Towers of Terror Taking a Telltale Turn?

In an e-mail received several hours ago from Assembly member Curt Hagman (R-Chino Hills,) the California Public Utilities Commission has ordered Southern California Edison to being pre-construction planning and design work for underground routing of a section of the Tehachapi Renewable Transmission Project (TRTP) through some of Chino Hills.

This order, voted by the CPUC today, is done while the commission works toward a decision on forcing SCE to remove some of the massive 198-foot tall towers it has completed or partially finished on its 40-foot wide easement through the city.  This decision is to be made in July, but the commission specifically cited the deadline of having the project up and running within about two years.

CPUC president Michael Peevey observed that the purpose of this latest order is to create "a complete record that will allow us to determine whether to authorize undergrounding a portion of the Tehachapi Renewable Transmission Project that runs through Chino Hills."  The idea would be that, if the commission were to approve the realignment of this part of the project underground, Edison woulld already have the work done in advance to allow the utility to proceed with the underground construction quickly to meet that 2015 deadline.

Activities covered by the pre-construction order include cable testing at a cost up to $3 million; general engineering up to $1.5 million; the groundwork for acquiring property up to $200,000; an environmental survey and preparations for appropriate permitting at no more than $250,000.

If the CPUC were to not order that the underground work be mandates, Edison would stop all work leading towards that, including any contracts for manufacturing and installation of lines and associated elements.  In this case, the utility could recoup up to $28 million in contract termination charges and these costs would be covered by the CPUC.

Looking at the CPUC order linked to Assembly member Hagman's e-mail blast, the first sentence makes it clear that the decision was made pursuant to a request by Edison "for rate recovery for reasonable costs it will need to incur in the next few months" before the expected July decision and if the project is to be completed by late 2015.

The commission went on to state that "we conclude, on balance, that it is in the public interest for SCE to undertake specified pre-construction activities and to incur the costs associated with those activities," while noting that "this determination necessarily means that SCE may be entitled to reover reasonable expenditures in the amount of as much as $32.95 million" if the CPUC was to decide not to force the utility to route the project underground in the affected area "after a review on the merits." The commission ruling also indicated that the existing halt on construction of the above-ground work on the section through Chino Hills is not affected by the decision.

The ruling is an 18-page document, much of which reviews the curious history of the project, which was approved by the CPUC in 2009 and, yet, came for review on an appeal from the City of Chino Hills (in turn spurred on in large measure by the impressive grass-roots work of the Hope for the Hills organization), which yielded the stay of construction and the review which has slowly moved onward since then, leading to the July hearing.

Notably, however, the commission crafted its wording on this upcoming meeting by averring that, "today's decision will determine whether we ever consider [emphasis added] that ultimate issue [in other words, the decision to either order or not the placing of the project underground] on its merits."

It is also important to note this genesis of today's decision: "though SCE is ont an underground proponent, SCE's rate recovery proposal [to cover costs associated with any work preparatory to the undergound pre-construction] seeks a finding from this Commission that it would be in the public interest for SCE to undertake certain activities now—essentially to accelerate them—in advance of our decision."

Also of significance is that the decision was made in large measure because of concerns expressed by other interested parties in the TRTP, such as renewable energy companies who are associated with the project and naturally are concerned about any potential delays engendered by the controversyhere in Chino Hills.

Again being particularly cautious in its approach to this issue, the CPUC stated:

"We recognize, as the parties do, that direction to a utility to engage in pre-construction activities is unusual – we would much prefer to wait until we are in the position to issue a decision on whether or not to underground Segment 8A following full development of the record. But in this unique situation, if we wait, we certainly will delay commercial operation of the TRTP. That clearly is not in the public interest. At this stage in our review of Chino Hills’ petition for modification, we find it reasonable to continue that review, as long as the associated costs of the additional and necessary pre-construction activities are not disproportionately large."

Moreover, the commission stated quite clearly that, "We must assume that ratepayers could be at risk for the actual value of all costs reasonably incurred," while also observing that any rate increases requested by Edison must be approved by federal regulatory officials.

As to Edison's oft-asserted view that there should be certain contingencies for unexpected costs, the commission commented that, "We strongly question SCE’s assertion that various uncertainties associated with the potential undergrounding of Segment 8A demand a 50% contingency."  It also implored the utility to consider any mitigation towards the procurement of materials for the pre-production element, including restocking for other Edison projects or resale.

Finally, the order concludes with more cautionary language: 

"The purpose of this interim decision is quite limited. We decline to revise findings or conclusions on the great importance of timely completion of the TRTP or the role of Segment 8A to that effort. If any party believes our existing decisions are insufficient, then after a showing of changed facts or policy, we will consider appropriate revisions. That showing has not been made here, nor is this the correct forum. Likewise, for the same reasons, we decline to add findings or conclusions on the potential financial impact to generators, renewable or conventional, of alleged construction delays along some part of the TRTP to date."

So, while proponents of the rerouting of the TRTP through much of Chino Hills are declaring this latest manifestation to be a victory (and it is, to a point, in at least getting this far with the reconsideration of an already-approved and in-process) project, it is certainly a narrow, specific and limited decision.  Additionally, the CPUC is certainly not "tipping its hand" by giving any hint or indication of what it might due come July (and there are further hearings scheduled for April.)  It's highly guarded language about today's decision having an impact on "whether we ever consider" the likelihood of forcing an underground route is striking.

Assembly member Hagman's statement that the decision by the Commission "has begin to untie the stranglehold on the residents of Chino Hills" is an interesting interpretation, especially as the CPUC was quite careful to word its decision based on the necessity to complete the entire project by 2015 and that the order was in response to an Edison request for rate recovery on accrued costs.  Yet, it is obviously true that, without the dogged determination of citizens and the legal efforts of the city, this point would never have been reached.

Whether the CPUC does the remarkable, astounding, and perhaps unprecedented and orders that the project go underground as desired by the city and Hope for the Hills remains to be seen, but the fact that the matter has evolved as it has is something already to behold.