ML020450291
| ML020450291 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 01/24/2002 |
| From: | Dasso K Pacific Gas & Electric Co |
| To: | Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California |
| References | |
| 01 30923 DM, 94-0742640 | |
| Download: ML020450291 (10) | |
Text
1 JAMES L. LOPES (No. 63678)
JEFFREY L.' SCHAFER (Ni.91404) 2 SARAH M. KING (No. 1-8961)
HOWARD, RICE, NEMEROVSKI, CANADY, 3 FALK & RABKIN A Professional Corporation 4 Three Embarcadero Center, 7th Floor San Francisco, California 94111-4065 5 Telephone: 415/434-1600 Facsimile: 415/217-5910 6 Attorneys for Debtor and Debtor in Possession 7 PACIFIC GAS AND ELECTRIC COMPANY 8
9 UNITED STATES BANKRUPTCY COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN FRANCISCO DIVISION 12 In re No. 0130923 DM Chapter 11 Case 13 PACIFIC GAS AND ELECTRIC corporation, Date: February 8,2002 COMPANY, a California o~aMPx 14 Time: 2:30p.m.
em Debtor.
15 Place: 235 Pine St., 22nd Floor
.15 San Francisco, California Federal I.D. No. 94-0742640 Judge: Hon. Dennis Montali 16 17 18 19 DECLARATION OF KEVIN DASSO IN SUPPORT OF DEBTOR'S FUNDS TO UPGRADE 20 MOTION FOR ORDER APPROVING EXPENDITURE OF A 230 KV TRANSMISSION SUBSTATIONS AND, IF NECESSARY, RECONDUCTOR 500 KV TRANSMISSION PROJECT
- 21. LINE TO SUPPORT THE LOS BANOS-GATES [PATH 15 PROJECTI 22 23 24 25 26 27 28 DECL. OF K. DASSO ISO OF DEBTOR'S MOT. FOR ORDER APPROVING EXPENDITURE OF FUNDS FOR PATH 15 UPGRADE PROJECT WD 012402/1-1419948/10/99455/v6
1 I, Kevin Dasso, declare as follows.
("POL&")
2 1. 1 am the Director of the Pacific Gas and Electrie Company Departincot, a positiou I have held since 3 Electric Transmission and Distribution Engineering 4
1 make this Declaration based upon my personal knowledge ortthe Los November 1999.
Project, and 5 Banos-Gates 500 kV iransmission proijt, also known as the Path 15 Upgrade If called as a 6 uponimy review of PG&[i's records conccrning the matters stated herein.
7 witness, I could and would testify competently to the facts stated herein.
to enter into binding 8 2. PG&E is seeking an order authorizing P(G&B Upgrade 9 agreements to expend funds to perform work necessary to support the Path 15 PG&E would commit to design and build 500 kV and 230 kV 10 Project. If approved, 230 kV transmission lines, to substation equipment, and, irneedcd, to reconductor the Western 12 a new 500 kilovolt ("kV") transmission line to be constructed by accommodate its on PathS13 15. PO&I." estimates that the costs of Area Power Administration ("WAPA")
including previously incurredl engineering and h-,UI work to support the Path 15 Upgrade Project,
-15 permitting costs, will not exceed $75 million.
16 3. Path 15 is a series of high-capacitY transmission lines that conncet part oflthe Pacific AC Intertio 17 1customers in Northern and Southern Calitfrnia and also forms Upgrade Pacific Northwest and Oregon to Southern Calilbrtia, The Path 15 linking the increase the south-to-north rating of Path 15 by approximately 1500 megawatts 19 Project will PG&E's Los Bianos and Gates 20 ("MW') through the addition of a new 500 kV line between Upgrade Project 21 substations. WAPA will construct the 500 kV line portion of the Path 15 15 othcr than PG&l". The purpose of the Paih 22 with funding from project participants P'roject is to decrease congestion oi Path 15 and to further integrate gencraing 24 Upgrade 14th 15 Upgrade within the ISO-controlled grid. The scheduled operating date of the plants 25 Project is October 2004. Project, 4, In order to intercofmect and othcrwise support the Path 15 Upgrade 26 terminal equipment at 27 PG&E would design and construct the ibllowing facilities; 500 kV 11RIRfJEC' 28 OR OlI).E APPROVINUJIýATII 15 IJPlrR A01 i-I[ITU'S MUTI'I(N 28rDlEDCL, Cal1"K. DASSO IN St PPOi[tlcw Il-WD 0 12 4 02/1-I419948/1081i96455M
line; and Gates for the proposed Los B1anos-Gates 500 kV transmission Los Banos 2 bus from a ring-bus to ibreaker-and-a-half Ircconfiguratioi of the Gates 500 kV mid Gates 3
install 250 MVAR of 230 kV shunt capacitors at both Los Banos arranrgemeint; 230 kV 4
to provide ncessary voltage support; and rmonductor the Gates-Midway substations lines. The 5 capability by re-rating the transmission transmlission line or provide the nccessury 6 upon !he Path 15 Upgrade Project-cniabling construction of the Project is contingent 7
agreements being developed and executed.
