Monday, Aug. 27, 2007 | When San Diego Gas & Electric unveiled the Sunrise Powerlink two years ago, the company gave three essential reasons for building the 150-mile long power line.
Renewable energy. SDG&E is under a state mandate to produce 20 percent of its energy from renewable sources by 2010. The utility said the Sunrise Powerlink would connect San Diego to green energy — solar, wind, geothermal — that would be built in Imperial County.
The Transmission Question
Savings. The $1.3-billion power line, which is proposed through Anza-Borrego Desert State Park, would keep customers from spending hundreds of millions of dollars annually on expensive local power.
Reliability. Building a new line would increase SDG&E’s ability to import energy to San Diego, boosting the power available on high-demand summer days.
In its original application to the California Public Utilities Commission, the company wrote: “No other single project, planned or identified, provides such a comprehensive set of benefits to customers.”
But in the two years since SDG&E proposed the transmission line to connect San Diego with Imperial County, those comprehensive benefits have steadily eroded.
The power line’s $447 million annual savings was cut to $142 million a year after erroneous calculations were uncovered. A solar energy project whose fate was once tied to the line has failed to demonstrate that it works on a commercial scale. SDG&E has equivocated about how much renewable energy can be found in Imperial County, where the line will begin. The company has waffled about whether the line is necessary to spark renewable energy development in Imperial County.
And the Division of Ratepayer Advocates, a state watchdog, has said SDG&E won’t need the power line to keep the lights on until at least 2014.
The slipups have snagged the major energy infrastructure proposal, delaying a decision on a power line that SDG&E casts as an investment in a green energy future, but that opponents call an unnecessary and environmentally damaging expense.
Environmentalists and ratepayer advocates fighting the line say their case was strengthened during the public process that unfolded this summer. They maintain the line is a boondoggle that would crisscross California’s largest state park and produce little benefit, beyond profits for Sempra Energy, SDG&E’s parent. They say they were boosted when regulatory hearings before the California Public Utilities Commission were delayed in late July.
Dian Grueneich, the California Public Utilities commissioner who ordered the delay, wrote in her ruling that the power line — by SDG&E’s own admission — was not needed to meet the company’s 2010 renewable energy goals. That undermines one of SDG&E’s key arguments for building the line. Grueneich wrote that SDG&E’s testimony during summer hearings had prompted the need for more environmental analysis.
“SDG&E’s case was crumbling,” said Michael Shames, executive director of the Utility Consumers’ Action Network, a ratepayer advocate and Sunrise opponent. “They’ve done the best they can to shore it up. But their case is hurting big time.”
For local business leaders, politicians and the operator of the state’s electricity grid, all who have endorsed the project, the Sunrise Powerlink still holds the promise embodied in its sweet-sounding name.
“It hasn’t changed our overall view that the line is necessary,” said Gregg Fishman, spokesman for the California Independent System Operator, the agency responsible for maintaining statewide electricity reliability. “San Diego needs the additional transmission capacity.”
SDG&E admits it made mistakes in its $16 million technical analysis, which modeled energy use throughout the West. But a company official says the utility has corrected its errors and is ready for hearings to resume Sept. 4.
The mistakes were “not damaging to the overall case,” said Mike Niggli, SDG&E’s chief operating officer, “because Sunrise is all about reliability and renewables. The cost-benefit is positive.”
When testimony begins, SDG&E will again try to make the case for its power line and recover from the setbacks.
Scott Anders, director of the Energy Policy Initiatives Center at University of San Diego, said the local utility has been shaken by Shames’ testimony, which helped expose the errors, but rejected the idea that SDG&E deliberately made the mistakes to boost its case.
“SDG&E is in a no-win situation,” Anders said. “If the line is approved, it’ll be called a waste of money. If the lights go out — worst case — then they’ll get hammered.”
Tracking the Mistakes
When corrections have been made in SDG&E’s pitch to build the Sunrise Powerlink, they’ve had one thing in common: The original erroneous claims have always favored the company.
The company has corrected the power line’s potential savings more than once. SDG&E first claimed the Sunrise Powerlink would save $447 million each year, quickly paying for itself. The savings decreased to $220 million and again to $142 million.
The company blames the mistakes on several factors, including a handful of misplaced decimal points. SDG&E says the incorrect data were interspersed through tens of thousands of entries. The bottom line, Niggli said, is that the Sunrise Powerlink still saves money for customers.
“The savings of Sunrise versus all other options, there’s still no change,” he said. “Sunrise is still the most cost-effective project to meet the state mandates.”
The company has also offered different estimates of the amount of renewable energy available in Imperial County. In a 2005 filing, SDG&E estimated that 1,045 megawatts of renewable energy could be produced from sources in the flat stretches of desert east of San Diego. That’s equal to two large power plants.
A year later, the company had revised that estimate to 360 megawatts, less than one big power plant. More green power was available in southern San Diego County than in Imperial County, SDG&E said in court filings.
