, STEP and IVSG. The CAISO endorsed the Sunrise Project in August.

There is serious question as to whether all reasonable alternatives were examined. The reliability need for SDG&E is 413 Mw by 2015 (Table II-1, first line). Options to meet this need include: AMI-related savings (~250 Mw), G-1 redefinition (232 Mw), Mexico Light (~140-300 Mw), South Bay replacement (561 Mw), SDG&E-proposed 2008 peakers at Miramar, Pala, and Margerita (250 Mw), NRG-proposed CTs (144 Mw), SDG&E-proposed increases in Demand Response Programs for 2007-08 (17-114 Mw), LEAPS transmission (~1000 Mw), reconductoring ~10 miles of the Barre-Ellis 230 kV overhead line with ACCR conductor (up to 400 Mw) Moreover, a proposed gas-fired combined cycle plant in the Miramar area by Enpex offers another 750MW. None of these alternatives are fully or fairly addressed in SDG&E's application.

The renewable energy delivery need is zero - SWPL is fully capable of delivering all of the renewable energy reasonably likely to be generated by 2015. Up to 300MW of the Stirling solar plant will be imported via SWPL, according to that company's public statements.

The economic benefits of Sunrise don't exist in 2010-11 by SDG&E's own numbers. The economic benefits are allegedly evident by 2015, but that conclusion is heavily dependent on assumed overbuilding in the Southwest (see Table IV-3), coupled with assumed zero load growth in Nevada and load shrinkage in New Mexico (see Table IV-25).

Based upon SDG&E's own numbers, it is inappropriate for Sunrise to be constructed prior to 2015, given that the reliability needs can be met in 2010-2014 from other sources at lower cost.

6. Can one underground the entire project? At what cost, now and in the long run, for
maintenance?

No. Undergrounding a 500 kV line over long distances in a desert environment is not possible.

Again, this is not necessarily correct. While undergrounding a 500kV line is problematic, there's no reason why SDG&E couldn't deploy dual 230kV lines in sensitive areas, as SDG&E is doing in many areas throughout central San Diego. It has chosen to construct a 500kV line, knowing that two 230kV lines could be suitable options while also undergroundable.

7. During 2005, what percentage of power imported here via the Southwest Powerlink (SWPL) actually was consumed within SDG&E's service area?

Essentially all the power imported here via the Southwest Powerlink is consumed within SDG&E's service area. In most hours of the year, and always on an annual basis, the San Diego area is a net importer of power so it is likely that most of the power delivered to the San Diego area over the Southwest Powerlink is consumed within the San Diego area. On a typical day, anywhere from several hundred megawatts to well over a thousand megawatts of power flow into SDG&E service area along SWPL while at the same time a couple of hundred megawatts flow into the SDG&E service area from San Onofre Nuclear Generating Station (SONGS) along the South-of-SONGS path.

This answer is unresponsive. The line is rated to carry over 2000MW of power. As indicated by the next question, SWPL supports the ability of SDG&E to export power to the north.

 

8. During 2005, what percentage of SWPL imported power coming to San Diego was then
exported to Southern California Edison (SCE) under Sempra's contract with the State
Department of Water Resources?

On a day to day basis, the California Department of Water Resources' (CDWR's) contract with Sempra Energy Resources gives Sempra Energy Resources some flexibility in deciding where the power used to discharge its obligations under the contract will be generated. For this reason, SDG&E does not know where the power that Sempra Energy Resources contractually delivers to SCE (the CDWR contract was allocated to SCE) is actually generated.

In addition, even if SDG&E did have access to this information, it is not possible to determine what portion of the power that is contractually delivered to SCE by Sempra Energy Resources is physically "imported" to and/or physically "exported" from the San Diego area.

 

9. What were SDG&E's actual regional Reliability Must-Run (RMR) and congestion costs in 2005? What have they been so far in 2006?

