California's large market for electrical power and the state's renewable portfolio procurement policy will be central in delineating need for new renewables and transmission outside of the state. We are concerned that several of the scenarios considered in the Transmission Expansion Planning Policy Committee (TEPPC) studies for 2019 and 2020 time horizons were defined before very recent siting successes, ARRA incentives, transmission development, procurement activity and the new Brown Administration's policies for distributed generation. We are also particularly concerned when we see proposals for large renewable energy resource development outside of California interconnecting across long distances directly into California balancing authorities. This may be problematic for three primary reasons:
1. Cost: The west-wide benefits that WECC's studies attribute to several of these projects are driven by assumptions about generation and transmission costs, capacity factors, and other key considerations. As you know, the developer of at least one significant line, TransWest Express, expects the project to cost about 70 percent more than WECC'a original assumptions for transmission capital costs would indicate. We thus appreciate the ongoing efforts of WECC staff to review these and other assumptions and to revise capital cost assumptions upward. We look forward to working with you in the next study cycle to ensure that all such assumptions reflect the best-available information gleaned from developers, utilities, regulatory filings, independent estimates and other sources.
2. Risk: When procuring energy for their RPS goals, California utilities consider several factors in addition to cost, including the risk associated with particular generation and relating transmission services. Transmission lines proposed to stretch hundreds of miles over private and public lands face significant permitting and development risk - perhaps most so in the case of DC lines, which offer few electrical benefits to the state they cross. The WECC final plan should repost not only the potential costs and benefits associated with transmission and generation options, but also the risks associated with those options, and how those risks, and potential delays in siting and permitting the lines, address procurement priorities and decisions.
3. Importance of a Dynamic Western Grid: With high penetrations of renewable energy, customers across the West will benefit most from a grid that is truly dynamic and allows for the flexible importing and exporting of power and ancillary services in real time among balancing authorities. We encourage the efforts WECC has underway on initiatives supporting such a future. These include movement toward sub-hourly scheduling, which would assist with integrating intermittent renewable generation across the West, with significant benefits for California. We are also supportive of WECC's efforts to study energy imbalance markets. By enabling additional renewable generation output while helping to minimize reserve requirements and load following requirements, such initiatives balance responsible and prudent system operation with an increasing need for flexibility.