Contrary to the impression left by state policymakers nowanxious for California to buy the state’s three investor-ownedutilities’ portion of the state transmission grid, the overworked,congestion-plagued system has had more than 100 upgrade projectstotaling more than $1 billion under way in the past three yearssince the state-chartered independent operator (Cal-ISO) assumedcontrol of the private-sector assets. The utility owners havecontinued to foot the bill for the upgrades and expansions.

A surprising amount of the work has been completed during theongoing electrical crisis and will be put in place by this summer,probably long before the state completes its now inevitable buyoutof the three utilities’ approximately 60% portion of the state’sgrid. (The rest is owned and operated by individual municipalutilities and the federal government, with the City of Los Angeles’giant municipal utility holding more than half of the publiclyowned transmission assets.)

“They (Cal-ISO and utilities) have been doing as much as theycan in an expedited fashion within existing rights of way, and Ithink a lot of the results will be seen this summer with quite abit of work done in the San Francisco Bay Area and San Diego areasto reinforce those systems dramatically over what they were in thelast two years,” said Don Kondoleon, a state energy commissiontransmission expert.

Some of the largest upgrades, such as the so-called Path 15 inthe central part of the state, are still not on the approved listof Cal-ISO, but are expected to be shortly. The congestion, whichhas long existed for moving peak-demand supplies from the southernhalf of the state to the north, was not a priority in past yearsbecause the northern territory of Pacific Gas and Electric Co.rarely needed excess power from the south, Kondoleon said.

“If the state gets involved in transmission more, those problemsmay come more to the forefront,” said Kondoleon. “But you reallyhave to take your hat off to PG&E and SDG&E because I thinkthey are doing everything and anything possible” to expand andupgrade the grid.

Cal-ISO transmission planners and the utilities identified anumber of smaller projects last summer that could be addressedbefore this summer, and many are already under way. Some stillawait state regulatory approval. A lot of them are focused onbeefing up the system in the general San Francisco Bay Area, whichwas the center of rolling blackouts that occurred last summer andearlier this year.

“There is quite a bit of investment going on in the transmissionsystem,” said a Cal-ISO transmission planner who noted that morethan 100 projects have been taken on since the ISO began itsoperations in late 1997. “I don’t know if state ownership willaccelerate the process. Permitting is very long, so maybe there isa way for the state to cut this down, although I am not sure it isnecessary to have state ownership to do that.

“As for reducing costs, you would save some on taxes (privatesector power owners have to pay) by having the state build thelines, but local governments lose that revenue.”

A regional economic forecaster with the Los Angeles CountyEconomic Development Corp., Jack Kyser, said as far as he knows noone is assessing the economic impact of the lost property taxrevenue locally for a proposed state takeover of the transmissiongrid.

A counterbalancing benefit from state ownership would be theopportunity to have a truly statewide grid because the municipaland federal owner/operators would be more likely to join withanother public entity, the transmission experts like Kondoleon andthe Cal-ISO planner said.

With or without state ownership, the major long-term solutionsto the grid, such as upgrades for transferring power back and forthwith states in the Northwest and Southwest, cannot be quicklyfixed. Those are five-, seven- and 10-year projects potentially,said Kondoleon, noting he has briefed Gov. Gray Davis on thisreality.

Most of the short-term fixes are already completed, under way orbeing planned, so the state ownership will not change thatsituation.

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