CPUC Addresses Financing of Renewable Energy Transmission

To meet its Renewable Portfolio Standard (RPS) goals, which require that the state’s investor-owned utilities obtain 20 percent of their energy from renewable resources by 2010, the California Public Utilities Commission (CPUC) moved to ensure that California can afford the necessary transmission infrastructure needed to access the renewable energy.

A recent decision by the CPUC to recover the costs in customer rates was the breakthrough that was needed to give utilities assurance that investments in new transmission facilities will support development of new renewable resources. An example is the Tehachapi area’s potential of more than 4,000 megawatts (MW) of wind energy, but it needs new transmission lines, at a project cost of up to $1 billion. Under this recent decision, customers are protected by guidelines to ensure that cost recovery will be available only in clearly defined circumstances that demonstrate that proposed transmission facilities are necessary for renewable development. “This decision provides certainty to the utilities and the renewable power industry on funding for transmission projects that are necessary to meet the RPS goals,” said Commissioner Dian M. Grueneich, presiding in this Commission proceeding. Transmission facilities that meet one of the following qualifying criteria are eligible for cost recovery: 1) new high-voltage, bulk-transfer, transmission facilities that are designed to serve multiple RPS-eligible projects, or 2) transmission network upgrades that are required to connect an RPS-eligible resource.
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