ATTACHMENT ALT-36. LEAPS Project Alternative

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1 ATTACHMENT ALT-36 LEAPS Project Alternative ALT-36 Please provide a detailed discussion explaining the difference between the environmental effects and system benefits of SDG&E s previously proposed Valley-Rainbow project with the LEAPS project. Include a discussion, and diagrams, illustrating the difference between the previously proposed Rainbow substation interconnection to the SDG&E grid as compared to the proposed interconnection of the LEAPS project. Please also explain whether or not the LEAPS interconnection can be configured to provide similar benefits to what was expected with the Valley-Rainbow project. Response ALT-36 Environmental Effects The originally proposed Valley-Rainbow route traversed near the Pechanga Indian Reservation in southwestern Riverside County, up through the Cities of Temecula and Murrieta as well as the communities of Menifee and Perris. However, this route was rendered infeasible with the purchase of property by the Pechanga Indians which effectively blocked the pathway as proposed. Following the Pechanga Indians land purchase a new route was identified that roughly paralleled the route for the proposed Talega-Escondido/Valley-Serrano (TE/VS) transmission project (the TE/VS project being the transmission that connects the Lake Elsinore Advanced Pumped Storage (LEAPS) project to SCE s transmission system to the north and SDG&E s transmission system to the south). The proposed route for the TE/VS transmission project was assessed in a Draft Environmental Impact Statement (EIS) which is available from FERC at the following web location: SDG&E provided comments on the Notice Of Proposed (NOP) project and the Draft EIS for the TE/VS-LEAPS project. SDG&E s comments are also available on line. The Valley-Rainbow project configured as roughly parallel to the TE/VS transmission route was deemed by the CPUC as not needed before a full assessment of environmental impacts could be completed. Since the TE/VS-LEAPS project is not an SDG&E project, and since SDG&E is not involved in any of the environmental analysis, SDG&E cannot attest to the accuracy of the impact analysis other than to say that a document has been prepared by FERC in cooperation with the United States Forest Service (USFS) and that the information from that analysis is provided at the above link. System Benefits Summary With regard to the system benefits there are really two basic questions. Can the TE/VS-LEAPS project be configured to provide the same benefits as the Valley- Rainbow Interconnection (VRI)? And implicit in that question, is the question: Could the TE/VS-LEAPS project (or VRI for that matter), provide the same benefit as the Sunrise Powerlink and therefore serve as a substitute for the Sunrise Powerlink? The answer to the first question is yes, provided that the necessary associated projects and upgrades are identified and built. The answer to the second question is not known with

2 certainty, however analysis conducted to date suggests the answer is no. Neither the TE/VS-LEAPS project, nor the VRI, connect to the existing grid at the same locations as the Sunrise Powerlink and neither is comprised of the same set of facilities. Accordingly, neither of these projects should be expected to provide exactly the same benefits as the Sunrise Powerlink. VRI and TE/VS-LEAPS Projects The Valley-Rainbow 500 kv Interconnection project (VRI) was proposed primarily as a new transmission tie connecting the San Diego area to the Southern California Edison (SCE) system, geographically-separated from the existing ties into the San Diego area, for the purpose of improving reliability and increasing imports into the San Diego area. The project had an in-service date of The TE/VS-LEAPS project, sponsored by the Nevada Hydro Company and the Lake Elsinore Municipal Water District (TNHC), has primarily been a generator interconnection of an advanced pump storage facility that adds a new transmission tie connecting the San Diego area to SCE system. The transmission portion of the project, TE/VS, has a proposed in-service date of 2007 (although SDG&E questions whether that in-service date is still achievable). The generation portion of the project, LEAPS, has a proposed in-service date of Project Descriptions The original VRI project proposed an interconnection between SDG&E s existing 230 kv transmission system at the proposed Rainbow substation on Rainbow Heights Road near the unincorporated community of Rainbow in San Diego County, and Southern California Edison s (SCE) existing 500 kv transmission system at the Valley substation on Menifee Road in the unincorporated community of Romoland in Riverside County. The major elements of the old VRI included: VRI Plan of Service New Substations Rainbow 500/230/69 kv Substation, including: o 2-500/230 kv Transformers A UPFC (a Universal Power Flow Control) (which is a Flexible AC Transmission System (FACTS) device) Existing Substation Modifications to SCE s existing Valley substation Modifications to SDG&E s Talega and Escondido substation New Lines Valley - Rainbow 500 kv transmission line A second Talega Rainbow 230 kv transmission line (single conductor) A second Escondido Rainbow 230 kv transmission line (single conductor) Modified or Upgraded Lines Loop-in the existing Talega Escondido 230 kv (single conductor) into Rainbow forming a Talega Rainbow 230 kv and an Escondido Rainbow 230 kv