before 8 15 during various periods in 2000 and
- 5. Following congestion on Path ordered 9
Chapter II filing, the California Public Utilities Commission ("CPUC")
PG&E's (a 10 an application fur a Cetlifieate of Public Necessity and Conveniencle PG&B, to submit a Conditional 11 Upgrade Project.. PG&E submitted "CPCN") to construct the Path 15 12 on April 13. 2001 pursuant to the CI'UC order and applicable Application to the CPUC application wts 13 of the California Public Utilities Code. While that CPCN IK)% st provisions of 6uK1,N 14 of Energy directed WAPA to solicit expressions BU¢~1 pending, the United States Department a Federal
- 15 the Path 15 Upgrade Project, and WAPA did so through interest in constructing a 16 On October 16, 2001, PG&E, WAPA and other participuntf executed Register Notice.
17 ("MOU") regarding construction oL"thw Path 15 Understanding of non-binding Memorandum of and the other participants arc now in the process 18 Upgrade C'G&E Project. WAPA, 19 regarding construction orthe Path 15 Upgradc Project.
negotiating binding agreements MOU.
20 Attached hereto as Vxhibit , A is a true andcorrect copy of the of 21 the MOU, PG&E filed a "Notice
- 6. On November 6,2001, inlight of 22 Applicatign. In an order dated November 30, 2001 (the Withdrawal" of its Conditional to withdraw "CPUC Order"), the CPUC treated PG&E Inotice as a motion for permission 24 denied it, and consolidated the conditional application with tle conditional application, 25 Sthe of electric tran1smision investigation, pursuant to Calibfmia Assembly Bill 970, 24 CPUC's affiecting actions to rcsolve those constraints, and relatcd matters and distributtion constraints, 2'2 m1PATi IS WPIKRADE I'Mix
,XILNIfITIR1REOr ruINL).' m'C ft).S MOT. FOiR u)KORi)R APPROVING uE¢C"* OF K.DASI() ISU OF DEll 994311000'451.6 WI) 0124021-141 I
I'
° Administrative Law Judge has scheduled the reliability of electric supply.' Thc CPUC'S of the on tic economic benefit o' the Path 15 Upgrade Project, requird submission hearings 3 MOU impleimentation agreements to be followed by heiarings thereon, and brieling on 4 whether a CPCN is required for PG&E*s participation in the project.
5 7. Because the WAPA-sponsored Path 15 Upgrade Project will increase the 6 the same extent as contemplated in PG&E's Path 15 electric transmission capacity to with 7
Application, allow PG&B to obtain a share of such capacity comtensurate Conditional incur incurred for the benefit of the Path 15 Ulpgrade Project, and require PG&E to its costs it rather than spend the estimated $325 million costs estimated at or less than $75 million, participate ill the 10 will cost to construct the entire Path 15 Upgrade Project, PG&E intends to II Path 15 Upgrade Projcct through its contemplated work in support of the WAPA-sponsored alone.
12 project rather than pursuing its Conditional Application to construct the entire project in the southernl portion of Mt, 13 8. Path 15 is a transmission system segment located Operator (SO")I 114t"R the PG&E service area and in the middle of the Independent Systemn 1,0s grid, Path 15 consists ofthe 11ollowing lines: Los Banos-Gates 500 kV; controlled 16 Banos-Midway 500 kV; Gates-Panochc f1 230 kV: Gates-Panoche #2 230 kV; Gates-Gregg 17 230 kV; and Gatcs-McCall.230 kV. These facilities are used to meet transmission capacity and Southern 18 requirements of various parties in the Northwest, Northern California 19 California, and for integrating generating plants within the ISO-controlled grid, 20 9. Path 15 is currently constrained to a lower south-to-north transfer limit than 500 kV lines 21 the rest of the 500 kV system in Northern California because there are just two corridor, the Westent 22 in this area. Because the two 500 kV lines arc located in a common that the Coordinating Council ("WSCC") transmission reliability criteria require 23 Systems double-line 24 simultaneous loss ("Los Banos South system be operated to withstand their is Under these criteria, the present maximum south-to-north transfer. limit 25 outage").
