COM/MP1/tcg ALTERNATE DRAFTAgenda ID #8136 (Rev. 1)
Alternate to Agenda ID #8065
Ratesetting
12/18/08 Item 60b
Decision ALTERNATE PROPOSED DECISION OF PRESIDENT PEEVEY (Mailed 11/18/2008)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of San Diego Gas & Electric Company (U 902 E) for a Certificate of Public Convenience and Necessity for the Sunrise Powerlink Transmission Project. / Application 06-08-010(Filed August 4, 2006)
(See Appendix F for List of Appearances.)
DECISION GRANTING A CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY FOR THE
SUNRISE POWERLINK TRANSMISSION PROJECT
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A.06-08-010 COM/MP1/tcg ALTERNATE DRAFT
TABLE OF CONTENTS
TitlePage
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A.06-08-010 COM/MP1/tcg ALTERNATE DRAFT
TABLE OF CONTENTS
TitlePage
DECISION GRANTING A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY FOR THE SUNRISE POWERLINK TRANSMISSION PROJECT
1.Executive Summary
2.Background
2.1.Procedural History
2.2.Scoping Memo
3.Project Objectives and Description
3.1.Project Objectives
3.2.Description of the Northern Routes
3.2.1.The Proposed Project
3.2.2.SDG&E’s “Enhanced” Northern Route
3.2.3.The Final Environmentally Superior NorthernRoute
4.Standard of Review and Governing Law
4.1.Burden of Proof
4.2.Section 1001 et seq.
4.3.Rebuttable Presumption of Economic Need
5.SDG&E’s Electric System
5.1.SDG&E’s Transmission Resources
5.2.SDG&E’s Generation Resources
5.3.Future Generation Additions
5.4.Local Capacity Requirement
5.5.Upgrades Planned for Neighboring Transmission Systems
5.5.1.Imperial Irrigation District Transmission Upgrades
5.5.2.Green Path
6.Modeling Assumptions for the Analytical Baseline
6.1.Summary of Adopted Analytical Baseline Assumptions
6.2.Assumptions Regarding the Proper Peak Demand Forecast
6.2.1.Parties’ Positions
6.2.2.Discussion
6.3.California Solar Initiative Adjustments to the Peak Demand
Forecast
6.3.1.Parties’ Positions
6.3.2.Discussion
6.4.Energy Efficiency Adjustments to the Peak Demand Forecast
6.4.1.Parties’ Positions
6.4.2.Discussion
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6.5.Distributed Generation Adjustments to the Peak Demand
Forecast
6.5.1.Parties’ Positions
6.5.2.Discussion
6.6.Demand Response Adjustments to the Peak Demand Forecast
6.6.1.Parties’ Positions
6.6.2.Discussion
6.7.Assumptions Regarding In-Area Fossil Resources
6.7.1.The Existing South Bay Power Plant
6.7.1.1.Parties’ Positions
6.7.1.2.Discussion
6.7.2.Peakers
6.7.2.1.Parties’ Positions
6.7.2.2.Discussion
6.7.3.Other Fossil Resources
6.7.3.1.Parties’ Positions
6.7.3.2.Discussion
6.8.Assumptions Regarding Out-of-State Generation – Including Coal Plant Construction
6.8.1.Parties’ Positions
6.8.2.Discussion
6.8.3.Mexican Imports
6.9.Assumptions Regarding In-Area Renewables
6.9.1.Parties’ Positions
6.9.2.Discussion
6.10.Assumptions Regarding Imperial Valley Renewables
6.10.1.Parties’ Positions
6.10.2.Discussion
6.11.Assumptions Regarding the Availability of Out-of-State
Renewables to California
6.11.1.Parties’ Positions
6.11.2.Discussion
6.12.Assumptions Regarding Development of Renewables in Mexico
6.12.1.Parties’ Positions
6.12.2.Discussion
6.13.Assumptions Regarding Renewable Costs
6.13.1.Parties’ Positions
6.13.2.Discussion
6.14.Assumptions Regarding Transmission Resources
6.14.1.The Dispatch Limit at Imperial Valley Substation
6.14.1.1.Parties’ Positions
6.14.1.2.Discussion
6.14.2.Upgrades at Miguel Substation
6.14.2.1.Parties’ Positions
6.14.2.2.Discussion
6.14.3.Path 44 Upgrades
6.14.3.1.Parties’ Positions