3 Rebuild of an existing 69 kv transmission circuit on new 69 kv wood and steel pole structures adjacent to the existing 230 kv line within the existing Talega-Escondido right-of-way Reactive Support A 230 kv Static Synchronous Compensator (STATCOM) at the existing SDG&E Mission substation Shunt capacitors at SDG&E s existing Miguel and Sycamore Canyon substations. TE/VS-LEAPS Plan of Service New Substations Lee Lake 500 kv Switching Station (in the SCE Valley Serrano 500 kv line) LEAPS Pumping, Storage and Generating Facilities, and a 500/16 kv substation (generator step-up), including: o MW Pumps, which can also serve as o MW Generators Camp Pendleton 500/230 kv Substation (in the SDG&E Talega Escondido 230 kv line), including: o Two 500/230 kv Transformers o Two 230/230 kv Phase Shifting Transformers Existing Substations Modifications to SCE s Valley and Serrano Substations Modifications to SDG&E s Talega and Escondido Substations New Lines A Lee Lake LEAPS 500 kv transmission line A LEAPS Camp Pendleton 500 kv transmission line A Talega Camp Pendleton 230 kv #2 (second) transmission line (single conductor) (note: many versions of the LEAPS plan of service do not include this line) An Escondido Camp Pendleton 230 kv #2 (second) transmission line (single conductor) (note: some versions of the LEAPS plan of service do not include this line) Existing Lines Loop existing Serrano Valley 500 kv line into the Lee Lake Substation Loop existing Talega Escondido 230 kv line (single conductor) into the Camp Pendleton Substation Diagrams Included below are the diagrams illustrating the previously proposed VRI project and the proposed LEAPS project. VRI One-Line.ppt LEAPS One-Line.ppt Although similar, the TE/VS-LEAPS alternative is not electrically equivalent to SDG&E s VRI project. The VRI project had a northern termination at SCE s Valley substation. The LEAPS project proposes a new substation, called Lee Lake, which

4 would be between SCE s Serrano and Valley substations. Also, The Nevada Hydro Company (TNHC) the project sponsor for the TE/VS-LEAPS project has proposed Camp Pendleton for a substation at the southern end the TE/VS transmission line. This substation is modeled further west (closer to Talega) on the Escondido-Talega 230 kv line than the old proposed Rainbow Substation of the VRI proposal. All of these affect the modeled impedance and add new credible contingencies to the list of outages to study (specifically, Valley Lee Lake 500 kv and Lee Lake Serrano 500 kv). However, these differences are minor. Major differences include VRI s use of a UPFC and TNHC s use of Phase Shifting Transformers. In addition there is the issue of whether to add a second Talega Escondido 230 kv line, looped into either Rainbow or Camp Pendleton. A further issue is the capacity of this new Talega Escondido 230 kv line (i.e., should it be single conductor or two bundled conductors) and if bundled, whether to reconductor the existing Talega Escondido 230 kv line to two bundled conductors or leave it as is (single conductor). VRI proposed adding a second Talega Escondido 230 kv line, single conductor, and leaving the existing Talega Escondido 230 kv line as single conductor because it had a UPFC to mitigate potential overloads of these lines. TNHC s various proposals range from just looping in the existing Talega Escondido 230 kv line, single conductor, to adding one or both parts of the Talega Camp Pendleton Escondido 230 kv line, single conductor. Can the TE/VS-LEAPS Project be Configured to Provide VRI Benefits? The answer is yes, with enough associated projects and system upgrades, the TE/VS- LEAPS can be configured to provide the same benefits as VRI. There were several benefits associated with the VRI project, however, the primary benefit was increased imports. With the appropriate system upgrades, TE/VS-LEAPS could increase system imports. Although the TE/VS portion of the TE/VS-LEAPS project appears somewhat similar to VRI so much has changed that a direct comparison is difficult and a general comparison can be deceptively superficial. VRI was proposed back in 2000 and the focus of these proposed projects, VRI and TE/VS-LEAPS, was and has been, very different. Additional studies would be required to determine whether or not the TE/VS-LEAPS project (or some variation that may include additional associated projects) could provide similar benefits to those of VRI. Imports Some of the benefits that have been assigned to the TE/VS-LEAPS project are due to increased imports which reduce San Diego area RMR requirements based on application of the CAISO s G-1/N-1 local area reliability criteria. For comparison, the current G- 1/N-1 import capability with the existing system is 2500 MW. The G-1/N-1 import capability with the Sunrise Powerlink is 3500 MW. The G-1/N-1 of the VRI project was 3200 MW. There have been a few attempts at determining the G-1/N-1 import capability of the TE/VS-LEAPS project. The original CAISO study (in May 2004) found that the TE/VS- LEAPS project provided a 3300 MW N-1 import capability (note that this is an N-1 import limit not a G-1/N-1 import limit). However, even this N-1 import limit, required more than a dozen system upgrades. A G-1/N-1 import limit might require more.

