Pacific Gas and Electric Company Seeks Approval to Recover Abandoned Transmission Plant Costs

Strategic Insights -

The Pacific Gas and Electric Company has submitted a filing to the Federal Energy Regulatory Commission (FERC) requesting authorization to record and recover through its Transmission Owner Tariff (TO Tariff) Formula Rate 50% of the approximately $1.2 million in abandoned project costs associated with the Dinuba Battery Energy Storage System (BESS) project. The project was initially approved in the California Independent System Operator's (CAISO) 2017-18 Transmission Plan but was subsequently cancelled due to CAISO's recommendation to approve the Reedley 70kV Capacity Increase Project instead.

Key Takeaways:

  • The Dinuba BESS project was initially approved in the CAISO's 2017-18 Transmission Plan and was expected to be a transmission asset.
  • The project was cancelled due to CAISO's recommendation to approve the Reedley 70kV Capacity Increase Project instead.
  • Pacific Gas and Electric Company (PG&E) seeks to recover 50% of the approximately $1.2 million in abandoned project costs through its TO Tariff Formula Rate.
  • The recovery of abandoned project costs is consistent with Commission policy as found in Opinion No. 295.
  • The CAISO determined that the Dinuba BESS facility should be considered a transmission asset, which is permitted for recovery under FERC precedent in Western Grid.
  • The project abandonment costs were prudently incurred, and PG&E proposes to amortize the recovery of the costs over one year on a straight-line basis.
  • PG&E seeks to implement recovery of the Project's costs through its TO21 Rate Year 2027 Annual Update and to amortize cost recovery over one year consistent with the TO21 Formula Rate.

Statistics:

  • $1.2 million: The approximately abandoned project costs associated with the Dinuba BESS project.
  • 50%: The percentage of abandoned plant costs that PG&E seeks to recover through its TO Tariff Formula Rate.
  • $602,472: The amount of prudently incurred abandoned plant costs that PG&E seeks to recover.
  • 1.2 million/50% = $2,400: The monthly amount that PG&E proposes to recover through its TO Tariff Formula Rate.
  • $0.0067/MWh: The ratio of the abandoned or cancelled projects' total recoverable costs to PG&E's expected annual gross load, which is less than the $0.05/MWh threshold.

Sources:

  • PG&E's filing to the FERC (no date provided)
  • CAISO 2017-18 Transmission Plan (no date provided)
  • Opinion No. 295 (42 FERC P 61,016 at 61,077-78 (1988))
  • Western Grid Development, LLC, 130 FERC P 61,056 at PP 43-46, 51-52 (2010)
  • CAISO 2021-2022 Transmission Plan (no date provided)
  • Pacific Gas & Electric Co., 185 FERC P 61,243 (2023)