Jul 3 - McClatchy-Tribune Regional News - Ed Fletcher The Sacramento Bee, Calif.


One of the largest public works projects in the West -- 600 miles of high-voltage power lines through Northern California -- is on life support after its biggest player abruptly pulled the plug.

A magnet for opposition from both owners of properties the transmission lines would cross and environmental activists, the project was promoted as vital to the region's clean-energy future.

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

On Wednesday, the Sacramento Municipal Utility District told The Bee it was pulling out of the $1.5 billion project due to regulatory and financial uncertainties -- leaving a gaping hole in the project budget. SMUD had been expected to shoulder 35 percent of the project's costs.

The Transmission Agency of Northern California -- the project's sponsor -- has 15 members. But only five had agreed to fund the power line project's environmental impact studies and, if it ultimately was 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 viability.

"We need another entity or entities to step forward in order to move this thing forward," said Paul Hauser, director of Redding Electric.

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

Most of the staff and board members of the participating utilities contacted by The Bee said they doubted the project would 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 was 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.

Santa Clara remains interested in the added transmission capacity, but a city spokesman said going it alone doesn't pencil out.

With SMUD out of the picture, "financing will be up in the air," said Dan Beerman, a city spokesman.

The Turlock Irrigation District was a participant, but its interest was limited to 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 federal Western Area Power Authority, which delivers 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 authority spokesman.

"Western isn't in the business of bankrolling transmission projects," Wilkerson said. "We do participate in transmission projects that have a need and can -- in the foreseeable future -- pay for themselves."

Wilkerson said that like other players, Western is required to break even.

Randy Fiorini, vice president of the Turlock Irrigation District, said he wasn't surprised SMUD had pulled out.

Some of the project's opposition -- which has been fierce -- probably can be attributed to the lack of initial outreach, Fiorini said. 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," he said.

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

Rather, SMUD officials said a changing regulatory environment -- and how that might affect the financial picture -- was the main factor.

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

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."

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Call The Bee's Ed Fletcher, (916) 321-1269.

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