With a potential equity and energy interest in both, Pacific Gas and Electric Co. (PG&E) views major interstate natural gas pipeline and electric transmission projects in the Pacific Northwest as treading water, awaiting other key market and regulatory developments, according to PG&E Corp. CEO Peter Darbee, speaking on a conference call with financial analysts Wednesday. For now, the projects are in what Darbee called the San Francisco-based combination utility's "far-end guidance period" (2012-13).
One proposal calls for a major new interstate high-voltage transmission line from British Columbia (BC) in Canada to California, for which California regulators authorized PG&E to spend up to $14 million for detailed feasibility studies. The second project is the so-called Pacific Connector natural gas pipeline that would be connected to the proposed Jordan Cove liquefied natural gas (LNG) receiving terminal along Oregon's Pacific Coast at Coos Bay.
"We've been working with the other utilities on the specific geography for the transmission line route," Darbee said. "We have also been in discussions with the counterparties in Canada -- both on the generation and the transmission sides."
Still to be completed in the study are the detailed cost and other issues revolving around a multi-billion-dollar project of this magnitude. During the past two years PG&E has spearheaded efforts to analyze alternatives that have included both 500-kV and 765-kV alternating current (AC) and high-voltage direct current (HVDC) lines via overhead or undersea routes between British Columbia and Northern California (see Power Market Today, Nov. 7, 2008). The transmission would improve California's access to hydropower supplies. Any project would also have to beef up western grid reliability, PG&E officials have said.
Less than six months ago on a similar earnings conference call, Darbee assured analysts that the BC-to-California power line project was still alive. Eventually, the utility owes the California Public Utilities Commission (CPUC) the results of its multi-year study.
"What I do want to emphasize is that the start of this project -- assuming we overcome all of the hurdles between the cooperation and agreement on the Canadian side [and] the cooperation of the utilities in the United States and in California -- and its construction would really be at the far end of the guidance period," Darbee said. "Therefore, I don't think there are any expenditures for this project included in our guidance."
After the study is complete and filed with the CPUC, the state regulators would have to agree to a "next phase" or a total plan would be submitted, requesting the regulatory approval. There also would have to be approvals from the states of Oregon and Washington, as well as appropriate Canadian federal and provincial authorities. In the United States, the Federal Energy Regulatory Commission (FERC) and the California Independent System Operator (CAISO) also would have to be involved.
"So there are quite a number of hurdles for this to go," Darbee said.
Regarding the Pacific Connector natural gas pipeline from Oregon to California, the application is now at FERC, and the federal regulators released last Friday a favorable final environmental review of Jordan Cove Energy Project LP's proposal to build an LNG import terminal and associated pipeline facilities to serve the Pacific Northwest, Northern California and northern Nevada.
"I think the key issue has to do with lining up the contracts for the LNG," Darbee said. "This pipeline project will only move forward if the partners are able to line up product to move through that pipeline. There is also some local permitting that has to be completed in and around Coos Bay in Oregon."
The project manager for the Jordan Cove project, Bob Braddock, told NGI late Wednesday that he expects FERC to certify the environmental assessment by the end of July, and that near late summer or early fall he hopes to have an announcement on potential LNG supplies. With those two milestones, Jordan Cove is still on target to begin construction in the fall of 2010, Braddock said.
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.