ALJ dismisses Nevada Hydro’s CPCN application

An administrative law judge (ALJ) in a proposed decision April 3 dismissed Nevada Hydro‘s application for a CPCN for the Talega-Escondido/Valley-Serrano 500-kV transmission line project.

The California Public Utilities Commission’s (CPUC) five commissioners will vote on a preliminary decision on the matter.

ALJ Angela Minkin said the independent transmission developer’s application was incomplete and did not conform to the CPUC’s requirements. She dismissed the application without prejudice but outlined several conditions for Nevada Hydro to meet before re-filing its application.

The TE/VS 500-kV transmission line would have a nominal design capacity of 1,000 MW and provide a transmission interconnection from the proposed Lake Elsinore Advanced Pumped Storage (LEAPS) hydroelectric energy storage facility to the transmission systems of Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E).

Among the conditions are that Nevada Hydro ensure that the financial viability of the project is clear and “that any financial partner’s participation is transparent,” and that it explain how the California ISO is “currently considering the project,” including a full discussion of how revenue requirements will be calculated and recovered through the transmission access charge (TAC).

Nevada Hydro also must hold a public forum, which a source familiar with the situation said was the only new condition. The company has held several public forums to which “nobody showed up,” the source said. “There’s not a lot of public opposition to this,” the source added.

 

According to a second source familiar with the situation, the conditions imposed by the ALJ could be construed as discriminatory, as they are not also imposed on investor-owned utilities (IOUs) during their application processes for transmission lines.

The first source noted a Catch-22 with regard to financial transparency. The CPUC wants such clarity provided in Nevada Hydro’s application, but financing for the line is contingent upon CPUC approval of the project, the sources told TransmissionHub.

Once regulatory approval for the project is obtained, “The risk profile changes dramatically,” the first source said, adding that investors will be sniffing around the project in droves when it gets approval.

The first source added that when a public utility applies for a CPCN, it is not required to outline how exactly it will finance a project. “There’s a little bit of being held to a different standard,” this source said.

According to the ALJ’s decision, First Reserve Corporation and the St. Augustine Trust provided letters of intent to provide development and construction financing for the project. Though First Reserve is understood to be interested, it is unclear whether the trust is still an interested party.

The project is now estimated to cost $684m, up from $353m in 2007 dollars. “The costs are reflective of a 500-kV line, with a portion underground and with gas insulated substations,” the second source said, adding that a “large portion” of that figure was attributable to network upgrades.

If approved, the line could be in service in 14 months, in time for summer 2013, the second source said.  

Another potentially discriminatory statement in the preliminary decision revolves around changing expert witnesses, the second source claimed. In November 2011, Nevada Hydro requested a 90-day stay in the proceeding to submit new expert witness testimony to replace the witnesses associated with the Siemens Company, who were no longer available.

“At this late date, we decline to stay this proceeding while Nevada Hydro seeks expert witnesses to prepare testimony that is critical to the consideration of whether this project is viable, feasible, economic, and whether there is a need for the project,” Minkin wrote.

The second source claimed utilities are granted the opportunity to submit testimony multiple times, as was the case in the Sunrise Power Link project, sponsored by SDG&E, a Sempra (NYSE:SRE) subsidiary.

In her decision, Minkin also said the need for the proposed project had not been stated. According to the two sources, however, the line would preclude blackouts such as the one San Diego County, Calif., experienced last fall. 

If the ALJ’s decision is upheld by the commissioners, Nevada Hydro will have to reapply for approval of a CPCN, but because the company has met “most” of the CPUC’s conditions, the process will not be that difficult, the second source familiar with the situation told TransmissionHub.

Interveners in the project include the Division of Ratepayer Advocates, SCE, (SDG&E), John Pecora, Forest Residents Opposing New Transmission Lines (FRONTLINES), Fresian Focus, Linda Lou and Martin Ridenour, the Elsinore Valley Municipal Water District (EVMWD), and jointly, the Center for Biological Diversity, Friends of the Forest (Trabuco District) and the Santa Rosa Plateau, and Santa Ana Mountains Task Force of the Sierra Club.

SCE is a subsidiary of Edison International (NYSE:EIX).

 

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.