$203,464.245 - 2005 RMR costs

$89,263,685 - 2006 RMR costs (through June) [To the extent these numbers include RMR generator energy costs as well as capacity costs, they overstate the net cost of RMR. Generation from RMR units is used to meet loads. Without RMR generation, the energy would have to come from somewhere else, and be paid for. The relevant number is the cost of RMR generation net of the cost savings from generation which didn't need to be paid for because of RMR unit operations. Similarly, the capacity costs of RMR units are partially offset by the RA costs that SDG&E avoids because of the existence of RMR capacity.]

 

10. What impacts on regional RMR costs and congestion will the 2011 expiration of Sempra's
contract with the State DWR have? How much less power will need to be imported via SWPL for export to SCE's service area?

The expiration of Sempra Energy Resources contract with the CDWR will have no impact on regional RMR costs. The physical dispatch of generators is based on the variable costs of running each plant. These operating costs are unaffected by the price, terms and conditions of purchase power contracts. Most purchase power contracts, such as the contract between Sempra Energy Resources and the CDWR, are intended to achieve a financial result, not to dictate physical operation. [That's not true for reliability contracts, which are intended to cause specific generators to run, since otherwise there is a risk of seller non-performance when reliability is needed; it's also not true for "green" contracts, where the seller is supposed to produce energy from a "green" resource and not from whatever market-priced resource is cheapest in a particular hour ] Since the expiration of the Sempra Energy Resources-CDWR contract will not change the variable operating costs of any generating plants, the merit order dispatch of generating plants will not change. [Not necessarily true. If a generator has a unit-specific contract at price X, and has marginal costs Y, it will run the specified unit whenever X > Y. If the grid-wide marginal cost is Z, and Z < Y, then the generator will run the specified unit because of its contract (Y < X) but will cease operating that unit when its contract expires (Y > Z).] SDG&E assumes there are no unit-specific contracts. The resulting grid powerflows are therefore unaffected and the need for local RMR generation (or its equivalent in 2011) to manage any congestion which may arise is also unaffected.

As indicated in the response to question 8, SDG&E does not know what portion of the power that Sempra Energy Resources contractually delivers to SCE is physically "imported" to and/or physically "exported" from the San Diego area. In addition, SDG&E does not know how SCE intends to meet their bundled customer load requirements in 2011. Accordingly, there is no way to know the amount of power that may be physically "imported" to and/or physically "exported" from the San Diego area in order to serve SCE's bundled customer loads in 2011.

 

11. On page 1.6 of its earlier incomplete CPUC application, SDG&E provides a chart showing projected increases in regional RMR and congestion costs. That chart shows RMR and congestion costs actually declining, beginning in 2006, due to construction of several power plant and transmission upgrades, including:

• The Miguel to Mission transmission upgrade,
• Operation of the Palomar power plant,
• Operation of the Otay Mesa powerplant, and
• Construction of the Sunrise Powerlink transmission line

For each of these individual projects, please indicate how much each will reduce regional
RMR and congestion costs between 2006 and 2010, and clarify the marginal RMR and
congestion cost reduction that will be created solely by the construction of the Sunrise
Powerlink project.

Solely by Sunrise in 2006$ in millions:

2010 2011 2012 2013 2014 2015 2016
$70.8 $72.0 $79.8 $81.6 $80.7 $83.0 $87.9

[These numbers don't match the RMR numbers on the next-to-last line of Table IV-4]. The differences range from $13.4 million in 2010 to $29.3 million in 2015. The reason for the difference can't be the additional "congestion" cost reduction referred to in the answer. SDG&E workpapers show a CAISO-wide congestion benefit in 2010 of $9 million from Sunrise, increasing to $159 million in 2015 (Table IV-2). Moreover, SDG&E's workpapers show the great majority of the 2015 congestion savings ($156 million) are at Miguel. Thus, SDG&E's numbers shown above are too big if they only reflect RMR savings, but much too small if they are supposed to include congestion savings as well.]