26 true and correct copy of the CPJC Order 27 'See CPUC Investigation No. 00-11-001, A 28 is attached hereto as Exhibit 13.
15 uI;RArF.1ROIEC Dt:CI. oF K. DASSI)1S0OF DEIBOR'S MO'[' R )RI)ER APPROVING F.XPENL)TLURE OFI:UNDS FOR IArII WD 0124021l-1419948/I (8/96945SIV6
of special automatic zrod imanual operating 3,950 MW. T1his limit is bascdon the availability 2
that would be initiated immediately after any Los Banos Souih doubnle line procedures 3
outage.
4 I5 coe,89tion hal resultWd in
- 10. The ISO has found in recent years that Path
ý5 consumers mainly during off-peak periods.
highcr generating costs to Nortlern California 6 that it'has been necessary to operate higher-cost During such periods, the ISO has found or to 7
in Northern California, to import higher-cost power from the Northwest, generation 8 to meet lower-cost power from Southern California onto the Pacific D)C Intertie reroute lowcr-cost 9 ISO has found that access to additional demand in Norther California, The 10 15 transler limits.
resources in the south has bccn limited due to the Path 11 generating in Northern California during the
- 11. Due to limited generation availability 12 The part of 2000, congestion on Path 15 began to occur much more irequcntly.
latter Caliromia 13 2001 as a shortage of generation in Northern IKA'MD problem escalated further in January 14 north of Path 15. While the ISO concluded that there were additional
)AJC4 led to rotating outagcs ct3W1 15
.15 reserves in Southern California, the ISO found that constraints on Path generating 16 The ISO further found that Path 15 constraints, prevented full access to this generation.
il Nortliern 17 with generation shortages, could again contribute to rotathig outages combined 18 California. I'G&E and the ISO began
- 12. 0,vcn belore the rotating outages occurred, 19
- 20 aitcrnaties to reduce off-peak analysis of Pathl 5, with thc objectiveof identifying 2001 21 analyses conducted by the ISO and published in January generation costs. Subsequent 22 11 above indicated that:- (a) ath 15 following the outages described in paragraph over 23 in increased market costs ranging friom $7 million to $220 million congestion resulted have 24 ending December 31, 2000 (depending on how the market would the 16-month' period could
,:25 responded had the Path upradeO5been in-service); and (b) Path 15 constraints project need 26 rotating outages. The ISO analyses were not conclusivC on contribute to future the work necessary to undertake the permitting
.27 t but provided su:ffieicn Supp0r4tObegijt
.:28 lINDS FOR I'ATII I5 tPlIIjAIf~tl Pk(JECT NDIT1tRE OF U I"I'WRS MoT" FOR ORDnI APPROVIN(T I:XIPO DEICLI OF I* A 15 O ISOF tlASSO Wi) 012402/414 9A"8 11OtS/96t455/Vr0 I
[ proce~ss approval 2 13. Subject to PG&E nmanagcrnt's approval, PG&E reqiested ISO the pernits 3 to conduct preliminary engineering and project siting work imeessary to pursue PG&l,'s 4 for the construction of a ncw Los Banos-Gatcs 500 kV project. The ISO approved on February 5, 200 L. Addifinnally, before reqLLCes to proceed with the permitthig process additiioiml ianalyses 6 applybig for the necessary permits, PG&E. and the ISO agreed to perform 7 to ascertain project need under future generation build-out scenarios.
PIO&1 to submit an application lor 8 14. On March 29, 2001, thc C[UC ordcred 9 a CPCN to construct the Path 15 Upgrade Project. In accordmcec with the CPUC ordcr, lbr a l0 PG&E filed Conditional Application, No. 01-04-012 (the "Conditional Application")
2001. PG&t's application was II CPCN for the Conditional Application Project on April 13, that the Project is 12 conditioned upon the following: (1) a PG&E and ISO determination Court's approvol of Hc,, 13 needed and cost effective; (2) PG&E management approval; and (3) this Path 15 Upgrade Project.
