The California Public Utilities Commission (CPUC) on April 20 issued a Proposed Decision that would deny without prejudice Southern California Edison’s (SCE) request to construct the Coolwater-Lugo Transmission Project (CLTP).
Administrative Law Judge Irene Moosen’s Proposed Decision, which will be up for review at the commission's May 21 meeting, dismisses the application of SCE for a Certificate of Public Convenience and Necessity (CPCN) without prejudice. This recommended action is because the current proposed project cannot be evaluated without new studies that take into consideration: significant changes to transmission grid conditions along the project route that have occurred since the project was proposed, and comprehensive new analyses to identify any residual need for transmission system upgrades in the area.
The Proposed Decision cites comments from the California Independent System Operator (CAISO) that the need for the project to interconnect the Mojave Solar Project no longer exists due to the retirement of several power plants in the project area. The Proposed Decision also responds to the notification by NRG California South LP that its Coolwater Generating Station was permanently retired as of January 2015. This facility was a 636-MW gas-fired plant located in Daggett, Calif. NRG California is a unit of NRG Energy (NYSE: NRG).
“Although some transmission improvements in this area may be needed in the future, the Proposed Decision finds that significant changes in circumstances surrounding the proposed project dictate that the Application should be dismissed without prejudice,” said Commissioner Mike Florio, who was assigned to shepherd this project through the review process. “If future studies and analysis determine that additional transmission improvements are needed to ensure reliability and/or renewable energy development, a new Application can be filed.”
The Coolwater-Lugo Transmission Project was proposed by SCE in 2013 and includes the construction of a major transmission line from the Lugo substation near Hesperia, Calif. to the Coolwater substation near Daggett, Calif., as well as a new substation near Apple Valley, Calif. The estimated cost of the proposed project is $936 million.
“If the Proposed Decision is adopted by the CPUC, we may have a very fortunate outcome – saving consumers nearly a billion dollars and preventing environmental impacts because several old power plants have retired and a new solar power plant in the same area will no longer need new transmission lines built to deliver its energy to the transmission system,” said Florio.
Said the Proposed Decision: "The impact of significant material changes in grid conditions on the Southern California Edison Company Application for a Certificate of Convenience and Necessity for the Coolwater-Lugo Transmission Project necessitates this action. Specifically, the permanent retirement of the Coolwater Generating Station has freed a large quantity (636 MW) of electric transmission transfer capability along the south of Kramer route targeted for upgrades. In addition, the California Independent System Operator Corporation (CAISO) has identified additional deliverability capacity that is now available as a result of additional generating resource retirements. This has led to assigning Full Capacity Deliverability Status to Mojave Solar, LLC. All parties agree that several new CAISO studies will be necessary to determine the existence and timing of any residual need for transmission upgrades."
Mojave Solar's comments in this proceeding responded to the question of whether CLTP is still needed since the permanent retirement of Coolwater by emphasizing that “Coolwater’s firm capacity rights are not available at this time to another party, let alone Mojave Solar, and may not be available in the future.” It pointed to the CAISO’s policy to hold NRG’s Full Capacity Deliverability Status (FCDS) for the full rated capacity of Coolwater for three or more years and concluded that “NRG has many options and several years to determine how to proceed. It can repower the plant, or sell the plant to a buyer that will repower it.” The Proposed Decision said that NRG has shown no desire to repower the Coolwater plant.
Without access to Coolwater’s FCDS capacity or the CLTP power line project, Mojave Solar stated that it will be subject to significant detrimental impacts under the terms of at least three contractual agreements covering Mojave Solar’s financing, its interconnection agreement with the CAISO and SCE and its Purchase Power Agreement (PPA) with Pacific Gas and Electric (PG&E).
California ISO says plant retirements opened up grid capacity for Mojave Solar
On March 17, the CAISO requested leave and filed Supplemental Comments citing subsequent material changes regarding the need for the CLTP. CAISO said that as a result of its annual reassessment of Network Upgrades sufficient capacity is available such that the Mojave Solar project may now achieve FCDS, subject to review and approval by the Federal Energy Regulatory Commission. The change in FCDS for Mojave Solar was attributed to election by several generating facilities other than Coolwater to permanently retire and forego repowering. The now-released deliverability status and associated capacity was reallocated to Mojave Solar.
The CAISO stated that “as a result, the Coolwater-Lugo Transmission Project is no longer necessary in order for Mojave Solar to receive Full Capacity Deliverability, as was set forth in its [Large Generator Interconnection Agreement].” The CAISO stated that it will conduct additional Phase II Interconnection Studies to determine whether there is any residual need for any elements of the CLTP to interconnect other projects currently in the CAISO Queue. The CAISO said it will finalize these Phase II Interconnection Studies in November 2015 and recommended that the commission suspend this proceeding and defer a decision on whether to approve this application until these studies have been completed and all necessary FERC approvals have been obtained.
Said Mojave Solar in April 1 comments: "Because Mojave Solar does not now have FCDS and because the LGIA is still in effect in its original form, it would be imprudent to dismiss this proceeding under these circumstances. In the event FERC does not give its approval, or if the CAISO studies determine that some portion of the CLTP is still necessary, as discussed below, the parties would be substantially prejudiced by having to file a new application in a new proceeding governed by the increasingly short timeline of the LGIA."
Mojave Solar added: "The PPA between Mojave Solar and PG&E, which was approved by the Commission in Resolution E-4433, requires Mojave Solar to pay PG&E the cost of Resource Adequacy (100% Net Qualifying Capacity) procured by PG&E that would otherwise have been provided by the Mojave Solar Project if it were fully deliverable. Over time, the cost to Mojave Solar of compensating PG&E for replacement Resource Adequacy resources would likely be substantial. For Mojave Solar’s deliveries to be resource adequate it must obtain a FCDS Finding from the CAISO. In the event FERC does not approve the amended LGIA, or does not do so in a timely manner, the CAISO may not be able to give Mojave Solar the requisite deliverability status required by the PPA."
Mojave Solar suggested that this CLTP proceeding be stayed until November, to await new developments, instead of dismissed outright.
Mojave Solar is a 250-MW (net) project. The CAISO has determined that constraints on the existing Kramer-Lugo transmission corridor will result in Mojave Solar being less than 100% fully deliverable. The amended LGIA between Mojave Solar, SCE, and the CAISO obligates SCE to construct the necessary network upgrades to provide Mojave Solar with full deliverability by April 11, 2018.