Developer tries to reverse FERC dismissal of 500-MW Lake Elsinore

Developer Nevada Hydro Co. has appealed to members of the Federal Energy Regulatory Commission to reverse FERC staff's dismissal of a seven-year-old application to license the 500-MW Lake Elsinore pumped-storage project, proposed with a related transmission line for southern California.

Director Jeff Wright of FERC's Office of Energy Projects issued an order July 12 dismissing the license application for the Lake Elsinore Advanced Pumped-Storage (LEAPS) project (No. 11858) due to long-standing disagreements between Nevada Hydro and its co-applicant, Elsinore Valley Municipal Water District.

"During the course of the proceeding, it has become apparent that Nevada Hydro's primary interest is developing the LEAPS project's transmission line, which it ultimately hopes to use to transport electric power between the systems of major California utilities, rather than building a pumped-storage project and its associated transmission lines," the FERC order said. "Elsinore Valley, on the other hand, wants to develop a pumped-storage project as proposed and improve the water quality of Lake Elsinore through the operation of that project."

The project would be located on San Juan Creek in Riverside County, Calif., utilizing the existing Lake Elsinore as its lower reservoir. A dam and upper reservoir would be built in Morrell Canyon along with a powerhouse near Santa Rosa. The plan also includes 32 miles of 500-kilovolt transmission line connecting to an existing Southern California Edison transmission line to the north and an existing San Diego Gas & Electric transmission line to the south.

"Because the commission holds co-licensees jointly and severally liable for the performance of all license obligations, fundamental disagreements between co-licensees make it difficult, if not impossible, for the licensees to comply with the terms of a license," the FERC order said. "The co-applicants' divergent responses to the May 6, 2011, just cause letter further clarify that the co-applicants have different goals, that they have been unable to work together in the past, and that they likely would be unable to do so if issued a license for the project."

The FERC order added that the transmission line Nevada Hydro seeks to construct is beyond FERC's jurisdiction as a stand-alone project because its primary use would not be to link the hydro project to the grid.

Nevada Hydro official writes FERC members

Nevada Hydro Vice President Rex Wait wrote individual FERC members urging them to intervene in the process to save the Lake Elsinore project.

"Although OEP contends otherwise, please be aware that: LEAPS is moving forward through the California Public Utilities Commission's environmental process," Wait wrote July 23. "It took us a long time to find an agency that would take leadership on this project. The PUC will approve our transmission line connecting LEAPS to the grid, and the commission will license LEAPS. While the PUC understands this plan, apparently OEP does not."

Wait added that FERC's Hydro Branch and the PUC understand that Elsinore Valley's actions "involve simply commercial issues between us: They are attempting to leverage more money from the project. Commercial pushing and shoving should not result in a dismissal."

Press reports indicated the board of directors of Elsinore Valley voted July 14 to terminate the water district's agreement with Nevada Hydro to develop the Lake Elsinore pumped-storage project.

In the meantime, Nevada Hydro filed an application for a preliminary permit for an identical Lake Elsinore project (No. 14227). Nevada Hydro, which filed as sole applicant, said a new preliminary permit would preserve its investment in the hydro site if FERC should refuse to reinstate its license application.

The California Water Resources Control Board dismissed in 2009 the project's application for Clean Water Act Section 401 water quality certification, a prerequisite to FERC licensing. The water board said Nevada Hydro's environmental documents did not comply with the California Environmental Quality Act. In February, the California Public Utilities Commission said it would prepare CEQA documents for both the hydro project and transmission line. In April, Nevada Hydro filed a court petition seeking to reinstate its 401 application.

FERC ruled in 2007 that the transmission line project meets the requirements of the Energy Policy Act of 2005 for an advanced transmission technology. However, FERC ruled in 2008 that the project is ineligible for transmission incentive rate treatment. To be eligible, FERC said Lake Elsinore would have to be operated by the California transmission system operator, putting the system operator in a conflicting position of both generation operator and overseer of the grid.

For more FERC news, click here.

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