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California Western Grid Development LLC Economic Study Request in the 2025-26 TPP
March 12, 2025
California Western Grid Development LLC (“Cal Western” or ”CWG”) appreciates the opportunity to submit this economic study request for the Pacific Transmission Expansion Project (“PTE” or “PTEP”) in the 2025-2026 Transmission Planning Process (“2025-2026 TPP”).[1] We also hereby request that CAISO study the PTEP as a transmission solution to reliability needs, and State Public Policy needs, including those identified in Senate Bill No. 887 (“SB 887”). Given that PTEP addresses all these various needs, we request that the CAISO consider these study requests at the appropriate time in the 2025-2026 TPP. We also request that the PTEP be analyzed as a Multi-Value Project (“MVP”) based on its cumulative reliability, economic, deliverability, and public policy benefits, as contemplated and provided for in the Study Plan. We appreciate the CAISO clarifying the role of MVP’S in the Study Plan. Analyzing all the benefits of a project is the best approach for “no regrets” planning.
The PTEP is currently being studied in the 2024-2025 TPP as both a reliability and economic project and we also requested it be studied as an MVP project. PTEP is a controllable 2,000 MW HVDC system utilizing subsea cables, which the CAISO has previously found will allow existing power available at the Diablo Canyon 500 kV switchyard, new sources of offshore wind (“OSW”), or other new sources of renewable energy to be delivered to and between northern and southern California. CAISO has determined that a similar configuration can reduce Local Capacity Requirements (“LCR’s”) in the West LA Basin by approximately 1,993 MW, thereby displacing the need to rely on a similar amount of local capacity. An alternative project configuration with the same LCR benefit consists of a new substation at Morro Bay looped into the existing Gates to Diablo Canyon 500 kV transmission line. Cal Western requests that PTEP be studied in the 2025-2026 TPP, with the following HVDC converter stations:
- One 2,000 MW, ±525 kV HVDC bipole converter station located at the northern terminus of the project, connecting either at the Diablo Canyon 500 kV AC station or a future Morro Bay 500 kV AC station.
- One 2,000 MW, ±525 kV HVDC bipole converter station located at a site in El Segundo, with underground HVDC cables from the shoreline to the converter, and the following AC connections:
- Two 220 kV AC underground cable circuits to El Nido substation; and
- Two 220 kV AC underground and offshore cable circuits to Redondo substation.
Cal Western also encourages CAISO to evaluate different configurations of the PTEP, to the extent CAISO Staff thinks appropriate, including multi-terminal configurations and alternative points of interconnection (“POI’s”).
In the 2021-2022 TPP Report, at page 292, the CAISO stated that:
The potential PTE project benefit of reducing capacity requirements needs to be reassessed in future planning cycles as the assumptions change, particularly if the need to retain the existing gas-fired fleet for system-wide resource reliability purposes is relaxed.
Some of the important assumptions in the 2025-2026 Study Plan relevant to the study of the PTEP have changed and warrant the reassessment of the PTEP. The CAISO is also about to issue its 2024-25 TPP findings on the long-term Local Capacity Requirement (“LCR”) Study and analysis of the CPUC high gas retirement sensitivity portfolio, both of which are expected to show a need for new transmission to address local transmission constraints, including in Los Angeles.
In our comments on the 2025-26 TPP Study Plan filed today, we request CAISO to make available to Stakeholders the amount of gas plant usage found in production simulation runs used to evaluate both the base and sensitivity portfolios in the 2025-26 TPP, and especially the gas plant usage in transmission constrained local areas. This is particularly important because Senate Bill No. 887 (“SB 887”), that was unanimously approved in 2022, and signed by the Governor into law identifies an urgent State Public Policy need for new transmission that can deliver renewable energy into transmission constrained load centers and reduce reliance on gas-fired generation by 2035. SB 887 points out that CAISO’s FERC approved tariff requires CAISO to plan and approve transmission needed to meet state, federal, and local public policy needs, and the legislature requests CAISO to take notice of the State Public Policy needs identified in SB 887 and to act proactively. Given the 10 year or more lead time for new transmission it is imperative that the CAISO plan and approve transmission now to reduce the need to rely on gas plants in local areas like LA.