The exact amount by project over time is not known. MM2 saved about $100M the 1st year by reducing the amount of RMR energy needed to reduce intra-zonal congestion, but Palomar would save part of this amount by itself (by providing market energy at no additional RMR energy cost to push back on SWPL). So MM2 savings in the 2nd year (after Palomar) should be less by sharing some of the RMR savings with Palomar. As more projects are added (like OM) the exact savings by project over time can't be determined even when the total RMR cost reduction is known.[This question could be answered by assuming the projects are added in their actual order. Thus, MM gets credit for the savings difference between having nothing new and having MM; Palomar gets credit for the savings difference between having MM and having both MM and Palomar; Otay gets credit for the savings difference between having MM and Palomar versus having MMand Palomar and Otay; and so on. SDG&E's logic for why it can't compute the RMR benefits attributable to MM or Palomar or Otay would imply that it shouldn't be able to compute the Sunrise benefit either.]

 

12. If 10 percent of the $3.2 billion the CPUC has authorized for the California Solar Initiative is spent in SDG&E's service area supporting the development of new solar energy systems, what impacts will that have on projected regional peak demand between now and 2010?

The program is designed to get about 3,000 MW of solar panels installed over the ten year life. If 10% of this gets installed in San Diego, that would be 300 MW. However, PV systems produce only about 50% of their nameplate capacity at the time of system peak, which is late in the afternoon. So that results in about 150 MW of peak reduction after 10 years. There is currently a shortage of panels due to world wide demand and thus SDG&E (and many others) expect it will take some time for production to ramp up and supply the panels needed to meet this goal. Using aggressive assumptions, it is possible that 20 MW of panels could be installed by 2010, ramping up to 300 MW of panels by year 2015. [SDG&E has installed 7 Mw/year of PV in the last 18 months (UCAN DR 1-23). SDG&E's resource balance numbers start from a base in 2005 (see Table II-3). So for the 5 years from 2005-2010, it's not aggressive at all to assume SDG&E will average 4 Mw/year of new solar installations.]
SDG&E's need calculations assume the full 300 MW of panels will be installed by year 2015. This translates into a 150 MW reduction in peak demand by year 2015.

 

 

13. SDG&E's earlier incomplete Sunrise Powerlink application assumes that the existing South Bay Powerplant will be retired by 2010, but Duke has indicated that it, or its successor owner, plans to replace the existing South Bay Powerplant with another powerplant nearby. How would construction of such a new plant, assuming that it would produce 600 MW of combined cycle natural gas-based power, impact SDG&E's regional peak power demand and supply projections?

Table II-8 in SDG&E's August 4, 2006 filing with the CPUC shows the affect on the San Diego area local reliability requirement of repowering South Bay to 620 MW. [And what it shows is a capacity surplus in every year through 2016, the last year shown] SDG&E's economic analysis of adding in-area combined cycle generation to meet the CAISO's local area reliability requirement [which does not include South Bay, but instead consists of three new combined cycle plants, one at Sycamore Canyon and two at Encina] shows that new combined cycle generation is clearly inferior, economically, to building the Sunrise Powerlink. [SDG&E's combined cycle economic numbers are in Table VI-6. They show new combined cycles are better than Sunrise at reducing congestion (compare Table VI-6 to Table IV-2), and better overall in 2010. It's only when SDG&E's inflated 2015 benefits are thrown into the mix, benefits which are far far higher than the CAISO's values for 2015 benefits, that Sunrise beats the combined cycle alternative. See the discussion of question 27, below. Besides having no analysis of a South Bay combined cycle case, SDG&E has offered no analysis of what happens to the economics of Sunrise if South Bay is built. Building South Bay, if permitted, will be up to Dynegy, not SDG&E. If South Bay exists and Sunrise makes it a money-loser, that's Dynegy's problem. But if Sunrise is built, and South Bay makes it a money loser, it's SDG&E ratepayers who will suffer. Thus SDG&E's attempt to portray it as a "3 combined cycle plants or 1 transmission line" choice is simply wrong. A likelier outcome is "one combined cycle plant, at South Bay, with or without Sunrise as well."

