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Southern Cal Edison Receives CWIP and Abandonment Incentives for Riverside Transmission Project

Paul Dumais's picture
CEO Dumais Consulting

Owner and CEO of Dumais Consulting (www.DumaisConsulting.com) which provides expert ratemaking services to energy companies. Dr. Dumais is a ratemaking and regulatory expert who specializes on...

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  • Oct 1, 2020
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On September 17, 2020, in Docket No. EL20-51, FERC granted Southern California Edison (SCE) the transmission abandonment and CWIP incentives for its Riverside Project, which includes the construction of a new 230 kV substation and associated facilities; approximately 10 miles of 230 kV double-circuit transmission lines, of which approximately four miles will be placed underground; and new telecommunications equipment between the new substation and existing substations (Project).  FERC granted abandonment incentive as SCE faces risks and challenges in the development of the Project, including certificates of convenience and necessity and wetland permits from the U.S. Army Corps of Engineers.  FERC stated that the abandonment incentive will protect SCE, should the Project be abandoned for reasons beyond SoCal Edison’s control.  If the Project is abandoned for reasons beyond SCE’s control, SCE would be required to make a filing under section 205 of the FPA to demonstrate that the costs were prudently incurred before it can recover any abandoned plant costs.  In such a proceeding, abandoned plant cost recovery is available for 100% of prudently incurred project costs expended on or after the date of issuance of this order.  In the event SCE seeks abandoned plant recovery for the period prior to the issuance of this order, SCE would be eligible to seek recovery of 50% of its prudently incurred costs.
 
FERC granted the CWIP Incentive as FERC has found that allowing companies to include 100% of CWIP in rate base would result in greater rate stability for customers by reducing the “rate shock” when certain large-scale transmission projects come online.  With the Project expecting to cost $581 M and not expected to go into service until 2026, FERC found that granting the CWIP incentive to SCE is consistent with Order No. 679.  FERC also stated in its Order that its accounting regulations provide procedures to ensure that customers will not be charged for both capitalized AFUDC and corresponding amounts of CWIP in rate base and its determination to grant SCE the CWIP Incentive is conditioned upon SCE fulfilling FERC’s requirements for CWIP inclusion for the Project in its future FPA section 205 filings. 

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