Expressing strong dissatisfaction with what it considers California’s one-sided energy approach, the Arizona Corporation Commission (ACC) late last month unanimously voted to reject the proposed second Devers-to-Palo-Verde (DPV2) high-voltage interstate transmission line by Rosemead, CA-based Southern California Edison Co. Edison is the majority owner/operator of the existing high-voltage interstate line along the same route.

One possible outgrowth of this decision, if Edison doesn’t resurrect the proposed second power line, is that additional new natural gas-fired generation plants in the inland desert regions of Southern California will more likely be built over the next decade to satisfy the growing air-conditioning loads in one of the fastest growing areas in California. An example is the California Energy Commission’s (CEC) acceptance as “data adequate” last month of a proposal to build a 656 MW gas-fired combined-cycle generating plant in the Inland Empire area 50 miles east of downtown Los Angeles, which now starts a one-year CEC licensing process. Several other new plants, including a second High Desert facility, are on the drawing broad in that part of the state.

In the Arizona decision, the ACC set aside a heavily conditioned recommendation for approval of the $680 million, 230-mile “extension cord to Arizona” by the state’s Power Plant and Transmission Line Siting Committee. Unlike that legislature-chartered committee, the five ACC commissioners are “obligated to balance the need for the line against the environmental, ecological, reliability and economic impacts,” said an ACC spokesperson.

In a statement, Edison expressed deep disappointment and said it was “evaluating options.” As background, Edison noted that the California Public Utilities Commission (CPUC) approved the DPV2 project last January and Arizona’s line siting panel granted a certificate of environmental compatibility the following month (last February), along with approvals in May from the U.S. Fish and Wildlife Service.

From the Arizona regulators’ perspective a lot of the controversy and questions surrounding DPV2 centered on “who stands to benefit from [the line’s] construction,” the spokesperson said. Ultimately, the ACC commissioners didn’t like estimates that Arizona power consumers would wind up paying $242 million for their share of the DPV2 project while California would reap the bulk of the benefits by being able to access more relatively cheap power supplies in Arizona.

ACC Commissioner Kris Mayes said that California “wants to drop a 230-mile extension cord into Arizona at a time when Arizona is the fastest growing state in the nation.” Mayes concluded that the project would come at Arizona’s expense — monetarily, environmentally and ecologically.

Acknowledging that Arizona has some excess power supplies available for export now but saying that will change in the future, ACC Chairman Mike Gleason voted in favor of what he called “the long-term needs of the people Arizona. We are going to need this power.” This mean rejecting the new transmission line, which he viewed as potentially sucking more power supplies out of his state.

Other commissioners pointed to what they thought was California’s failure to build an adequate amount of new power plants and transmission lines over the past 10 years, and the perception that the neighboring behemoth has developed energy policies requiring “power user sacrifices and higher utility bills.”

“Southern California Edison’s plan has Arizona paying the price and California reaping the benefits,” said ACC Commissioner Jeff Hatch-Miller, the immediate past chair of the regulatory panel. The ACC’s newest member, Gary Pierce, prefaced his vote for rejection to say he was not supporting “balkanization” of energy markets or “economic protectionism,” and that he did support more interstate power transmission capacity in the West.

“The conditions under which the DPV2 line would enhance the public interest are not present in the current application because it does not adequately deal with the negative externalities of electric generation.”

A year ago while Hatch-Miller was ACC chairman, he and Mayes sent letters to Edison executives and members of the Arizona Power Plant and Transmission Line Siting Committee requesting further evaluation of the DPV2’s potential impact on Palo Verde Hub prices and Arizona Public Service Co.’s (APS) rates and ability to sign short- and long-term supply agreements.

At that time, Hatch-Miller said, according to Edison, “the [new transmission line] would increase the electrical transfer capability between Arizona and California by 1,200 MW. Presumably, [Edison] would secure long-term power contracts with independent natural gas-fired generators surrounding the Palo Verde Hub. One potential result is that electricity supplies will become tighter and hub prices will climb. I ask the Line Siting Committee to examine how the…project will affect the peak and off-peak prices on the wholesale spot market for the Palo Verde Hub.” Hatch-Miller also asked for an evaluation of the impact on APS’s immediate and long-term supply contracting ability.

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