14. SDG&E's earlier incomplete CPUC application indicates that construction of the Sunrise
Powerlink ultimately may be necessary for SDG&E to meet its CPUC mandated renewable power portfolio goals. Would SDG&E be able to meet those goals if the CPUC allows Renewable Energy Credits, and new renewable generated in the Imperial Valley are moved from the valley to coastal areas via the proposed Imperial Irrigation District Green Path transmission line upgrades project? If not, please explain why this model is not feasible.

No studies have been done to determine whether the economics of the IID/LADWP Green Path project are as attractive as the economics of adding the Sunrise Powerlink. [However, the estimated cost to build the LADWP line is about $700 million, a half billion less than Sunrise, so a study should be done, if it hasn't] However, the IID/LADWP Green Path project does nothing to address the local area reliability deficiency which will exist as early as year 2010 absent new transmission into the San Diego area or new generation within the San Diego area. [This answer is not responsive to the question. Local reliability is a separable question - see comments on question 5 above]

The use of Renewable Energy Credits to meet renewable energy goals will not change the need to increase import capability in order to reduce the costs of serving load in the California load centers. [Yes, but it would eliminate the need for San Diego to be one of those "load centers". RECs would allow SDG&E-contracted renewable energy to be delivered to the SCE area] Assuming Renewable Energy Credits do not change the type, location or quantity of renewable generation which gets built, the same pattern and magnitude of grid congestion will exist and the economic value of adding the Sunrise Powerlink will be unchanged.

15. Has SDG&E analyzed the option of using the proposed Green Path transmission project to import renewable from Imperial Valley by way of SCE's transmission grid? If not, please explain why this option was not included in SDG&E's assessment of alternatives.

No. At the time SDG&E performed its analysis, the IID/LADWP Green Path project was not sufficiently defined. [Nor does SDG&E ever intend to compare Sunrise to LADWP's proposal, even though it would effectively allow for Imperial Valley renewables to be accessed by SDG&E]

18. How many MW of peak demand reduction does SDG&E plan to achieve prior to building the new Sunrise Powerlink? What impact will these demand reduction efforts have on SDG&E's projected 2010 peak electric demand levels? Shouldn't those peak demand savings be included in any analysis of the Sunrise Powerlink?

The impacts of demand reduction programs have been accounted for in SDG&E's analysis of San Diego area local reliability requirements. See, for example, Table IV-17 on pages IV-11 and IV-12 of SDG&E's August 4, 2006 filing with the CPUC. [Yes, that table shows zero Mw for demand reduction programs, including AMI. It includes energy efficiency programs, which are targeted at saving energy and necessarily save capacity as well, but nothing for demand reduction programs focused on reducing peak demand. (This fact is confirmed by the utility in SDG&E's confidential response to UCAN DR 4-34)]

 

19. Does SDG&E have information on the history of wildfires that disrupted SWPL over the last 20 years, compared to the number of wildfires that have hit the various alternative routes SDG&E is considering for the Sunrise Powerlink? If the key concern over double lining SWPL is wildfires, it would be useful to see how many fires that corridor has had over the last two decades compared to the northern corridors in which you are considering placing the Sunrise Powerlink.

SWPL has had 23 fire related outages since 1995. [confirmed by confidential response to UCAN DR 1-15d] SDG&E has not researched the incident of fires within the preferred route for the Sunrise Powerlink. However, the key issue is not whether there are fires that affect SWPL separate from Sunrise. The key issue is the potential of losing two lines at approximately the same time during critical system conditions, such as when the largest in-area generator is out of service and the San Diego area is experiencing very high loads. If a second 500 kV line were built adjacent to the SWPL, the probability of a single event, such as a wildfire, taking both 500 kV lines out of service during critical system conditions would likely be deemed credible by the Western Electric Coordinating Council.

20. Also, since one of the key justifications for building the Sunrise Powerlink is to import
renewable power from Imperial Valley, would SDG&E be willing to commit to the CPUC that some minimum percentage of power imported to San Diego over the Sunrise Powerlink will come from renewable sources over the life of the line?

