California regulators approve SCE cost recovery prior to Tehachapi undergrounding

The California Public Utilities Commission (CPUC) on Feb. 28 granted Southern California Edison (SCE) permission to move forward with preconstruction activities associated with the potential undergrounding of a portion of the Tehachapi Renewable Transmission Project (TRTP) and to recover the costs associated with those activities (Docket No. A07-06-031).

The CPUC must still make a decison on whether a portion of the project should be placed underground through the city of Chino Hills, Calif.

“This interim decision concludes, on balance, that it is in the public interest for … SCE to undertake certain preconstruction activities associated with the potential undergrounding of Segment 8A of the Tehachapi Renewable Transmission Project (TRTP) and to incur the reasonable costs of those activities,” according to the decision drafted by Jean Vieth, CPUC administrative law judge (ALJ).

After the commission approved the proposed decision without dissent as part of its consent agenda, CPUC President Michael Peevey addressed the need to make every effort to keep the project on schedule.

“We’re acting on this in part because we don’t want, in any way, to impede that line’s operation, but at the same time, we’re looking very, very closely at the attractiveness and desirability and the need of undergrounding that line through the community of Chino Hills,” Peevey said after the proposed order was approved.

The decision, which became effective immediately upon passage, noted that SCE’s preconstruction activities needed to occur in the next few months, prior to the commission’s determination on the merits of undergrounding Segment 8A, if the project is to begin commercial operation in late 2015, as scheduled.

The commission noted that the interim decision does not alter the commission’s stay of construction on portions of Segment 8A.

The decision acknowledged 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.”

The interim decision could increase ratepayer costs by as much as $33m, including estimated contracting termination charges of up to $28m if undergrounding of Segment 8A does not occur. If the CPUC ultimately orders that section of line placed underground, contract termination charges will not be incurred, the decision said.

A decision on the question of undergrounding, which is still pending before the full commission, is expected in July, according to a scoping memo issued by Peevey on Nov. 15, 2012.

When completed, the 250-mile, $2.5bn, 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).