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Fortnightly Magazine - February 2012

California Energy Commission’s 2003 Renewable Resources Development Report, the Tehachapi Area has the largest renewable resource potential in California, except for solar power installations, which weren’t considered to be cost-competitive at the time. The CPUC issued Decision No. 0406010 in 2004 that convened the Tehachapi Collaborative Study Group to produce a comprehensive development plan for a phased transmission expansion to accommodate 4,500 MW of potential renewable capacity in the Tehachapi wind resource area. The CPUC also required Southern California Edison to prepare a formal CCN application for the first phase of that expansion.

As with other states, California had to address the question of transmission cost recovery. In response to a petition from Southern California Edison for a declaratory order (Docket No. EL05-80) , FERC initially determined that Segment 3 of the planned Tehachapi Renewable Transmission project (see Figure 5) wasn’t a network upgrade and, therefore, wasn’t eligible for rolled-in rate treatment. FERC noted further that FERC precedent wouldn’t allow the costs of such facilities to be shifted from the interconnection customers to all users of the transmission grid. Nevertheless, the CPUC approved Phase 1 of the Tehachapi project in March 2007 that included $207 million of new 500 kV lines—initially operated at 230 kV—and associated upgrades to accommodate 700 MW of new capacity. Under the CPUC’s decision, Southern California Edison was permitted to recover through its retail rates any costs not approved by FERC for recovery through CAISO’s wholesale transmission rates.

FERC issued an order granting petition for declaratory order in November 2007 regarding an expanded Tehachapi project consisting of the three Phase 1 segments previously reviewed plus eight additional Phase 2 segments (see Figure 6) . FERC determined that most of Segment 3 could now be considered a network facility—by the addition of Segments 4 and 10—and therefore qualified for rolled-in rate treatment.

In December 2007, FERC approved an amendment to the CAISO tariff that added provisions for “location constrained resource interconnection facilities.” Before that time, the costs of radial generator interconnections weren’t eligible for recovery through the CAISO tariff. Under the new provisions, the costs of location constrained resource interconnection facilities designed to serve more than one generator can initially be covered by the CAISO tariff with the costs ultimately to be paid by the connecting generators after they come on line. In May 2009, the CAISO announced that the radial line from Windhub to Highwind—a portion of Segment 3—had been approved by the CAISO Board as the first location constrained resource interconnection facility. However, construction of this project remains on hold until sufficient capacity on the lines is requested by generators.

In 2009, the CPUC approved the remaining Phase 2 segments, estimated to cost $1.8 billion, and reiterated the Tehachapi project’s eligibility for backstop retail rate recovery. Phase 1 was completed in 2009, and several segments of Phase 2 have been completed, with the last planned for completion in 2013. At this writing, FERC was expected to approve cost recovery of all phases through CAISO transmission rates, so backstop retail rate cost recovery might not be utilized.