Transmission Expansion Cost Drivers

1
Transmission Expansion Cost Drivers

• NARUC
• Portland, Oregon
• David Mead
• Vice President, Engineering
• Southern California Edison

2
SCE has one of the nations largest and oldest
electrical systems.

• Operating for 121 years
• Covering 50,000 square miles of central, coastal
  and Southern California
• Serving a population of more than 13 million via
  4.8 million customer accounts in 428 cities
• Added 386,000 new meters over the last five years
  (77.2k/year)
• 17.6 Billion T D Assets (2006)

First Predecessor Company to SCE Established in
1886 Consolidated Edison (NY) was founded in
1823.
3
What Is Driving The Need For Transmission

• Replacement of aging infrastructure presents a
  growing challenge
• New records are continuing to be set for peak
  demand throughout the state
• In addition to load growth, we are obligated to
  comply with increasing regulatory requirements on
  renewable energy
• California Renewable Portfolio Standard
• 20 by 2010
• Possibly 33 by 2020 (statute under
  consideration)
• California Greenhouse Gas (GHG) regulation

4
What Are The Cost Escalators To New Transmission

• State Regulatory processes are lengthy, costly
  and require significant resources
• Duplicative environmental reviews
• Federal agencies are difficult to navigate and
  slow to approve
• BLM
• US Fish and Wildlife
• US Forest Service
• Interstate projects must have sufficient
  benefits to avoid state opposition as
  intrusive
• Public more engaged and mobilize opposition
  quickly
• Land availability and changes to California
  Eminent Domain laws
• Escalating project construction costs

5
Permits And System Constraints Complicate The
Issue

• Permitting and licensing decisions from
  regulatory/jurisdictional agencies contain
  significant changes impacting project scope and
  schedule
• Multiple and significant mitigation measures
• Limits construction methods and hours
• Routes permitted are often different than
  proposed
• New routes outside of existing right-of-way
• Fully utilized electrical systems make
  construction outages even more challenging
• Outage availability due to peak demand
• Construction window narrow

6
Execution Has Its Own Set of Challenges

• Competition for resources
• Materials
• International trade/demand
• Extraordinary inflation
• Equipment
• Long lead times and price increases
• Labor
• Numerous large expansion projects
• Replacement of aging utility infrastructure
• Fuel

7
Public Opposition

• The public is more engaged and opposition
  mobilizes quickly
• Creating an unassailable need statement is
  critical to managing public opposition
• Regulatory/permitting jurisdictions view
  undergrounding as the answer to public concerns
  on visual impacts
• Costly and only benefits a small percentage of
  ratepayers
• Communities benefiting should carry the cost
• Changes to Eminent Domain is example

8
Public Opposition Acronyms A Quiz!

• NIMBY
• NOPE
• BANANA
• NIMET
• CAVE
• NIABY
• LULU
• NEIUROW
• BNMHYMWBS

Not In My Back Yard
Not On Planet Earth
Build Absolutely Nothing Anywhere Near Anyone
Not In My Elected Term
Citizens Against Virtually Everything
Not In Anyones Back Yard
Locally Unwanted Land Use
Not Even In Utility Right-Of-Way
Build Near My House Your Mama Will Be Sorry
9
Transmission Planned and Under Construction for
Renewable Generation Delivery

• SCE pursuing numerous renewable transmission
  projects
• Tehachapi Renewable Transmission Project delivers
  4500 MW of primarily wind generation.
• Acceleration of SCEs construction of the
  California phase of Devers-Palo Verde 2 500 kV
  project to deliver renewable generation from
  Colorado River area to Southern California.
• Eldorado Ivanpah 230 kV project to deliver 1400
  MW of primarily solar generation.
• Developing comprehensive transmission plans for
  solar and wind generation integration in several
  other areas of San Bernardino and Riverside
  counties.
• Above projects in various stages of project
  development with the capability of delivering
  over 7,000 MW of renewable generation.

10
Tehachapi Renewable Transmission Project

• Delivers 4500 MW of renewable generation
• 2.7 Billion

11
Tehachapi Renewable Transmission Project Segment 1

• The Certificate of Public Convenience and
  Necessity issued by California Public Utilities
  Commission
• Contained 179 mitigations measures, the
  predominant issues
• 46 are visual
• 33 are biology
• 22 are cultural
• Contained two major route changes
• US Forest Service
• Record of Decision
• Requires helicopter construction
• Requires narrow window on construction

12
Tehachapi Renewable Transmission Project

• Segments 4-11 Certificate of Public Convenience
  and Necessity currently in Regulatory review
• Segment 8 regulatory evaluation is currently
  reviewing the proposed route and 4 alternative
  routes plus an undergrounding option
• Any of 4 alternates or undergrounding the
  preferred route will add significant costs to the
  project
• Segment 6 and 11 Double circuit proposal for
  Angeles National Forest
• Elevation and icing issues

13
If We Build it They Will Come

• The market will produce the Generators
• The utilities will provide the Transmission
  access
• Will it be done in the current proposed
  timetables?
• Without more creative solutions, it will be
  difficult
• If we are able to meet the current schedule
  demands
• Costs are rising and may be higher than necessary
• Grid quality and reliability is at risk if we
  dont pay attention
• The process can end up more contentious than it
  should be

14
Conclusions

• Transmission investment opportunities are
  exciting and unprecedented
• Southern California Edison 5.5 billion in 5
  years
• Investments needed to access renewable energy,
  serve growing loads, and replace aging
  infrastructure
• Obtaining project approvals is a daunting
  challenge weve learned much over the last few
  years
• Managing the escalating costs will be key for
  utilities and our customers