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California OKs Power Transmission Role for Citizens Energy

Nonprofit gas marketer Citizens Energy Corp. on Thursday gained California Public Utilities Commission (CPUC) approval to take a stake in San Diego Gas and Electric Co.'s (SDG&E) $1.9 billion Sunrise Powerlink transmission project, which would run from Imperial County into North San Diego County.

At a cost of $83 million, Citizens Energy, the nonprofit founded by Joseph Kennedy in 1979, gets the option to lease transportation rights on a 30-mile stretch of the Sunrise project, now under construction in Imperial County. The deal approved by the CPUC runs for 30 years, after which the transmission line capacity reverts back to the San Diego-based Sempra Energy utility.

As part of the deal, Citizens will devote 50% of its after-tax profits on the independent transmission deal to programs serving low-income families in Imperial County, where current estimates place the unemployment rate at more than 25%.

CPUC President Michael Peevey called the deal an "unusual but exciting proposal." Citizens will supply capital to SDG&E as it continues to build the transmission line, which is to run for about 120 miles in the extreme southern end of California. The CPUC voted 5-0 on the deal, despite some concerns raised because SDG&E does not serve the residents of Imperial County where Citizens will operate and make its charitable donations.

In the pre-deregulated energy market of the early 1980s, Citizens Energy contends that it played a pioneering role in electricity trading, becoming the first nonutility to win a federal license to trade power among utilities. Shortly thereafter, Citizens also became a leading marketer of natural gas to local distribution utilities after successfully challenging the then-monopoly control of the nation's natural gas pipelines.

Peevey said California needs an independent transmission operator, and it will help the SDG&E line remove a well-documented power transmission bottleneck, along with facilitating the development of more renewables in Southern California. Other commissioners expressed reservations about the deal because of its potential to raise rates for utility customers, but in the end they all joined Peevey in approving the deal.

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