MK the cxpenditure of funds to construct the
-. 15 15. PG&1 and the ISO submitted opening testimony in thc CPCN proceeding presented, 16 on September 25, 2001 regardiag the conditional application. PG&E's testibony Path 15, the estimated 17 among other things, two service alteniatives considered for upgrading o' those altcrnatives, possible routes for the new line, and the estimated cost 18 cost of those
$325 million to construct 19 route alternatives. PG&1 estimated that it will cost approximately need for the Path 20 the Path 15 Upgrade Project. The ISO's testimony addressed the cconomic Thlie Oflice of Ratcpayer 21 15 Upgrade Project, and concluded that the P'roject is cost-justified.
rebuttal 22 Advocates ("ORA") submitted opposing testimony and the ISO submitted the Path 15 23 testimony. No CPUC administrative hearings were or have been held on 23 24 Upgrade Project.
CPUC, tihe 25 16. While PG&E's Conditional Application was pending befure the in a public-privatC 26 Ulnited States Department of Energy alld WAPA solicited interest execution of the MOU 27 parhersbip to construct the Path 15 Upgrade Project. Following 28 AVIIROVLNrj l:XPI1-Nr)I'rUIE O1 IUNJ)S IoR iATI I 5IIPiRAI)i- IROJ-L.1 D 3CL. OF Kj.IASSO ISO lV)LH'IrOR"S MOT' FOR ORFlbi 4
WDEO i 24O*2/L141990110Kt9)I )f5/v
I its Conditional
'1 the WAPVAsponsorcd Path 15 Upgrade Project, PG&E withdrew regarding 200 .
2 its opening testimony oil November 13, Application on November 6, 2001 and it 3
CPIJC declined to allow PG&E to withdraw its Conditional Applicatioa, Although the Project and 4
scheduled hearings on the PG&L-7sponsored Path 15 t) pgrade dropped investigation 5 proceedinig with the CPUC's ongoing consolidated the Conditional. Application 6 970 of electric transmission iand distribution pursuant to California Assembly Bill 7
thc CPUVs Administrative Law Judge set hearings in rate February constraints. T'hereafter, PG&LE to the economic, acCed for the Path 15 Upgrade Project, required 2002 to consider claim 9
implementation agreements, and scheduled briefing on the ORA's submit the MOU 10 its contemplated portion of the WAPA-spotisored that PG&&E needed a CPCN to perfornm to II Project. Although the ORA asscrts that PG3&E must have a CI'CN 12 Path 15 Upgrade oil unambiguous Project, PG&E believes hint, based participantc in the Path 15 Upgrade the work that it 13 in General Order 13 l-D, it does not need a CPCN to perform iic language Upgrade Project.
would commit to perform in support of the Path 15 15 a Secretary of'Energy, prompted by
(?IA1
- 17. In May 2001, the United States WAIPA to "16 directive incorporated in the National Energy Policy report, directed Presidential anod ownership interest 17 planning for an upgrade to Path 15 nod to solicit financing complete 18 in the project.
solicit 19 In June 2001, WAPA posted a notice in the Federal Register to 18.
on PG&E's ptoposcd 20 and ownership interest in a project to upgrade Path 15 based financing its solicitation, 21 Project set forth in its Conditional Application. Following Path 15 Upgrade of 22 private entities to discuss the possibility with a number of public and WAPA inet 23 Project.
constructing the Path 15 Upgrade 24 16, 2001, PCG&E, WAPA and other Path 15 Upgrade Project
- 19. On October the 25 the MOU, The MOU outlines, on a preliminary basis, p:rticipants executed the contributions, ownership rights and operational dotails of spOSibilities, financial r, .e age onnndagesies tn agree aggressive schedule to "define the Projcct and rojt an'd requires. the partivs.tP reiest 2t:2 FOR PATHI 15 Ul'URA El t Rt1RL:C I:OR ODIWR APPRCOVINO I'XPh'NuI"ITuIu OF PIJNns ci.Li.OF K. DASWO IS OF 1JjBTOR'S .M(T.