6.14.3.2.Discussion
6.14.4.The Talega-Escondido/Valley-Serrano Transmission Line
6.14.4.1.Parties’ Positions
6.14.4.2.Discussion
6.14.5.Imperial Irrigation District Upgrades
6.14.5.1.Parties’ Positions
6.14.5.2.Discussion
6.14.6.The Green Path Transmission Line
6.14.6.1.Parties’ Positions
6.14.6.2.Discussion
6.14.7.Modified Coastal Link
6.14.7.1.Parties’ Positions
6.14.7.2.Discussion
6.15.Assumptions Regarding Gas Price Forecasts
6.15.1.Parties’ Positions
6.15.2.Discussion
6.16.Assumptions Regarding Combustion Turbine Costs
6.16.1.Parties’ Positions
6.16.2.Discussion
6.17.Assumptions Regarding Project Costs
6.17.1.Parties’ Positions
6.17.1.1.Capital Costs
6.17.2.Operating and Maintenance Costs
6.17.3.Cost Recovery Period
6.18.Discussion
7.Estimates of SDG&E’s Reliability Need Based on Analytical Baseline Assumptions
7.1.1.Parties’ Positions
7.1.2.Discussion
8.Energy Benefits
8.1.What They Are and How They Are Estimated
8.2.Overview of Conclusions
8.3.Parties’ Modeling Efforts
8.4.Discussion
9.Reliability Benefits
9.1.What They Are and How They Are Estimated
9.2.Overview of Conclusions
9.3.Parties’ Modeling Efforts
9.3.1.Sunrise’s Impact on Local Capacity Requirements
9.3.2.Estimating Benefits of Deferred New Generation
9.3.3.Estimating Must Run Contract Savings
9.3.4.Unquantifiable Reliability Benefits
9.4.SDG&E’s “Decision Quality” Framework Modeling
9.5.Planning for and Maintaining Reliability
9.6.Discussion
10.Potential Savings from Accessing Least Cost Renewable Resources
10.1.What They Are
10.2.Overview of Conclusions
10.3.How CAISO Estimates Potential Renewable Resource Savings
10.4.Discussion
11.Calculating Net Benefits
11.1.Overview of Conclusions
11.2.Parties’ Modeling Efforts
11.3.CAISO’s Compliance Exhibit
11.3.1.Overview
11.3.2.Discussion
11.4.The Commission’s Update to the Compliance Exhibit
11.4.1.Overview
11.4.2.Discussion
12.Green House Gas Impacts
12.1.GHG Emissions Projected in the EIR/EIS
12.1.1.Parties’ Positions
12.1.2.Discussion
12.2.GHG Impacts of the Proposed Alternatives
12.2.1.Parties’ Positions
12.2.2.Discussion
13.The Northern Routes’ Anza-Borrego Link
13.1.Overview of the Proposed Project’s Route through Anza-Borrego
13.2.Anza-Borrego’s Place in the State ParkSystem
13.3.Legal Issues Unique to the Anza-Borrego Link
13.3.1.Anza-Borrego’s General Plan
13.3.2.The California Wilderness Act and Potential Wilderness Dedesignation
13.3.3.SDG&E’s Right-of-Way through Anza-Borrego
13.4.Overview of the Environmental Impacts onAnza-Borrego
13.4.1.Environmental Impacts of the Proposed Project
13.4.1.1.Parties’ Positions
13.4.1.2.Discussion
13.4.2.Environmental Impacts of the “Enhanced” Northern Route
13.4.2.1.Parties’ Positions
13.4.2.2.Discussion
13.4.3.Environmental Impacts of the Final Environmentally
Superior Northern Route
13.4.3.1.Parties’ Positions
13.4.3.2.Discussion
13.5.Conclusions Regarding Any Route Through Anza-Borrego
14.Wildfire Risks
14.1.Overview
14.2.Risk of Fire Ignition
14.3.Risk of Dual Line Failure Due to Wildfire
14.4.Comparison of Fire Risk Across Transmission Alternatives
14.5.Mitigation to Reduce Risk of Fire Ignition
14.6.Conclusion
15.Environmental Review
15.1.Alternatives Analyzed in the EIR/EIS
15.2.Connected Actions
15.3.Future Transmission Expansion
15.4.All-Source Generation Alternative
15.4.1.Description
15.4.2.Parties’ Positions
15.4.3.Discussion
15.5.In-Area Renewable Alternative
15.5.1.Description
15.5.2.Parties’ Positions
15.5.3.Discussion
15.6.LEAPS Transmission-Only Alternative
15.6.1.Description
15.6.2.Parties’ Positions
15.6.3.Discussion
15.7.Final Environmentally Superior SouthernRoute
