SCE extends construction completion schedule for Mesa substation project

Southern California Edison (SCE) has extended the construction completion schedule by six months, from fall 2021 to spring 2022, for the Mesa substation project in order to better reflect preconstruction requirements and seasonal considerations affecting the start of construction, Maria Rigatti, Edison International (NYSE:EIX) executive vice president and CFO, said on May 1.

“This has only a minor impact on the profile of construction expenditures,” she said during Edison’s 1Q17 earnings call. “This update came out of a project scheduling review process that SCE is undertaking for all of its major construction projects. We want our forecasting to be as consistent as possible across all of these projects, given our recent experience with regulatory delays.”

As TransmissionHub reported, the Mesa substation project consists of such main components as construction of the new 500/220/66/16-kV Mesa substation and demolition of the existing 220/66/16-kV substation, increasing the substation’s footprint from about 22 acres to 69 acres.

Rigatti also noted during the call that the California Public Utilities Commission (CPUC) in March denied the state Office of Ratepayer Advocates’ (ORA) appeal of its decision approving the $1.1bn West of Devers project. She also said that SCE in April received the final environmental impact review for its $397m Alberhill System Project, which accepted SCE’s recommended project scope; final CPUC approval will still be required.

As noted on SCE’s website, the West of Devers project will consist of removing and replacing about 48 corridor miles of existing 220-kV transmission lines with new double-circuit 220-kV transmission lines between the existing Devers substation (near Palm Springs), El Casco substation (Redlands), Vista substation (in Grand Terrace), and San Bernardino substation.

SCE in October 2013 filed its application for a certificate of public convenience and necessity (CPCN) with the CPUC, which approved the CPCN last August, according to the site. SCE received the Record of Decision from the Bureau of Land Management last December, the site noted.

Subject to all necessary environmental permits and regulatory approvals, construction is scheduled to begin in 3Q17, and the project is anticipated to be in service in August 2021, according to the site.

According to SCE’s website, major components of the Alberhill project include a new 500/115-kV transmission substation, two new 500-kV line segments, a new 115-kV sub-transmission line, and modifications to existing sub-transmission lines. The project will help meet growing electricity demand in western Riverside County, the site noted.

According to the project timeline, construction on the project is set to begin this year.

Edison International President and CEO Pedro Pizarro discussed the SCE 2018 general rate case (GRC) during the earnings call, noting that the company’s filing outlined a continued focus on infrastructure reliability investment.

“It also proposed the first elements of a multi-year grid modernization initiative – one that will be a key enabler of California’s ambitious climate change policies, as well as supporting improved system reliability and public safety,” he said.

The state has only 13 years to reduce greenhouse gas (GHG) emissions 40% below 1990 levels, he said, adding, “Policymakers have identified a robust, modernized electric grid as a critical element in the effort to achieve significant GHG reductions.”

As noted in a Sept. 1, 2016, company document, SCE’s 2018 GRC requests 2018 revenue requirement of about $5.9bn:

  • $222m increase over presently authorized base rates, a 2.7% increase over total rates
  • Requests for post test year increases – $533m in 2019, and $570m in 2020

Capital expenditures include $2.1bn of proposed grid modernization capital to support improved safety and reliability, as well as increased levels of distributed energy resources, according to the document.

Pizarro said during the call that SCE is strengthening its system through a number of major transmission projects.

“The paths to permitting and constructing these projects are complex, but the benefits to system reliability and greenhouse gas emissions reductions cannot be understated,” Pizarro said. “This is especially important as we look ahead to the retirement of a number of gas-fired power plants owned by third parties. These are located along the coast, many in our service territory. These plants have to shut down or repower due to the future prohibition on the use of once-through cooling water. Most of them have to shut down by the end of this decade.”

Pizarro noted that other projects will enable increased access to renewable energy resources, and are necessary to meet the state’s 33% renewables target by 2020.

“It is particularly important to avoid regulatory delays on these and future transmission projects,” he said. “These projects are foundational if we are to add new sources of low-carbon, renewable energy to the grid as soon as possible.”

Earnings report

Edison on May 1 reported 1Q17 net income of $362m, or $1.11 per share, compared to $281m, or 86 cents per share, in 1Q16. There were no non-core items in 1Q17 results, the company said, adding that 1Q16 core earnings were $278m, or 85 cents per share.

SCE’s 1Q17 net income increased by $54m, or 17 cents per share, from 1Q16 due to an increase in revenue from the escalation mechanism set forth in the 2015 GRC decision, lower operation and maintenance expenses, and higher income tax benefits partially offset by higher net financing costs to finance SCE’s capital spending program, Edison said.

About Corina Rivera-Linares 3236 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.