December 19, 2002 PUC: 118 Docket #: A.01-03-036

Media Contact: PUC Press Office, 415.703.1366, news@cpuc.ca.gov

PUC FINDS TRANSMISSION CAPACITY ADEQUATE FOR SDG&E, DENIES REQUEST FOR VALLEY-RAINBOW PROJECT

The California Public Utilities Commission (PUC) today denied the request of San Diego Gas and Electric Company (SDG&E) to construct a 500 kilovolt (kV) transmission project and associated upgrades, called the Valley-Rainbow Project.

The Commission determined that SDG&E will continue to meet established reliability criteria for the region until 2008. Utilizing a five-year planning horizon from 2001 to 2006, the Commission concluded that the project is not needed for reliability purposes. In reaching this conclusion, the Commission reviewed forecasts for existing and new generation in San Diego, the ability of SDG&E to rely on resources in northern Baja California and Mexico, the possibility for additional import capability due to transmission upgrades, and assumptions that impact the peak demand forecast. SDG&E will continue to meet the reliability criteria until at least 2008, even under the conservative planning assumptions utilized by the Commission.

Because the project cannot be justified on the basis of reliability, the Commission evaluated whether the proposed Valley-Rainbow Project would provide positive economic benefits to SDG&E ratepayers and California in general. The Commission concluded that the project is not cost-effective to ratepayers except under the extreme assumptions that six consecutive years of one-in-35-year drought conditions occur, all new generation available to serve California is located in San Diego or northern Baja California, Mexico, and a major transmission project (Path 15) is constructed in Northern California. Under all other assumptions, the projected costs exceed the projected benefits.

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