It is May 8th and the evidentiary phase of the Sunrise Powerlink [1]hearings are finally over. It took the better part of two years to get here. SDG&E is going to be submitting one more exhibit (SD-144) today and we will have wrapped up the fact-gathering part of this case and moving into the briefing mode.
What I can say today is that SDG&E's case has effectively fallen apart. It's alleged economic annual savings claim of $400 million a year shrank after the first round of hearings to $140 million per year. Now, in the latest round, those savings have pretty much disappeared. SDG&E was pretty much forced to concede yesterday that San Diego can save far more money by building just one 500MW in-basin combined cycle power plant than it can by building a powerline to Imperial Valley.
Ex. SD-144 is revealing. It confirms that SDG&E's Enhanced Northern Route has a B/C ratio, according to themselves, of 1.22 compared to an 8100 Btu/kwh Carlsbad-based "super-peaker" plant and 1.06 compared to a 7165 btu/kwh. The net dollar benefits are $35 million/year compared to an 8100 Btu/kwh Carlsbad and $10 million/year compared to a 7165 Btu/kwh Carlsbad. So UCAN shouldn't have any objections to SD-144 being admitted into evidence.
But wait, there's more. The two new Table 11-6 variants, looked at together, show that a 935 Btu/kwh efficiency improvement lowers net ratepayer costs by $25 million/year. So a further improvement to the same 7000 Btu/kwh value that SDG&E used for all other combined cycles would, other things being equal, save a further $25 million/year x 165/935 = $4.4 million per year, knocking the net benefit of the ENR down to under $6 million per year. Bottom line compared to a reasonable range of gas-fired alternatives, the net benefits of Sunrise (ENR version) according to SDG&E's own numbers would be $6-35 million/year.
Now here's the kicker. As will become more evident as UCAN's briefs are released, the actual benefit of Sunrise is a NEGATIVE $133 million. In other words, Sunrise is a remarkable money loser -- some $8 billion over its estimated 60-year lifespan.
Remember, Ex. SD-144 reflects SDG&E's rosiest scenarios. But if you look at a more realistic scenario, the benefits of Sunrise over generation alternatives crumbles like week-old scones. It starts by deducting $36.5 million/year in alleged benefits when you no longer assume (as SDG&E does) that non-local RA is free. Another $27.5 million/year gets lopped off due to increased capacity of Miguel which SDG&E has all but conceded. As will be set forth in UCAN's upcoming brief, the list goes on and on. Reality is a bummer --- especially for trumped-up powerline projects.
SDG&E's claim of access to renewables also fell apart. Aside from the increasing signs that most of the promising, cost-effective renewables are located outside of the Imperial Valley, it was also readily determined that SDG&E could comply with the state's Renewable Portfolio Standard without having Sunrise constructed. And some very compelling testimony relating to the use of indigenous solar power along with Edison's announcement of its ambitious solar project undercut much of SDG&E's claims. There was also the embarrassing revelation that the controversial Stirling project has plans to build regardless of whether Sunrise was built or not. Oops. Of course, no one in California is betting that Stirling will be built anytime soon -- there are no signs that its technology will actually ever work in the field.
As to the question of Sunrise being needed to maintain reliability, or in SDG&E's parlance, "to keep the lights on", SDG&E fell flat on its face. UCAN and the PUC staff made overwhelming showings that SDG&E has a panoply of short and long-term lower-cost options to keep up with electricity demand without Sunrise. Even the California ISO distanced itself from SDG&E's claim that the line was needed for reliability.
The truth about the October wildfires also became clearer during the hearings. The transmission lines were found to be major contributors to wildfires. And the proposed Sunrise route runs directly through a fire-prone area. Moreover, testimony about seismic dangers showed that the Sunrise route begins at a spot that is the most seismically active in the United States with a high degree of likelihood for a 7.0 or larger quake. One of SDG&E's experts claimed that the Imperial Valley substation can withstand quakes in excess of 7.0 without suffering any damage. Yeah right. We'll see how confident they are when their own money is at stake.
So why is SDG&E continuing to push so hard for a powerline that is not justifiable on economic or reliability grounds other than "wouldn't it be nice"? The answer is three-fold:
1. It's about money. The appx. $800 million that SDG&E can reap in profits in building this powerline is simply too much potential profit from which the company can walk away. Sunrise is not just a cash cow, its a cash herd. Plus, SDG&E assumes that it will recoup all of the $200 million that it has and will continue to spend to make this project happen, so it has got nothing to lose by pursuing the project. It gets paid if it loses, it gets paid big-time if it wins. Las Vegas would go broke with those odds.
2. Second, this is about creating the ability for power companies to send power through San Diego County into Northern California. SDG&E views this project as the first of two powerline projects. The "full loop" that the company was found to be planning continues with another major 500kV line into the Edison territory. Why? Well, Sempra's Baja power plant is just one of many reasons.
3. It's about politics. The Bush Administration has been pushing transmission construction for the better part of its 8 years in power. These big construction projects are the mother's milk of the utility industry. With fewer new power plants being built and with those plants being increasingly risky propositions, the utilities need some long-term investments that will ensure their economic welfare for the next generation. Transmission is it -- whether it is needed or not. And with the federal government and the Schwarzenegger administration hell-bent on pushing these utility cash-cow projects, the politics behind Sunrise may well eclipse the merits of this project.
Final briefs will be completed by June 13th. At that time, the public will finally have an authoritative and complete accounting of all of the "facts" behind this ill-conceived nightmare. At that point, the real truths behind the proposed powerline will become far more apparent.