Energy secretary announces partnership to build power line

By Steve Lawrence Associated Press Writer
Monday October 22, 2001

SACRAMENTO – U.S. Energy Secretary Spencer Abraham announced a public-private partnership Thursday to ease a transmission line bottleneck that contributed to the blackouts that hit California earlier this year. 

The $300 million project will add a third line and make other improvements to Path 15, an 84-mile stretch in the Central Valley where high-voltage north-south transmission lines narrow from three to two. 

That narrowing caused problems in January when Northern California was hit by a power shortage and rolling blackouts and the overloaded Path 15 lines couldn’t bring more electricity from the southern part of the state. 

Abraham said a consortium that includes the federal Western Area Power Administration and the Transmission Agency of Northern California, a group of publicly owned power districts, will make the improvements and share ownership of the new line. 

Other participants are: 

• Pacific Gas & Electric Co., California’s largest privately owned utility and the owner of the two existing Path 15 lines, and one of its sister companies, PG&E National Energy Group. 

• Kinder Morgan Power Co., a Houston-based electricity generator. 

• Williams Energy Marketing and Trading Co., a power wholesaler. 

• Trans-Elect Inc., which offered in February to buy most of California’s power grid for $5.25 billion. Trans-Elect is partly owned by General Electric Co.’s investing arm. 

The Western Area Power Administration will oversee the work, prepare environmental studies and retain part ownership of the new line. But it won’t help pay to build the line and will only get enough revenue from transmission fees to cover its costs, officials said. 

“This proposal will benefit California ratepayers without burdening taxpayers,” Abraham said at a news conference in Palo Alto. 

Under a proposed ownership split, WAPA would own 10 percent of the new line, the Transmission Agency of Northern California would get 45 percent and the private companies would split the rest. 

Abraham said the improvements will allow for transmission of another 1,500 megawatts, approximately enough electricity to power 1.5 million homes. 

Bob Mitchell, vice president of Trans-Elect, said revenues from the new line will be regulated by the Federal Energy Regulatory Commission and will provide investors with a “modest return.” 

Transmission lines are “not a big profit maker but if you can get a fairly reliable rate of return of 11 to 11.5 percent you can do OK,” he said. 

Development of more power plants in Northern California would make Path 15 expansion less critical, but making the improvements would still be “the prudent thing to do,” Mitchell said. 

Consumer advocate Harvey Rosenfield criticized the deal, saying California would have been better off if the state had bought the transmission lines. 

“I don’t think it’s in California’s interest to have the federal government and a bunch of out-of-state energy companies on the spigot that controls the flow of electricity in California,” he said. 

But Mitchell said private ownership of transmission lines is a better idea. 

“There are other more pertinent tasks that government ought to undertake than getting into the energy business any further than they are,” he said. 

Steve Maviglio, a spokesman for Gov. Gray Davis, said the governor wouldn’t comment until he had seen details of the plan. 

Davis had proposed buying most of the state’s transmission lines as a way to ease the financial problems of California’s three major investor-owned utilities, but that plan was rebuffed by lawmakers and PG&E. 

Associated Press Writer May Wong contributed to this report.