Transmission Interconnection and the California Energy Commission Generator Licensing Process

1. Transmission Interconnection and the California Energy Commission Generator Licensing Process PANC 2010 Annual Seminar San Francisco, California April 19, 2010 Mark Hesters Strategic Transmission Planning Office Siting, Transmission and Environmental Protection Division mhesters@energy.state.ca.us / 916-654-5049

2. Energy Commission’s Role • Energy Commission’s Permitting Authority • Thermal power plants 50 Megawatts or Greater • Related facilities: • electric transmission lines to first point of interconnection • water supply pipelines • natural gas pipelines • access roads • Lead state agency for California Environmental Quality Act (CEQA) 2

3. Energy Commission’s Licensing Process • Certified regulatory program that results in a consolidated permit coordinated with appropriate federal, state, and local agencies • Mandated 12-month licensing process • Conducts joint CEQA/National Environmental Policy Act (NEPA) environmental reviews with federal agencies that must also issue permits • Staff of engineers and environmental experts in 19 technical disciplines • Oversight of the facility during its lifetime from construction through operation to decommissioning and closure 3

4. Transmission System Engineering Analysis • Licensing authority up to first point of interconnection with existing transmission grid • Identification of “the whole of the project” including facilities downstream of the first point of interconnection. • Compliance with applicable Laws, Ordinances, Regulations and Standards (LORS) 4

5. Energy Commission Licensing Authority • Power Plant Switchyard • Outlet Lines • Connection to utility system • Includes expansion of a utility substation • Interconnection Issue: • Pre and Post generator interconnection drawings of substations are considered confidential Critical Energy Infrastructure Information (CEII) • Because of CEII designation applicants are unable to provide the Energy Commission with information on interconnection facilities being licensed by the Commission 5

6. Interconnection Studies • Energy Commission relies on California Independent System Operator (California ISO) or utility interconnection studies • Serial process at California ISO • Transition to Generation Interconnection Process Reform (GIPR) • Cluster Studies after the Transition • Confidentiality (CEII) designation an issue 6

7. Serial Interconnection Studies • California ISO’s System Impact Studies (SIS) not a reliable forecast of generator transmission impacts due to the number of projects in the queue • SIS required constant updates • Facilities Studies could show different results than SIS • CEQA requires use of best available information to determine indirect project impacts (downstream facilities) which was the SIS • Energy Commission staff relies on SIS to forecast downstream transmission facilities 7

8. GIPR/Transition Cluster • July 2009: Transition Cluster Phase I Interconnection Studies completed • 108 Projects / 38,800 MW • Many large clusters required extensive transmission upgrades for reliable interconnections • December 2009: Generators required to post security deposits on transmission upgrades identified in Phase I Interconnection Study • 52 Projects / 10,400 MW remain in Transition Cluster 8

9. Transition Cluster (cont) • Phase I Interconnection Study results not indicative of Phase II Interconnection Study results • Significant reduction in number of projects and MWs in large clusters from Phase I to Phase II • Greater Bay Area cluster: reduced from 4,000 MW to 1,200 MW • 2 southern California clusters: decreased from 10,000 MW to 2,000 MW • Phase I Interconnection Studies provided best available information, although not very accurate • Phase II Studies not completed 9

10. First Queue Cluster • July 2009: Request Window Closed • 25 Projects / 7,500 MW • Expect smaller clusters in Phase I Studies • Meaningful Phase I Study results • What is a reasonably foreseeable consequence of a single generator based on cluster data? • Applying cluster results to particular generators will require some finesse and access to complete Phase I Studies 10

11. Interconnection Study Confidentiality • Critical Energy Infrastructure Information • What is it? • Information that could be useful in planning an attack on infrastructure • Does it apply to an entire Phase I /Phase II Interconnection Study or portions of the study? • Should One-line Diagrams and appendices be considered CEII and text of analysis not? • Can be an issue if Energy Commission staff is unable to access study data • Energy Commission confidentiality process can delay permitting process 11

12. How Is It All Working? • Transitions are difficult • Large number of projects in Transition Cluster • Difficult to apply analysis of large clusters to a single generator • Large number of generators that left the Transition Cluster • Future looks brighter with much smaller First and Second Queue Clusters • Confidentiality issue needs to be resolved 12