(Edison International Chairman and CEO Ted Craver (far left) at a DistribuTECH roundtable discussion)
Edison International’s $4.1 billion capital spending plan for 2016 and $4.2 billion plan for 2017 include a hefty amount on transmission infrastructure projects, with spending on the planned $1 billion West of Devers transmission project likely to be after 2017, Ted Craver, chairman and CEO, said May 2.
Transmission and distribution system replacement projects at Edison International unit Southern California Edison (SCE) represent a large chunk of those spending plans, with the utility annually replacing, on average, 24,000 distribution poles, 4,000 transmission poles, 500 miles of underground cable and 225 substation circuit breakers, Craver said during the parent company’s 1Q16 earnings call.
The capital spending plans for 2016 and 2017 have a majority devoted to the SCE distribution system, some of which was outlined in the distribution resources plan that SCE filed with the California Public Utilities Commission in the summer of 2015, Craver said.
Addressing transmission projects, Craver noted that a CPUC administrative law judge in April issued a proposed decision on the West of Devers project that largely follows what SCE proposed. Assuming the judge's decision is adopted, which could be as early as May 12, and once all federal approvals are received, the project will be ready to begin construction, with most of the work beginning after 2017, Craver said.
As TransmissionHub reported, the West of Devers project involves replacing or upgrading the existing 220-kV transmission lines and associated facilities between the Devers, El Casco, Vista and San Bernardino substations in Riverside and San Bernardino counties. The project would increase the transmission capacity of the existing West of Devers corridor from the current 1,600 MW to about 4,800 MW, and allow SCE to meet the generator interconnection requests of multiple renewable power projects in the region.
In the April 11 proposed decision the CPUC judge adopted two alternative configurations that differed from what SCE proposed in order to minimize visual impacts and reduce construction effects on nearby residents. The Tower Relocation Alternative would place towers along a center line about 50 feet farther from the edge of the right of way in particular residential segments where visual impacts have been identified, and the Iowa Street 66-kV Underground Alternative would place a subtransmission line underground for about 1,600 feet.
After the May 2 earnings call of Edison International, the CPUC released the agenda for its May 12 meeting, which includes the judge proposed decision.
A portion of the West of Devers project would cross the reservation of the Morongo Band of Mission Indians, which has an option, through Morongo Transmission LLC, to invest as much as half of the cost of the project once it begins operation, which SCE expects to be in 2021, noted Jim Scilacci, executive vice president and CFO at Edison International. “For internal planning purposes, SCE assumes that the option will be exercised,” Scilacci said during the earnings call, adding that while the 2021 investment option date falls beyond the period of time SCE provides visibility on capital spending plans, “we thought it was important to bring this option to the attention of investors and analysts.”
The Edison International capital spending plans for 2016 and 2017 do not include investments in energy storage or the distribution resources plan filed with the CPUC, the company said in its 1Q16 earnings presentation.
At the California ISO, policymakers are debating expansion of the California ISO footprint to include other states and efforts to meet California’s renewable portfolio standard, with discussion about whether the resource mix should favor more utility-scale renewable projects with enhanced transmission capacity or more distributed resources at the distribution level, Craver said.
“I expect it will be a mix of the two models,” and “SCE is positioned to participate in both models,” Craver said during the call. “We expect either approach will expand the investment opportunity at SCE beyond the current $4 billion annual level,” he said.
Edison International reported net income of $271 million, or 83 cents/share, in 1Q16, compared with $299 million, or 92 cents/share, in 1Q15. The decline from 1Q15 was attributed to a delay in receiving a general rate case decision from the CPUC, higher operating and maintenance expenses and lower incremental income tax benefits.