FERC Approves Request Related to West Coast Renewable Transmission Project

Posted on April 21, 2008 by Dennis Pfaff

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)
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California Regulators Approve Renewable Energy Pricing

Posted on February 21, 2008 by Dennis Pfaff

For some time, countries such as Germany have adopted "feed-in tariffs" as a way of providing an incentive to develop new renewable generation. Renewable energy advocates have pushed for a similar boost in the United States for some time. Now, the California Public Utilities Commission has granted the wish, at least in a small way.

The CPUC recently gave the green light to the tariffs, a long-term pricing structure for renewable power that utilities purchase from their customers. In an action Feb. 14, the rate-setting agency approved a tiered program involving seven utilities. For two of them, Southern California Edison and Pacific Gas and Electric Company, the tariffs apply to power purchased from any customer. For the others, however, the tariffs are limited to water and wastewater customers. The tariffs apply to renewable generators sized up to 1.5 megawatts.

As described in a CPUC statement, the tariffs offer a simple mechanism for small generators to sell power at predefined terms and conditions, without contract negotiations.

The feed-in tariff for renewable generation owned and operated by water and wastewater facilities was capped at 250 megawatts. The expansion of the program available to customers of Edison and PG&E adds another nearly 230 megawatts to the total, about 124 megawatts for Edison and nearly 104 megawatts for PG&E. 

According to the CPUC, the power that is sold to the utilities under the new tariffs will count toward the state's renewables portfolio standard, which requires the companies to reach a 20 percent renewable goal by 2010. The tariffs apply to multi-year contracts and are based on a so-called Market Price Referent, which is intended to reflect current market prices for long-term contracts.

The CPUC touted the pricing mechanism as a way of supporting the development of up to 480 megawatts of power from small facilities. The latest action also follows on a decision rendered by the panel in 2007 that broadened the program beyond water and wastewater for entities supplying Edison and PG&E. In the statement accompanying the latest action, CPUC President Michael R. Peevey (pictured) in lauded the impact of the new structure for smaller generators: 

"Up until now, only large renewable projects were able to effectively participate in the Renewables Portfolio Standard program. Now small facilities can easily contribute to this program and be compensated for their renewable generation by signing up for these tariffs."

Peevey said the tariff could prove particularly attractive to facilities that have access to significant amounts of biogas, such as livestock operations and water and wastewater treatment facilities.

Feed-in tariffs have been used in other countries, including Germany, to encourage quick growth in such renewable energy systems, according to a brief report on the California program prepared by the U.S. Department of Energy. The DOE report noted that the prices available under the contracts is adjustable by the time of day the power is generated. According to the DOE, the tariffs range from 8 to 31 cents per kilowatt-hour.  

         
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