15.7.1.Parties’ Positions
15.7.2.Discussion
15.8.Northern Routes
15.9.LEAPS Transmission Plus Generation Alternative
15.10.No Project Alternative
15.10.1.Description
15.10.2.Parties’ Positions
15.10.3.Discussion
15.11.Conclusions Drawn from Environmental Review
16.Community Values and Other Requirements Pursuant to Public Utilities Code Section1002(a)
16.1.Mussey Grade Road and Backcounty Areas
16.2.Agricultural Community Values
17.Developing the Renewable Potential of the Imperial Valley
18.Certification of Final EIR, Project Authorization, Statement of
Overriding Considerations, and Related Issues
18.1.Certification of Final EIR
18.2.Authorization of the Final Environmentally Superior
Southern Route
18.3.Statement of Overriding Considerations
18.4.Mitigation Monitoring
18.5.Electro Magnetic Field (EMF) Issues
19.Compliance with Public Utilities Code Section 625
20.Specification of Maximum Reasonable Cost
21.Miscellaneous Procedural Matters
22.Comments on Alternate Proposed Decision
23.Assignment of Proceeding
24.Conclusion
Findings of Fact
Conclusions of Law
ORDER
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TABLE OF CONTENTS
(Cont’d)
Appendix A – Acronyms
Appendix B – Assumptions Modeled in CAISO Compliance Exhibit
Appendix C – Risk of Fire Ignition
Appendix D – Mitigation Measures
Appendix E – CPUC CEQA Findings of Fact
Appendix F – List of Appearances
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A.06-08-010 COM/MP1/tcg ALTERNATE DRAFT
DECISION GRANTING A CERTIFICATE OF PUBLIC
CONVENIENCE AND NECESSITY FOR THE
SUNRISE POWERLINK TRANSMISSION PROJECT
1.Executive Summary
This decision grants the application of San Diego Gas & Electric Company (SDG&E) for a Certificate of Public Convenience and Necessity (CPCN) to construct the Sunrise Powerlink Transmission Project (Sunrise) using the Final Environmentally Superior Southern Route.[1]
SDG&E’s initial construction proposal, referred to as the Proposed Project, contemplates a new 500/230 kV transmission line running approximately 150miles from the El Centro area of Imperial County to northwestern San Diego County.[2] The 500 kV portion of the line would travel the length of Anza-Borrego Desert State Park (Anza Borrego), a distance of approximately 25 miles. We find all of the routes that go through Anza-Borrego to be environmentally unacceptable and infeasible.
Assuming renewable procurement at the level of 33% Renewable Portfolio Standard (RPS), we estimate that the Final Environmentally Superior Southern Route will generate net benefits of over $115 million per year,[3] and we find that it is the second highest ranked Alternative that will facilitate our policy to achieve greenhouse gas (GHG) reductions through renewable procurement at 33% RPS levels in the shortest time possible.[4]
A statutory framework governs our review of this application and we highlight its major components. Pursuant to Public Utilities Code Section 1001,[5] before granting a CPCN we must find a need for the Proposed Project or an alternative evaluated in this proceeding. Section 1002(a) requires that we consider four additional factors: community values; recreational and park areas; historical and aesthetic values; and influence on the environment. SDG&E claims that Sunrise is needed to maintain reliability, promote renewable energy, and reduce energy costs and projects that construction of the line will provide economic benefits to its ratepayers. The CPCN portion of our proceeding has been the forum for economic review and this decision evaluates each of SDG&E’s claims.