At present SDG&E's negotiations for the development of new generation sources in the Imperial Valley are limited to renewable generation technologies. Because the Sunrise Powerlink connects directly to the Imperial Valley and will be a relatively low impedance path, a significant portion of this renewable energy will flow on the Sunrise Powerlink to the San Diego load center. However, the actual flow of power on any particular line depends on each line's relative impedance so power generated at any point on the interconnected grid, including the Imperial Valley, tends to spread out and flow in varying amounts on different lines to reach loads. The physics of interconnected grid operation are incompatible with the notion of ascribing particular sources of generation to particular transmission lines.

This answer is unresponsive. SDG&E is capable of committing to contracts for renewable power. Moreover, it should be willing to commit to renewable purchase targets which, if not met, would result in SDG&E having to provide consumer refunds. SDG&E's current proposal does not require SDG&E to use Sunrise for renewables. If the Stirling contracts for 900MW do not materialize (a highly likely outcome), then SDG&E will be free to use the Sunrise line for conventional energy imports.

22. What is the total project cost for the Sunrise Powerlink, and does this updated cost include the costs of the extensive undergrounding proposals made by SDG&E for much of northern San Diego?

$1.265 billion. The cost estimate includes the proposed undergrounding.

23. Is it true that the CPUC staff hasn't begun its analysis of the Sunrise Powerlink application, and even has not hired consultants who will do the analysis? If so, when is it expected that the CPUC staff will complete their analysis?

No. Aspen was hired months ago and has been working with SDG&E throughout the development of the PEA. In addition, to evaluate SDG&E's Sunrise Powerlink "purpose and need" application, the CPUC staff has indicated that they have retained the same economic consultants used by the CPUC staff to review SCE's Devers-Palo Verde #2 application.

This is also not responsive, as it doesn't address the Division of Ratepayer Advocates, (DRA) which is the internal CPUC agency that is charged with reviewing the line with an eye towards whether the project is cost-effective, needed and optimally designed. This part of the CPUC review will be more focused on the economic and reliability issues related to the application. DRA retained a team of experts last month and is only now beginning to conduct its examination.

24. The Utility Consumer Action Network (UCAN) has posted five sets of requests for documents and information (data requests) on its Web pages, most of which were given to SDG&E in February and March of this year. According to UCAN, only the first set of data responses have been answered. Most all of its other information requests have not yet been answered by SDG&E. If this is true, when will UCAN be provided complete responses to all of its information requests?

Responses have been provided to UCAN for substantially all of the first five data requests. As of September 15, 2006, UCAN has provided two more data requests. SDG&E expects to provide a response to UCAN data request 6 on September 18, 2006. SDG&E is currently reviewing UCAN data request 7.

SDG&E finally responded to UCAN's first five sets of data requests some five months after they were tendered. UCAN submitted two more requests in August and, as of mid October, has not received responses. The CPUC's 10-day response rule has not been honored by SDG&E. UCAN is currently preparing an eighth set of data requests. Moreover, we are finding that we'll need to reask many of the questions in our first five data requests because SDG&E's answers were vague or unresponsive.

 

25. At its Web pages, UCAN has posted an April 11 memo to the California Independent System Operator (CA ISO) that proposes a series of alternative routes for the transmission upgrades that do not go through Anza Borrego State Park and may be less costly than the SDG&E Sunrise Powerlink proposal. Has SDG&E conducted studies of the UCAN alternatives, and what are its conclusions?

UCAN suggested four transmission alternatives to the CAISO. SDG&E has only looked at these alternatives briefly. The CAISO also conducted their own analysis. These four alternatives are:

