Environmental Law

FERC Approves Request Related to West Coast Renewable Transmission Project

By Dennis Pfaff and Kevin Livingston, Editors

The Federal Energy Regulatory Commission has partially approved Pacific Gas and Electric Company's request that allows the company to recover from customers at least some of the costs related to a 1,000-mile transmission project intended to deliver power from renewable sources.

In the words of a statement from the federal agency, it gave partial approval to the Northern California utility's "petition for a declaratory order for recovery of prudently incurred pre-commercial and abandonment costs" related to the effort (see text of statement here; see full text of decision here). The $3.2 billion project would deliver up to 3,000 megawatts of new renewable power to California from Canada's British Columbia and from states in the Pacific Northwest.

The project will also be designed to take advantage of the fact that demands in the region peak at different times of the year, according to a statement from one of the commissioners. 

The Energy Policy Act of 2005 gave the commission authority to encourage greater investment in the power grid, including granting incentives allowing the recovery through rates of the costs associated with the projects. Barbara Connors, a spokeswoman for the commission, declined to put a dollar figure on the items so far approved by the panel.

"This is an early stage request," she told Climate Law Update. She also noted that the action does not approve the project's construction. Some aspects of the law relating to the federal government's authority to address the location of transmission projects have been controversial (see Climate Law Update story here). 

Commissioner Marc Spitzer said the approval of incentives for the PG&E project and a separate effort in the Mid-Atlantic region show the commission is willing to exercise the authority granted to it under the 2005 law.

"Our policies are making a difference – major backbone transmission projects are being proposed and built throughout our nation,” Spitzer said in the commission's statement. 

The commission rejected as premature the utility's request for "construction-work-in-progress" and "return on equity" incentives. Instead, the regulators suggested that PG&E re-submit its request for any additional incentives once it completes studies to determine if it meets FERC standards for infrastructure incentives. Under a prior order approved by the commission, applicants seeking the incentives must show that the proposed facilities either ensure reliability or reduce the cost of delivered power by reducing congestion.

In a separate statement, Commissioner Philip D. Moeller applauded the company for "taking a bold step in leading the effort" to develop the proposed project. He added that "broad regional cooperation is also contemplated" as PG&E proposes to design the project to take advantage of the seasonal demands in the region, where California's demand peaks in the summer, whereas demands in Canada and the Northwest peak in the winter (see text of statement here).

(Transmission lines with Oregon's Mount Hood in background; U.S. Department of Energy photo)

Full post as published by Climate Law Update on April 21, 2008 (boomark / email).