5 SDG&E believes it is premature to determine with certainty just how much the TE/VS- LEAPS project increases the import limit. One thing is certain: For the TE/VS-LEAPS project to increase the import capability into the San Diego area, additional system upgrades will be required. Economics Based on studies to date, the Sunrise Powerlink appears to afford greater economic benefit than the TE/VS-LEAPS project (and very likely the VRI project). SDG&E s economic analysis for the Sunrise Powerlink (filed with the CPUC on August 4, 2006) projected that the levelized annual net benefits arising from the addition of the Sunrise Powerlink would total $447 million per year ( ) as compared to an in-area gasturbine build-out reference case. 1 In contrast, the Staff Alternative presented by the FERC s Office of Energy Projects, Division of Hydropower Licensing, projects that the levelized annual net benefits arising from the addition of the TE/VS-LEAPS project would be -$117 million per year 2 (over 30 years 3 ) as compared to adding a 500 MW simple-cycle combustion turbine project. The CAISO is currently conducting an independent assessment of the economic benefits associated with adding the proposed TE/VS-LEAPS project. SDG&E understands that this assessment will assume that the Sunrise Powerlink is in-service in the year As of November 6, 2006, the results of the CAISO s economic study of the TE/VS-LEAPS project are not available. In addition, as of November 6, 2006, the FERC and the U.S. Department of Agriculture have yet to release the Final EIS for the TE/VS-LEAPS project. Accordingly, SDG&E believes it is premature to determine with certainty whether the TE/VS-LEAPS project is economic. Is either LEAPS or VRI a Substitute for the Sunrise Powerlink? VRI was proposed as a reliability project. It was to increase imports into the San Diego area. VRI was not proposed as an economic project, although the economic benefits were analyzed. Nor was VRI proposed to access renewables. These are both very real needs for today and for System and Assumptions Changes since VRI VRI was a look at increasing import into San Diego in 2005, and a great deal has changed since then. The transmission system, the generation and the load have all changed. One of the biggest changes in assumptions since the VRI proposal is the assumption that the South Bay power plant will retire in November This assumption is consistent with the CAISO s Generation Assumptions for Grid Planning Studies dated April 16, Even without this CAISO reference it would be prudent to study and prepare for a South Bay retirement, given the expiration of their Port Authority lease in November 2009, given the uncertainty associated with future generation development plans in general, and the potential critical impact this could have on reliability (i.e., a resource deficiency) within the San Diego area under critical system conditions (namely a G-1/N- 1 contingency during a summer heat storm). 1 From Table IV-1 of SDG&E s August 4, 2006 Sunrise Powerlink Transmission Project, Purpose and Need, Volume 2 Part 1. 2 From Table 50 of the February, 2006 Draft Environmental Impact Statement For Hydropower License for the Lake Elsinore Advanced Pumped Storage Project, FERC Project No prepared by the FERC s Office of Energy Projects, Division of Hydropower Licensing and the U.S. Department of Agriculture, Cleveland National Forest: -$116,794,800 = (- $138,333,400) (-$21,538,600). 3 From Table 42 of the document referenced in the previous footnote.