"Mexico Light" - a proposal for transmission to connect the TDM and/or Intergen plants to the Mexico system. CAISO found that this alternative overloaded existing lines in Mexico. The CAISO also felt that if this alternative actually provided the 300 MW of incremental increase to SDG&E's non-simultaneous import level (NSIL), that it would delay the need for the Sunrise Powerlink by only a couple of years. SDG&E is concerned that the Mexico Light alternative circumvents the RAS which is designed to protect Mexico's system by preventing overloads on their system by taking the TDM and Intergen plants off line in the event of the loss of the Imperial Valley - Miguel 500 kV line. SDG&E feels that even if a scenario could be found with a certain amount of generation that could be safely switched from Imperial Valley Substation to La Rosita Substation without overloading Mexico's lines, this alternative would still not increase SDG&E's NSIL as there would still be scenarios under which this power would not reach the San Diego area. SDG&E's calculation of NSIL must be based on the most conservative assumptions.
The CAISO study is deeply flawed and misses some 140MW of power that could be achieved at literally no investment by SDG&E or CFE. Discovery will reveal the remarkable deficiencies in the CAISO investigation into this option

"SONGS Light" - includes looping one of the North-of-SONGS lines into the Talega Substation, transferring it from the North-of-SONGS path to the South-of-SONGS path. The CAISO found that this alternative did not increase SDG&E's NSIL because SONGS Light does not address the limiting factor on the South-of-SONGS path. The CAISO also noted some of the very real difficulties in trying to address the limiting factor on the South-of-SONGS path. In addition, the CAISO had concerns about transferring a North-of-SONGS line from SCE to SDG&E. SDG&E, in their preliminary studies, agrees that the SONGS Light alternative would not increase SDG&E's NSIL for the same reasons stated by the CAISO.

‘SONGS Medium" - includes SONGS Light plus adding a new Talega - Escondido 230 kV line or adding a fourth SONGS - San Luis Rey 230 kV line. At the suggestion of UCAN, CAISO did not study SONGS Medium, as studying SONGS Light and SONGS Heavy would provide bookends of a range of possible values. Similar to the CAISO, SDG&E did not study SONGS Medium alternative, but believes that it would not increase SDG&E's NSIL. This is because neither SONGS Light nor SONGS Heavy increased SDG&E's NSIL for the simple fact that they do not address the limiting factor for the South-of-SONGS path limit.

[SDG&E conveniently misinterprets UCAN's "South of SONGS" constraint Also, CAISO to did no analysis of the real constraint. UCAN will continue to investigate this option]

"SONGS Heavy" - includes SONGS Light plus adding a new Talega - Escondido 230 kV line and adding a fourth SONGS - San Luis Rey 230 kV line The CAISO also found that this alternative did not increase SDG&E's NSIL because SONGS Light does not address the limiting factor on the South-of-SONGS path. SDG&E found in its preliminary studies [what preliminary studies? None provided to us?] that SONGS Heavy could result in a range of values for SDG&E's NSIL, from a slight increase to a slight decrease. It would take a detailed path rating study before a peer review group to fully vet these issues. SDG&E believes pursuing this alternative through a full path rating study would be unproductive because even with the slight increase in NSIL, SDG&E still has a deficiency in 2010 without the Sunrise Powerlink.

26. There is much dispute over whether the proposed transmission lines actually will bring in
renewable power. SDG&E entered a large power purchase contract with Stirling to purchase solar thermal-generated power. However, Stirling is proposing to use a technology that is commercially untested. If Stirling is unable to make its machinery work at a mass scale, what other cost-effective renewables is SDG&E planning to bring over the proposed powerlines?

SDG&E has signed a [25 Mw] contract with a geothermal supplier and is currently in negotiations for more geothermal and other solar projects that will be based in the Imperial Valley area. The Imperial Valley Study Group identified over 2000 MW of geothermal energy in the region without adequate access to market. [SDG&E is wrong... In fact, the IVSG assumed there was 2200 Mw of renewable generation, and figured out a way to deliver it to the CAISO. SDG&E's Sunrise analysis assumes considerably more IV renewable generation in 2010 and 2015 than the IVSG did.]

27. Please explain why SDG&E can't bring renewable power from Imperial County over the
existing Southwest Powerlink. That link currently is transporting natural gas-generated
electricity. Why can't renewables be substituted for the existing gas-generated power
currently clogging up that line?

