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Building Electrical Transmission for Renewable Energy: California's New RETI Process
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October 29, 2007
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By Peter V. Allen and Paul C. Lacourciere
Thelen LLP
The Renewable Energy Transmission Initiative (RETI) was launched recently with the goal of getting transmission planned and built to areas with developable renewable energy resources. 1/ RETI is structured as a collaborative stakeholder process, bringing together interested parties and agencies to identify transmission projects needed to accommodate California's renewable energy goals.
There is general consensus that California's existing transmission infrastructure is a barrier to increased development and use of renewable energy - new resources cannot be developed because they cannot deliver their power to California 's load centers without incurring substantial upfront costs to construct the necessary transmission facilities. RETI is intended to provide a means to overcome this barrier. This article provides an overview of RETI's current structure and anticipated process.
RETI's Background and Purpose
In the recent past, there was some tension between the California Energy Commission (CEC), the California Public Utilities Commission (CPUC) and the California Independent System Operator (CAISO) in the area of transmission siting. Traditionally, CPUC was responsible for siting and permitting transmission facilities constructed by investor-owned utilities, and CEC was responsible for generation siting on thermal generation projects of 50 MW or more, including any transmission lines needed to connect the new generation to the grid.
With the advent of CAISO, the landscape became more complicated. The relationship between CPUC and CAISO regarding transmission planning was not clearly spelled out, and their early coexistence tended to be somewhat uneasy. In addition, because of the ratemaking treatment for new transmission under Federal Energy Regulatory Commission regulations, generators faced a classic "first mover" problem - the first generator to site its project in a resource-rich area would bear more of the costs of building transmission to that region. Its competitors, who waited to build, could benefit from that transmission but incur fewer costs. As a result, no one wanted to be first to build, especially in areas that were resource-rich and could support multiple competitors.
Public Utilities Code §399.25 was designed to alleviate this problem by allowing for the "backstop" retail rate recovery for transmission facilities necessary to help meet California's Renewable Portfolio Standard. CPUC relied on §399.25 in approving the first three segments of transmission to the Tehachapi wind region. 2/ With the utilities proposing to construct additional transmission capacity and seeking rate recovery under §399.25, it became apparent that a more coordinated approach to transmission planning should be developed. In addition, a mechanism was needed to address inter-agency conflicts and competing stakeholder concerns. Accordingly, RETI was established.
According to CEC, "RETI is a statewide initiative to help identify the transmission projects needed to accommodate [the state's] renewable energy goals, support future energy policy, and facilitate transmission corridor designation and transmission and generation siting and permitting." It is intended to be an open, transparent and collaborative process that provides a forum to consider the interests of all stakeholders, including state agencies, investor and publicly-owned utilities, generators, and ratepayers.
Structure
RETI has three components: 1) Coordinating Committee consisting of CPUC, CEC, CAISO and the publicly-owned utilities, which are represented by the Northern California Power Agency (NCPA), Southern California Public Power Authority (SCPPA) and Sacramento Municipal Utility District (SMUD); 2) Stakeholder Steering Committee consisting of designated representatives from the California transmission owners/providers and other stakeholder groups, including generators, utilities and other power purchasers, permitting agencies, landowners, and environmental and other public interest organizations; and 3) Plenary Stakeholder Group consisting of anyone else interested in participating, such as individual renewable generators, landowners, other agencies and adjacent states.
The role of the Coordinating Committee is to keep the process on schedule, ensure inter-agency cooperation and support, and ensure that RETI provides the information needed to support policy decisions by the agencies.
The Stakeholder Steering Committee is the primary working group and will direct the actual work of RETI, ensure active participation by member organizations and report progress to the Plenary Stakeholder Group.
The Plenary Stakeholder Group is designed to provide a forum for other interested parties to provide input to the Stakeholder Steering Committee and to ensure that all views are represented.
In addition, the Center of Energy Efficiency and Renewable Technologies (CEERT), under a contract with the CEC, will serve as the facilitator of the RETI process on behalf of the Coordinating Committee. A CEERT representative ran the kickoff Plenary Stakeholder Group meeting on September 20, 2007.
Process
RETI, as currently envisioned, will have three phases. Phase 1 will involve identification and ranking of Competitive Renewable Energy Zones (CREZs). This consists of assessing developable renewable resources in California and neighboring states, identifying cost-effective CREZs and creating a short list of priority CREZs.
Phase 2 calls for refinement of the Phase 1 CREZ analysis and development of a statewide conceptual transmission plan. During this phase, issues such as siting constraints, including environmental, jurisdictional and technological issues, will be considered along with other issues such as potential resource mix scenarios. This phase should result in a conceptual transmission plan being developed for each CREZ.
Phase 3 involves detailed transmission planning for the chosen CREZs. This will require additional analysis of each CREZ, identification of a transmission project sponsor for each CREZ, preparation of transmission plans through the CAISO and publicly-owned utilities, and reaching stakeholder consensus on each project, including a determination of need by the relevant planning authority.
The intended outcome of Phase 3 is the initiation of the permitting process for each transmission project. The proposed timeline for the process calls for Phase 1 to take eight months and for Phase 2 to take eight months, running from the completion of Phase 1. The duration of Phase 3 remains to be determined.
Questions and Obstacles
In general, stakeholders expressed support for the RETI process, particularly its inclusion of a broad range of parties that often do not work together. The clear hope is that RETI will provide a legitimate and broad-based consensus for the building of transmission infrastructure in support of renewable generation. At the same time, however, there are some concerns about the RETI process.
Some stakeholders expressed concerns about how the members of the Stakeholder Steering Committee were chosen and whether the committee was truly representative. To the extent these are valid concerns, RETI will need to adequately address them in order to claim that the outcome of the RETI process is truly a consensus.
Other stakeholders mused more privately about whether RETI (or at least Phase 1) was even necessary, given that there already has been (and continues to be) a lot of analysis of the various CREZs in and near California. For example, under CAISO's Location Constrained Resource Interconnection proposal, CPUC and CEC are to identify "Energy Resource Areas" that have significant energy resources not currently accessed by transmission. This raised the question whether RETI's process for identifying CREZs is just reinventing the wheel and actually could delay construction of transmission.
Additional concerns included whether the RETI process would have access to the numerous proprietary and confidential analyses of CREZs that have been performed and whether the focus of RETI on transmission is too narrow, resulting in a potential failure to consider other issues essential to bringing new renewable resources on line, such as integration of intermittent resources.
CPUC President Peevey generally has tried to move the CPUC into a more collaborative relationship with other agencies, but transmission siting has proved to be somewhat resistant to this effort. The ultimate question, and the test of RETI's success, will be whether the RETI process will help (or force) CEC, CPUC and CAISO and the other participants to truly work together to analyze the available resources and bring more renewable power on line or whether this will be just another forum for turf battles.
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For more information about the issues covered in this report, please contact Peter V. Allen in our San Francisco office at 415-369-7561 or at pvallen@thelen.com or Paul C. Lacourciere in our San Francisco office at 415-369-7601 or at placourciere@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction & Government Contracts Department, click here.
ENDNOTES
| 1/ | It originally was called "CRETI," for California Renewable Energy Transmission Initiative, but it was renamed to show a more regional focus and to avoid some unfortunate connotations of the prior acronym.
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| 2/ | See, Decisions D.07-03-012 and D.07-03-045, both citing D.06-06-034.
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©2007 Thelen LLP
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