Niggli, the SDG&E executive, said developers have offered to produce as much as 5,000 megawatts of renewable energy in Imperial County and Mexico, though not all of those projects may be economically feasible.
Opponents question whether the errors were deliberate. Bill Powers, a local engineer writing a white paper for the San Diego Foundation about a Sunrise alternative, said he believed SDG&E had gotten “lazy” in its studies.
“How do you dial the analysis so it tells you what you want?” Powers asked. “SDG&E is just stacking one conservative or erroneous assumption on top of the other.”
Niggli was unable to provide some basic estimates about the power line’s cost and savings. Niggli could not say how much building the line around the environmentally sensitive Anza-Borrego Desert State Park would cost. The company has said avoiding the park would cost too much, but has never provided specifics.
The company also cannot say how the power line may impact its customers’ bills, even though its customers will bear part of the construction cost. Niggli noted that the California Public Utilities Commission has the ultimate say in how the power line’s $142 million annual savings would be divided among state ratepayers, who will share in the line’s construction costs.
Shames, the ratepayer advocate, said if SDG&E’s savings estimate is correct — an estimate he still rejects as overblown — customers would save about 1 percent on their monthly bills.
This much is certain: The utility company and its shareholders would profit. By increasing its investment in transmission infrastructure — and the value of the company’s assets — SDG&E could boost its base rate. Shames estimates the company could reap $780 million from the line’s construction. Niggli said he was unfamiliar with that estimate, but did not dispute it.
“This line is an amazing windfall,” Shames said. “This is manna from the sky if they get this.”
The Solar Connection
San Diego Gas & Electric unveiled the Sunrise Powerlink in August 2005. The announcement came a week after a transmission emergency caused a 45-minute power outage for 51,000 SDG&E customers.
A week after the unveiling, SDG&E signed a contract with Stirling Energy Systems, a Phoenix-based solar developer. Stirling agreed to build a massive 12,000-dish solar array on publicly owned land in Imperial County. The project called for providing 300 megawatts of solar energy — enough to power almost 200,000 homes. If successful, the venture could triple in size, powering as many as 600,000 homes.
Within the solar industry, the project was considered lofty but potentially revolutionary. Because of the high costs of solar energy, only one large-scale solar project exists in the United States. Stirling aimed — and still does — to build the second.
When it signed its contract with SDG&E, Stirling was riding high. President Bush had visited its test site at Sandia National Laboratories in New Mexico a month earlier and signed the landmark 2005 Energy Policy Act with Stirling’s mirrored dishes as a backdrop. Bush said the technology, which uses a dish to focus the sun’s heat on a small engine, was “fascinating.”
SDG&E touted the Stirling contract as an important reason to build the Sunrise Powerlink and a vital part of its push to green its energy supplies.
But in the two years since, Stirling has shown little progress and SDG&E now downplays the solar project’s connection to the Sunrise Powerlink. Stirling still has only six dishes operating at Sandia and canceled plans to build a test facility in the Mohave Desert.
For the technology to be economically viable and find financing, its dishes must be produced commercially on an assembly line — not by hand. The company, which needs to manufacture 12,000 dishes to meet SDG&E’s contract requirements, still isn’t able to do that. While it aims to have its project operating by late 2010, Stirling acknowledges it faces a tight schedule.
“We have a firm idea of the pathway for what needs to be done,” said Bob Liden, Stirling’s executive vice president.
But Liden offered an uncertain prediction for the innovative solar project: “We’ll probably be ready,” he said.
SDG&E has two other renewable projects under contract in Imperial County, though they are not as large as Stirling. Niggli, the SDG&E official, said the utility has many options for Imperial County renewables beyond the iffy solar project.
Delivering Green Energy
Sunrise opponents have faced a major question: If the power line isn’t built, how can SDG&E meet its 2010 renewable energy goals? In recent filings with the Securities and Exchange Commission, the company said delays in the California Public Utilities Commission hearings would postpone Sunrise’s completion beyond mid-2010.
The delay means it is “unlikely” the company would meet its 2010 renewable energy goals, the SEC filing says, potentially exposing SDG&E to a $25 million annual penalty.
But in its testimony this summer, the company has contradicted that point.
“Hypothetically … it is possible for SDG&E to meet its 2010 [renewable energy] goals without the Sunrise Powerlink,” the company wrote in a court filing.
Sunrise opponents say the company has an obvious way to deliver renewable energy from the desert: Use an existing power line that already connects San Diego and Imperial County. That line, called the Southwest Power Link, currently brings in energy from Arizona, Mexico and Imperial County.
Some question whether that plan would be sufficient.
Anders, the University of San Diego energy expert, said connecting to those renewable sources will be harder without the Sunrise Powerlink. Eventually something has to give, he said.
“Some people oppose the Southwest Power Link, they oppose a power plant on the (Chula Vista) bay front and wind turbines in East County,” Anders said. “If the lights go out, what are they going to do? (They’ll) blame SDG&E.”