See responses to question 2 and question 10. The CAISO operates the grid on a least cost basis so whenever there is a bottleneck in the transmission grid, the lowest cost power gets access. Because the variable operating costs of gas-generated power is usually higher than the variable operating costs of renewable power (the variable operating cost for wind generation, for example, is close to $0/MWh), gas-fired generation in the desert Southwest will normally be reduced in order to alleviate congestion; renewable generation output levels will usually be unaffected, However, in granting such access, the CAISO also assesses congestion charges. The analysis done by SDG&E indicates that by building the Sunrise Powerlink, the congestion charges that would otherwise be assessed to renewables will be reduced by an amount that far exceeds the cost of building the new line.

This response is seriously misleading, if not an unabased lie. The last part of the response "the congestion charges that would have otherwise be assessed to renewables will be reduced by an amount that far exceeds the cost of building the new line" implies that if SDG&E does not built the Sunrise then the congestion charges assessed to the renewable would be equal to the total savings (between $42-$450 million per year) they have claimed for the line. This is patently false! Although it is true that some congestion costs (not calculated by SDG&E) would be assessed to all the power (both renewable and non-renewable generation) scheduled over SWPL, if and when there is congestion, but it does not mean that the whole savings calculated for Sunrise can be attributed to reduction in SWPL congestion costs. The savings shown by SDG&E's Gridview analysis ($42 to $ 450 million) comes from the reduction in California MCP (lower production cost) for the total of 40,000 MW of load. This can not be and will not be assessed against the 2000 MW of power scheduled over SWPL.

Congestion charges incurred by users of SDG&E-owned lines are colected by the CAISO but then rebated to SDG&E, and in turn to SDG&E ratepayers, as the owners of the line. So reducing congestion charges is an economic cost for SDG&E ratepayers, not a benefit. See Table IV-2, p. IV-17, showing that "CAISO Congestion Rents" are subtracted out and thus reduce "Net Consumer Energy Costs." The reduction in congestion charges calculated by SDG&E in 2010 due to Sunrise is only $11 million........ much less than the cost of building Sunrise. (See Table IV-2, "Less CAISO Congestion Rents" line, difference between Cases 100 and 101.)

Finally, the large reduction in congestion costs shown by SDG&E for 2015 is actually the result of SDG&E's assumption that there will be a huge increase in surplus energy availability in the Southwest between 2010 and 2015. SDG&E assumes that there will be a wave of overbuilding from 2010-2015 that will result in low-cost exports trying to get to California in 2015. Appendix IV, pp. IV-5 to IV-8 lists some 56 new generators assumed on-line in 2011-2015, none of them in SDG&E's service area. At the same time, SDG&E assumes New Mexico loads will shrink 8% between 2010 and 2015, and Nevada loads will be flat (Table IV-25)! Overall, By assuming huge reserve margins in 2015 for everywhere in the WECC except California [see Table IV-3], SDG&E creates a self-fulfilling, but highly implausible, prophecy of immense congestion on transmission lines leading into California. In reality, this forecasted overbuilding will not occur. And SDG&E would likely refuse to commit to the validity of its own SW generation forecast.

 

28. SDG&E states that high congestion costs are compelling the building of this new Sunrise
Powerlink, yet the Mission-Miguel transmission upgrades are supposed to alleviate most of the high congestion costs. And, with Palomar and Otay coming on line prior to the
completion of the Powerlink, won't most of SDG&E's congestion cost issues already have been addressed? If not, then please quantify the amount of congestion costs that will be
eliminated specifically by the building of this new Sunrise Powerlink.

The statement above is incomplete. In addition to reducing the costs of congestion that SDG&E projects will otherwise exist, the Sunrise Powerlink is being built to address a local area reliability deficiency that SDG&E expects will begin as early as year 2010, and to reduce RMR costs within the San Diego area.