WIDU12402/1-141994'I81UN/9M9455/V6
16, 2002. 'llic MOIJ contemplates that the the work to be done at each facility" by January be shared 2 from the Path 15 Upgrade PrqJcct will increased transmission capacity arising 3 among the public and private entities comilels-urate with eacii entity's contributions to the 4 Path 15 Upgrade Project. PG&-','s proposed contributions would include- (1) enviroiuental 5 and engineering studies and design work perlbriued to date; and (2) detailed design and 6 eolia'uction work for the 500 kV and 230 kV substation and 230 kV rccondtictoring work by 7 necessary to accommodate the additional 500 kV transmission lines to be coustructed 8 WAPA, which PG&E believes will be consistent with POG&E's Plan of Service Alternative 2 9 outlined in its since-withdrawn opening testimony submitted in the CPUC Conditional 10 Application proceeding. T'he total cost for this work is estimated not to exceed $75 million, II including the more costly option of reconducturing Ohe Gates-Midway 230 kV transmission 12 line and $9.5 million previously approved by the Board of Directors on May 8, 2001 for kLS:13 environmentlr , engineering mid permitting work related to a Path 15 upgrnde project. Based total project cost ($325 million, U 14 on lie ratio of PG&ws contribution to the anticipated PG&EM certain aspects of the project may chmige under WAl'A-sponsorshlip)i 15 although 16 would be allocated about 345 MW oFthe 1500 MW incremental tnulsfer capability.
to construct the 17 20. If this Coutrt grants PG&E the authority to expend Funds Project or its work to support the Path 15 Upgrade Project, PG&E expects to include the cost lInergy base utility revenue requirements and seek authorization by the Federal 19 in PG&E's 20 Regulatory Commission ("FERC") to earn a rate of return on such costs.
21 21. PG&E, along with the other Path 15 Upgrade Project participanlts, was by FERC staff that the Path 15 Upgrade Project may be eligible for prc-construction 23 advised on equity.
23 approval, accelerated depreciation, and a 200 basis points premium on return 15 Upgradc Project translates to an inereasce 24 pG&E's contribution of $75 million to the Path 25 in PG&F's present value of revenue requiremcnt o1'$95 million based on standard 26 depreciation and return on equity.
that 27 22. On November 27, 2001, pG&E's Maniagement Committee proposed 28 15 0I1IRALOPRtO"EL
.7-MUL. FIURORDEIR ANiIIOVINW EXNDITUILL.OF INDS FOR h'AIII WDIOFK.
DECL DASSO 11 01240*2/1-14199'1 ISO OF DEBTOR'S oK1g69455/06
I of $75 million for the work to support the Board of Directors authorize a capital expenditlre 2
15 Upgrade Project. On Decetnber 19, 200 1, PG&E's Board of Directors approved the Path 3 'rojcct.
an appropriation of $75 million to rund the 4 prcpared fbr thc Conditional
- 23. Based on preliminary design estimates 5
Corridor Route, uld including previously Application Project, Alternative 2, Western 6 to support hlic costs, PG&E estimates that its work incurred engineering and pcrmilting
$4 7
Path 15 Upgrade Project will cost approxiLmntcly $75 million, witl WAPA-sponsorcd 8 to be to be inclhdcd in PG&E's 2002 budget and the balance presently anticipated million 9 targe*ted with the Path 15 Upgrade Project's currenL incurred in the next few years consistent 10 completion date in 2004.
11 PG&E to coinstruct the entire Path 15
- 24. There is no CPUC order directing 12 Path 15 Project, forbidding PG&E from participatitig in.the WAPA-sponsored Upgrade 13 PG&Fl to or the contemplated work. or requiring Upgrade Project through performance 15 obtain a CPCN to performn the work contemplated by the MOU.
M the laws of the United States of America I declare under penalty of perjury trider at San 16 the fbregoing is true and correct. Execuicd this -4=day of Jnnuary 2002, that 17 Francisco, California.
18 19 Kcvin Dasso 20 21 22 23 24 25 26 27 28 IOR PA'IiI 15 lifvRAI)IDI'kLJJ C
)IXPliRLOFi4UNDsJ IDUIOR'S MOT IUOlt.U RUEK AMllOVIN DmuL.OF K.DASSO ISO OF WI.) 012402/I-8419-010KI9694550-I
Exhibits are not attached to the service copies of this document.
You may obtain copies of the Exhibits in one of the following ways: through the "Pacific Gas & Electric Company Chapter 11 Case" link accessible through the Bankruptcy Court's website (www.canb.uscourts.gov), or by written request to Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Attn: Racquel Lopez, Three Embarcadero Center, 7th Floor, San Francisco, California 94111-4065 WD 071801/1-1419901/gff/932202/vI