The review process established by the California Environmental Quality Act (CEQA)[6] has been the primary focus for environmental review. As lead agency pursuant to CEQA, we have evaluated the environmental impacts of the Proposed Project, seven alternatives (two of them solely generation based, “nonwires” alternatives and the rest, transmission based, “wires” alternatives), and a No Project Alternative. CEQA requires a lead agency to identify and study feasible alternatives and mitigation measures to reduce a project’s significant environmental impacts.
This proceeding has been heavily-contested, involving lengthy evidentiary hearings and dozens of public meetings. In addition to voluminous testimony, documentary evidence, and two rounds of briefs in connection with the evidentiary hearings, there have been eleven opportunities for public comment, both written and oral, including Public Participation Hearingsat five different locations. The Final Environmental Impact Report/Environmental Impact Statement (Final EIR/EIS)[7] prepared jointly by this Commission and the United States Bureau of Land Management (BLM) is over 11,000 pages long. Today’s decision certifies the Final EIR, which is the CEQA portion of the Final EIR/EIS.
A significant portion of the environmental review focuses on the environmental impacts the Proposed Project and other Northern Routes would have on Anza-Borrego. SDG&E proposes to build the Proposed Project through wilderness lands in the heart of Anza-Borrego. Many members of the public have referred to Anza-Borrego as the crown jewel[8] of the State Parks system. The Vision Statement in Anza-Borrego’s General Plan states:
Anza-Borrego is a place of awe, inspiration, and refuge. The vast desert landscape and scenery are preserved in a pristine condition. The full array of natural and cultural resources are cared for so as to perpetuate them for all time while supporting those seeking enjoyment from these resources ...[9]
The Final EIR/EIS finds that SDG&E’s Proposed Project has 52 significant, unmitigable environmental impacts that would require de-designation of approximately 50 acres of state wilderness in Anza-Borrego. SDG&E subsequently proposed to build entirely within a 100-foot corridor in Anza-Borrego. However, the Final EIR/EIS concludes that this “Enhanced” Northern Route only increases the potential for significant, adverse impacts. Further, the status of legal right-of-way within that 100-foot corridor is heavily contested. Consequently, we find that all routes that would traverse Anza-Borrego are unacceptable.
The Final EIR/EIS ranks three alternatives as environmentally superior to the Final Environmentally Superior Southern Route – the All-Source Generation Alternative, the In-Area Renewable Alternative, and the LEAPS Transmission-Only Alternative.[10] We find these three alternatives to be infeasible for, among other things, meeting California’s broader policy goals.
Modeling performed by the CAISO demonstrates total projected reliability benefits of Sunrise to be over $200 million per year in addition to a number of desirable, but unquantifiable, reliability benefits. Among other things, Sunrise will create a more robust southern California transmission system, and provide insurance against unexpected high load growth in SDG&E’s service area. A transmission solution affords SDG&E the best opportunity to plan for the current and future reliability needs throughout its service territory. The generation alternatives will not provide these benefits.
AB 32 requires that California reduce its GHG emissions to 1990 levels by 2020.[11] The Commission, with the Energy Commission, has adopted recommended policies and rules to be implemented by the California Air Resources Board (CARB) to meet California’s GHG reduction objectives in the energy sector.[12] Among them is a recommendation that the electricity sector achieve renewable procurement at 33% RPS levels.[13] On December 11, 2008 by a unanimous vote CARB adopted the Scoping plan, which incorporates this recommendation. Thus, this state and this Commission are committed to achieving GHG reductions in the energy sector, in part, through renewable procurement at 33% RPS levels.
Under renewable procurement at 33% RPS levels, the Final Environmentally Superior Southern Route is the second highest ranking alternative that will facilitate our renewable energy development and GHG emission reduction goals for the energy sector. The higher ranking alternative is environmentally unacceptable and therefore infeasible. We estimate that the Final Environmentally Superior Southern Route will facilitate development of 1,900 megawatts (MW) of Imperial Valley renewables by 2015, and that more than half of that development will be of high capacity geothermal resources. In contrast, the higher ranked alternatives are not estimated to facilitate even half that amount of renewable development.
Assuming 33% RPS, Sunrise is estimated to generate over $115 million in annual net benefits to ratepayers, which significantly exceeds the estimated net benefits of the All-Source Generation Alternatives.