With respect to congestion, the addition of Miguel-Mission did in-fact alleviate a significant amount of intra-zonal congestion in San Diego. However, the economic studies performed by SDG&E for the August 4, 2006 filing with the CPUC indicate that the anticipated addition of large amounts of renewable generation in the Imperial Valley; and the projected addition of new efficient combined cycle generation, coal generation and renewable resources throughout the other areas of the WECC; will, absent the Sunrise Powerlink, result in high levels of congestion between the desert Southwest and the California load centers. These impacts will be significant by year 2010 and pronounced by year 2015. [This is not correct...... see comment on question 27, above. SDG&E's forecast of congestion in 2010 is not significant. SDG&E forecasts congestion for 2015 that is 10-13 times as great as in 2010 (Table IV-2), because it makes hokey assumptions about new generation being overbuilt elsewhere and underbuilt in San Diego. ]

The economic benefits that are specifically attributable to the reduction in congestion that occurs with the addition of the Sunrise Powerlink, are described in SDG&E's August 4, 2006 filing with the CPUC. Table IV-2 shows the derivation of the reduction in energy costs that will be realized by CAISO consumers. Net CAISO consumer energy savings are estimated to be $42 million in 2010 [of which congestion represents $10 million] and $487 million by year 2015 [of which congestion represents $195 million]. On a levelized basis, SDG&E projects the Sunrise Powerlink will produce $468 million per year in net CAISO consumer energy savings (2010 through 2049). Note that SDG&E's analysis includes all existing and planned transmission and generation through 2009, so the affects of the Mission-Miguel line, and the Palomar and Otay Mesa combined cycle plants and related transmission additions, are fully reflected.

 

29. If the LS Energy proposed South Bay repower is constructed, isn't the need for the Sunrise Powerlink pushed off by at least five years?

See SDG&E's response to question 13 above. [The answer, as shown in the very last line of the last (4th) page of Table II-8, is that South Bay defers a reliability need for Sunrise to at least 2017 and probably 2018. That's a 7-8 year deferral. SDG&E's economic assessment is based wholly upon wildly undervalued generation available over the proposed transmission line]

30. Please provide a list of all of the other transmission lines proposed to be built in the Southern California region and, in doing so, provide the estimated cost of each of those lines as well as how much of the costs of those transmission lines will be assigned to SDG&E ratepayers to pay.

There are many transmission projects proposed for the Southern California region. Many of these projects are for the purpose of meeting on-going load growth in the SCE and SDG&E service areas. Other proposed transmission projects are associated with the planned interconnection of new generation projects. These proposed transmission projects are reviewed by the CAISO in its annual grid assessment process and through the CAISO's Large Generator Interconnection Procedures (LGIP).

In addition to Southern California transmission additions that are proposed as part of the CAISOs' annual grid assessment process and in connection with the CAISO's new generator interconnection requests, entities have proposed the bulk power transmission upgrades identified in the following table:

(SEE ATTACHMENT)

The projects shown in the above table are in various stages of development. The CAISO is currently assessing the technical and economic merits of the Tehachapi area transmission upgrades and the TE/VS - LEAPS project. The Palo Verde-Devers #2 project has been approved by the CAISO and its approval by the CPUC is currently pending. The proposed Frontier line is in the initial exploratory stage. The LADWP/IID Green Path project is in the initial exploratory stages.

It is notable that this is not what LADWP would say. (See the LADWP draft Integrated Resource Plan, 5/2/06, p. C-11: "LADWP is in the process of finalizing the Plan of Service to construct a 500 kV transmission line between the Imperial Irrigation District (IID) and LADWP.") IID's internal system transmission upgrades were identified by the Imperial Valley Study Group (IVSG). SDG&E does not know how far along in the development and permitting process IID has been able to get these projects. [But SDG&E assumes 15 IID upgrades all get built as part of its Sunrise analysis. (See Table IV-27) Without the internal IID upgrades, the 2685 Mw of new Imperial Valley generation that SDG&E assumes on-line by 2015 (Table IV-14; SS07-SS1414, Solar Thermal, and SaltnGeo) will be unable to get to Sunrise even if built. If SDG&E's isn't performing due diligence on IID's efforts, that calls into question whether Sunrise is really intended to deliver renewables at all.]