State

Power project gasping for cash

One of the largest public works projects in the West, a 600-mile high-voltage power line from Lassen County to Turlock and the Bay Area, is on life support after its biggest player abruptly pulled the plug.

A magnet for opposition from landowners whose properties would be crossed by the power lines and environmental activists, the transmission line project was promoted as vital to the region's clean energy future.

A consortium of municipal power providers said the power lines were needed to bring renewable solar, wind and geothermal energy from the northeast corner of the state to power-thirsty urban areas.

On Wednesday, the Sacramento Municipal Utility District said it was pulling out of the $1.5 billion project, leaving a gaping hole in the budget. SMUD was expected to shoulder 35 percent of the project's costs.

The Transmission Agency of Northern California, the project's sponsor, has 15 members. But just five had agreed to fund the project's environmental impact studies and, if ultimately approved, finance the project.

The remaining participants are the city of Santa Clara, Redding Electric Utility, and the Modesto and Turlock irrigation districts.

The Western Area Power Authority is a federal partner.

On Thursday, those partners grappled with questions about the project's vitality.

Keeping the project alive means one or more of the remaining players would have to absorb SMUD's $525 million share, or find a new partner to salvage the project, or even pieces of it, officials said.

Most of the staff and board members of the participating utilities contacted Thursday said they doubted the project will survive, despite the need for additional transmission capacity.

Tom Van Groningen, the Modesto Irrigation District board chairman, said he would "give serious consideration" to pulling out as well.

The likelihood of carrying on without SMUD is "very, very slight," he said.

Modesto had expected to pay $300 million of the total project cost, he said.

The Turlock Irrigation District was a participant, but its interest was limited to the east-west lines between Tracy and Turlock, officials said. The district was not expected to pay for or use the more controversial north-south portion of the project.

The Western Area Power Authority, a branch of the federal government delivering power to governmental and nonprofit entities from federal dams, also has some limited involvement.

If the project is to live on, it will be the feds that save it, some opponents of the project speculated.

But that's not a logical leap, said Randy Wilkerson, an agency spokesman.

"Western isn't in the business of bankrolling transmission projects," he said.

Partly a matter of outreach

Randy Fiorini, vice president of the TID board of directors, said he wasn't surprised SMUD pulled out.

He said some of the project's opposition, which has been fierce, probably can be attributed to the lack of initial outreach. Three tentative routes for the transmission lines were plotted on a map before stakeholders could weigh in.

"There has been so much controversy with the way the scoping was handled," Fiorini said.

SMUD acknowledged difficulty with the process but said the public uproar wasn't key to its decision to pull out.

Rather, SMUD officials said, a changing regulatory environment and how that might affect the financials was determinant.

There is talk at the state and federal level of changing the way transmission projects are placed and funded. Given the uncertainly, it made sense to hold off, said Elisabeth Brinton, a SMUD spokeswoman.

Rule changes could force SMUD to share in the cost of energy grid projects in which it is not directly involved. And it could force SMUD to share the assets it paid for, officials said.

"The game rules are changing," Brinton said. "We are going to the game, but we don't know if we are playing football, baseball or softball."

  Comments