Cal-ISO selects LS Power subsidiary DesertLink for Harry Allen to Eldorado project

The California ISO (Cal-ISO) on Jan. 11 chose LS Power subsidiary DesertLink LLC to build and own the Harry Allen to Eldorado transmission project, a 60-mile, 500-kV facility, through the Cal-ISO competitive solicitation process.

The DesertLink proposal was chosen over the proposals from Exelon Transmission Co. LLC and NextEra Energy Transmission West LLC (NEET West) in collaboration with utility Southern California Edison (SCE).

“We are pleased to be selected by the California ISO for this project, and we look forward to working with the ISO to complete it,” Paul Thessen, president of LS Power Development, said in a Jan. 11 statement.

“The competitive process and the binding cost containment provisions we offered, including a cap on construction costs, demonstrate the benefits of competition for transmission and will result in lower costs and protection for ratepayers from cost overruns,” he said.

In its selection report, the Cal-ISO said its analysis of the three proposals assessed the degree to which each project sponsor met the qualification criteria under the Cal-ISO tariff, and it noted that all three proposals contained cost cap provisions.

The Cal-ISO said in the report that it “would like to emphasize that it considers all project sponsors to be qualified to finance, construct, own, operate, and maintain the Harry Allen-Eldorado project.”

The project is an economically driven transmission line to move power between the Harry Allen substation, which is owned by NV Energy, and the Eldorado substation, which is primarily owned by SCE.

In its specifications for the project, issued in 2015, the Cal-ISO said the single-circuit line would have an estimated cost of $144m, and that it was seeking an in-service date of no later than May 1, 2020.

The proposals from the developers sought in-service dates before that date, though there were contingencies and conditions that would affect those dates, the Cal-ISO said in its selection report.

DesertLink affiliates have already completed the transmission line-siting process and the federal environmental review process under the National Environmental Policy Act, as well as secured federal rights of way (ROWs) and approval from Nevada state regulators, which should reduce risks for developing the project, the Cal-ISO said in the report. DesertLink’s schedule also has the most flexibility compared with the other proposals, which allows DesertLink more time to meet the planned in-service date, the Cal-ISO said.

The DesertLink affiliates relevant to the company’s proposal include Great Basin Transmission South LLC, owner of a 75% interest in the One Nevada Transmission Line (ON Line), Great Basin Transmission LLC, developer and owner of transmission assets in Nevada and Idaho, and Cross Texas Transmission LLC, a transmission provider in Texas, the Cal-ISO said. Great Basin Transmission has been developing a 500-kV transmission line between the Harry Allen and Eldorado substations since 2008, and it would transfer ROW assets to DesertLink for development of the project, the report noted.

NV Energy, owned by Berkshire Hathaway Energy, has an option to purchase a minority ownership interest in DesertLink, exercisable upon DesertLink placing the project under the Cal-ISO’s control. Since that option does not occur prior to financing or construction, NV Energy was not considered a source of equity or financing for the purpose of DesertLink’s proposal, the Cal-ISO added.

In much of the selection report, the Cal-ISO said it found no material differences between the proposals on various factors considered. But because the Exelon Transmission and NEET West/SCE proposals do not have existing ROW that would be used for their projects, the Cal-ISO found that DesertLink’s proposal was better in that factor “because of the progress DesertLink’s sister company Great Basin Transmission has made in acquiring [ROWs] for DesertLink’s proposed ‘approved’ route for this project.”

In November 2015, FERC rejected as premature several agreements regarding capacity rights, operation and maintenance (O&M) of the ON Line because they hinged on DesertLink being selected by the Cal-ISO to develop the Harry Allen to Eldorado project. The agreements included a transmission usage and capacity exchange agreement among Great Basin Transmission, Great Basin Transmission South and NV Energy utilities, an O&M agreement, and a license and sale agreement between Nevada Power and DesertLink. Among other things, the agreements would increase NV Energy’s capacity on the 500-kV ON Line, which began service in 2014, grant DesertLink a license to use Nevada Power property rights and unused transmission assets in development of the Harry Allen to Eldorado project, and have Nevada Power perform O&M services for DesertLink for the project.

The FERC order said that NV Energy and the other companies could refile the agreements at a later date when they would not contain the uncertainty and contingent terms associated with the Cal-ISO selection process.

NV Energy sought rehearing of that FERC decision on Dec. 21, 2015, an NV Energy spokesperson told TransmissionHub.