We do not take our decision to approve the Final Environmentally Superior Southern Route lightly. Of particular concern is the risk of wildfires created by electric distribution and transmission lines and the risk of power outages as a result of wildfires. The Final EIR/EIS describes these risks, but finds that while there are likely to be increased dual line power outages, the fire risk posed by the Final Environmentally Superior Southern Route is minimized given that the route is comprised of 230 kV and 500 kV lines placed on tall, steel structures. We also require SDG&E to take significant mitigation measures to prevent fire ignition in both the construction and operation of the line. This decision also imposes 125 substantial mitigation measures directly on SDG&E to address the many of the environmental impacts of Sunrise.
We acknowledge that there has been significant public opposition to Sunrise. Of the more than 400 individuals who have commented on Sunrise during our Public Participation Hearings, the vast majority oppose one or more of the Sunrise alternatives because of impacts on community values, the environment, and the other factors we consider pursuant to § 1002(a). Our consideration of these factors is reflected in the Sunrise route we approve as set forth in this decision.
We are convinced that approval of Sunrise will help to unlock the potential of one of the richest renewable energy regions in California. However, we recognize that some parties are concerned that Sunrise will instead be used to support development of new fossil-fired generation. While we do not believe the record provides evidence that this is a likely outcome, we wish to stress that the Commission’s decision in this case is only the first step toward fully developing renewable energy in the Imperial Valley region. We intend to use our extensive array of regulatory tools to ensure that the renewable resources enabled by Sunrise are indeed developed on a timely basis.
2.Background
2.1.Procedural History
This proceeding commenced on December 14, 2005, when SDG&E filed Application (A.)0512014, its initial request for a CPCN for authority to construct Sunrise (2005 Application). Because of critical deficiencies in the 2005 Application, including failure to identify the route for Sunrise or to include a Proponent’s Environmental Assessment (PEA), SDG&E filed an entirely new set of documents on August 4, 2006. Though at times SDG&E’s 2006 filing has been referred to, informally, as an “amendment” to the 2005 filing, we designated the 2006 filing as a new application and assigned a new proceeding number, A.0608010 (2006 Application). The Chief Administrative Law Judge (ALJ) consolidated the dockets for the 2005 and 2006 Applications and subsequently, in D.07-11-008, we affirmed the consolidation and then closed the 2005 Application.
On September 6, 2006, responding to requests from the Commission’s Energy Division, SDG&E filed a multiple volume supplement to the 2006 Application. On September 13, 2006, the assigned ALJ held a Prehearing Conference in Ramona, California. During this period the Commission continued to receive protests and ultimately more than a dozen were filed.[14] A Scoping Memo issued after the Prehearing Conference, as required by statute.[15] The Scoping Memo established the scope of this proceeding and the schedule, coordinating the CPCN review with the timeline for the concurrent, parallel track CEQA/NEPA review. The Scoping Memo also designated ALJ Steven Weissman as the presiding officer and set two hearing phases, focusing Phase 1 on all issues that could be examined prior to issuance of the Draft EIR/EIS, and Phase 2 on issues tied to the Draft EIR/EIS. In Section 2.2 below, we discuss the Scoping Memo in greater detail. On October 2, 2006, SDG&E supplemented the 2006 Application to include and rank four alternative routings which, unlike its initial route, would not pass through Anza-Borrego. On January 19, 2007, SDG&E filed corrections to certain cost/benefit assumptions in the 2006 Application.
The NEPA and CEQA scoping processes commenced, respectively, on August 31, 2006 with BLM’s publication in the Federal Register of a Notice of Intent to prepare an EIS; and on September 15, 2006 with the issuance by Commission Energy Division staff of a Notice of Preparation of an EIR. BLM and Commission staff, together with their environmental consultants, jointly held seven public scoping meetings in October 2006. By November 2006, the Commission had received over 300 comments on the Notice of Preparation from public, private, and tribal agencies and from members of the public. In February 2007, following preliminary identification of the alternatives to analyze in the EIR/EIS, BLM and Commission staff, and their consultants, held eight more public scoping meetings to gain further input. The subsequent CEQA/NEPA review proceeded with additional public notice and input at milestone intervals, consistent with those environmental laws.