California administrative law judge recommends allowing SCE to seek cost recovery for project

An administrative law judge (ALJ) with the California Public Utilities Commission (CPUC) has issued a proposed decision that would allow Southern California Edison (SCE) to seek recovery of costs associated with evaluating the underground placement of Segment 8A of the Tehachapi Renewable Transmission Project (TRTP) through the city of Chino Hills, Calif., before the full commission decides whether to order undergrounding (Docket No. A07-06-031).

“We conclude, on balance, that it is in the public interest for SCE to undertake certain specified pre-construction activities and to incur the costs associated with those activities,” ALJ Jean Vieth wrote in the proposed decision.

SCE sought the commission’s support for rate recovery of up to $33m in costs the utility determined it would need to incur prior to a final commission decision on undergrounding if the project is to begin commercial operation in late 2015, as scheduled.

SCE’s estimated costs include $4.5m for pre-production cable testing and additional engineering, $450,000 for real estate acquisition preparation and environmental permit preparation, and between $24m and $28m for contract termination charges. SCE explained that, in order to prepare testimony that adequately responded to previous commission directives, it had to enter into a bid process “to provide the commission with more refined estimates of the actual costs of an underground design derived from specific market information” and could incur termination charges if the commission ultimately declines to authorize undergrounding.  

The amended scoping memo issued by CPUC President Michael Peevey on Nov. 15, 2012, anticipates that the commission will determine whether to require undergrounding of Segment 8A through the existing right of way in Chino Hills in July 2013.

In the event that the CPUC declines to authorize the undergrounding, the proposed decision directs SCE to “cease all expenditures toward that end and shall immediately cancel cable manufacture and installation contracts associated with undergrounding Segment 8A.”

The proposed decision acknowledges that rate recovery is subject to FERC jurisdiction, but noted SCE’s position that, “[U]nder the unique circumstances of a situation like this one, a state commission’s assessment is particularly likely to inform FERC’s determination.”

An SCE spokesperson told TransmissionHub the utility is currently reviewing the draft document and declined to comment.

The proposed decision can be placed on the commission’s agenda after 30 days from its Jan. 29 issue date, a CPUC spokesperson told TransmissionHub Jan. 30. In the interim, interested parties can submit comments on the draft document to the CPUC.

If approved as drafted, the decision would become effective immediately upon approval by the full CPUC.

When completed, the 250-mile, $2.2bn, 500-kV project will be capable of moving up to 4,500 MW of renewable energy from the Tehachapi, Calif., area to population centers in Los Angeles and San Bernardino counties in California.

SCE has called the Tehachapi project “a critically important, high-voltage transmission line, the timely completion of which is essential for California’s progress toward its aggressive renewable energy goals.” California’s renewable portfolio standard calls for 33% renewable energy by 2020.

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