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First Refusals, Least Regrets

What California can teach FERC about transmission planning.

Fortnightly Magazine - December 2010

RTTP tariff will grant what amounts to a first refusal to incumbent PTOs in the case of grid network upgrade projects associated with generator interconnection requests, allowing the incumbents to push an aggrandized and essentially policy-driven square-peg upgrade through the round hold of the LGIP regime, even if the project in the process becomes much larger than a so-called “but for” upgrade—a grid enhancement that wouldn’t be required but for the request by a generation developer for grid interconnection service.

In fact, these stakeholders, which include Pattern Transmission, Green Energy Express, 21st Century Transmission Holdings, and the so-called “six cities” (Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside), charge that just such a case has arisen with regard to Southern California Edison and the transmission rate incentives it requested for some $1.4 billion in grid projects, including the combined 500-kV Lugo-Pisgah and Red Bluff substation project, costing about $950 million, and the Eldorado-Ivanpah project, costing another $430 to 480 million.

In two recent orders, FERC granted rate incentives for the projects, in part to make sure SoCalEd could meet project milestones necessary to qualify for stimulus funding under the American Recovery and Reinvestment Act. (See, Docket EL10-81, Oct. 29, 2010, 133 FERC ¶61,107; Docket EL10-1, Oct. 29, 2010, 133 FERC ¶61,108.)

The six cities complain first that such shoe-horning allows incumbent utilities to bypass comprehensive planning because CAISO has taken the position that upgrades identified as needed through the LGIP route aren’t to be reviewed through a regional planning process, because they are presumed to be constructed as part of the preliminary assumptions that pre-date planning. (See Comment of Six Cities, Docket ER-1410, Sept. 8, 2010, citing comments of CAISO, FERC Docket EL10-1, filed Aug. 24, 2010.)

The idea also arises that Edison’s strategy allows incumbent utility PTOs to win approval through the interconnection process for what are essentially policy-driven upgrades that should have been let out for bids from private developers, as noted by Pattern Transmission:

“The [then] pending SCE petition in Docket EL10-81 with respect to the Lugo-Pisgah and Red Bluff projects is an example of large network upgrades that should be considered public policy projects under any reasonable definition of that category.”

Many stakeholders, such as the Western Independent Transmission Group, warn that CAISO’s establishment of “multiple, vaguely defined transmission project categories, some with ROFRs and some without, will cause endless gamesmanship and associated litigation.” (See Comments, June 30, p. 7.)

Pattern Transmission, a member of WITG, complains it’s unclear whether, after adopting a completed plan, any policy or economic projects will remain available for bidding by independent developers, after “the three large PTOs” have characterized and claimed projects for their own as reliability driven, for generator interconnections, or for some other project category that pre-empts comprehensive planning, such as projects needed to maintain CRR feasibility, or CAISO’s special project category for generator tie-lines for location-constrained resource interconnection facilities, known as LCRIFs. (See Comments, June 30, 2010, p. 6.)

At the August conference CAISO maintained that category differences exist between policy-driven upgrades and LCRIF tie-lines. Yet many stakeholders found those