As we also point out in our March 7, 2025, comments filed with the California Public Utilities Commission with respect to the appropriate inputs and assumptions for its Integrated Resource Plan (“IRP”), RA procurement from gas plant owners is seeing quickly escalating prices. The RA procurement prices paid by LSEs exceed the cost of maintaining gas plants.[2] It seems evident that gas plant owners will also have increased market power, especially in transmission constrained local areas where a significant share of RA needs must be met by local gas plants. Gas generators’ market power and local RA prices are likely to continue to increase until new long lead time transmission allows local batteries and remote energy sources to compete to supply local RA. This information must be considered in determining whether new transmission is economic, especially in transmission constrained local areas like LA.
Clearly the need for new transmission is growing. The CPUC’s very recent February 20, 2025, Decision in R.20-05-003[3] transmits a Base Case Portfolio for the CAISO to use for transmission planning for the 20254-2026 TPP that will surely drive the need for significant new transmission. It includes the following:
- Over 60 gigawatts (GW) of new generation and storage resources by 2035 and nearly 100 GW by 2040. This is on top of the dramatic increases already reflected in the pre-existing resource mix
- The adopted 2025-2026 portfolio continues to model decreased use of natural gas plants in the CAISO-system throughout the modeling time frame, with a projected 71 percent decline in annual natural gas generation in terawatt-hours by 2035 as compared to the first modeled year, 2026. By 2040, modeled natural gas usage in the adopted portfolios is reduced by 80 percent from the modeled 2026 usage[4]. A claim that CPUC has admitted it does not have local area modeling granularity to verify and has asked the CAISO assistance to use its modeling capability for transmission constrained local areas to verify. [5]
- An increase in gross peak load of 5% by 2035 compared to 2024-25 TPP load assumptions and an increase in annual retail sales increase 6.4 TWh in 2035, or a 3% increase compared to 2024-25 TPP assumptions.[6]
In Cal Western’s October 14, 2022, filing for the 2022-2023 TPP[7], we submitted an independent analysis performed by E3 of the benefits the PTEP will provide, even if the gas plants remain in service through the study period (“E3 Analysis”). The E3 Analysis is also discussed in Cal Western’s October 2023 request to be studied in the 2023-2024 TPP. Cal Western hereby incorporates herein by reference these prior study requests and will not repeat the many benefits analyzed therein. The E3 analysis concludes that, without retirement of any gas generation and without quantifying many of the known benefits of the PTEP (wildfire risk reduction, reduced reliance on Aliso Canyon, air quality improvement especially among underserved communities), economic benefits of the PTEP would offset more than fifty percent (50%) of the PTEP’s cost. And the benefits not quantified include environmental air quality benefits that lie at the core of the State’s energy goals, as well as wildfire mitigation benefits that SB 887 requires to be considered in planning new transmission. Thus, we urge the CAISO to evaluate the benefits of the PTEP in terms of the cumulative “multi-valued” benefits the PTEP provides, including the benefit of accommodating the need for transmission to meet State Public Policy needs identified in SB 887. A silo approach to analyzing benefits is sure to ignore the true value of a project like the PTEP.[8] In terms of quantifying the benefits of the PTEP, we request that the CAISO utilize the E3 methodology, which anticipates storage (not gas-fired generation) becoming the marginal Resource Adequacy resources in the 2030’s and beyond. The E3 methodology is described in detail in the October 14th filing. To the extent necessary or appropriate we will provide an update to the E3 Analysis prior to the CAISO’s economic study.[9]
Importantly, we disagree with CAISO’s historic approach of using conservative valuations for LCR benefits as mentioned above. We believe the E3 methodology is a superior approach to calculating LCR benefits and should be used by the CAISO to quantify LCR reduction benefits.
Recent events demonstrate how significantly CAISO understates the cost of continued operation of gas plants in its LCR analysis, especially in transmission constrained local areas. The California Department of Water Resources recently contracted for resources needed to create the AB 205 California Strategic Reserve. It is an excellent example of the extraordinary prices that a fossil generator located in transmission constrained local area could demand for Local RA procured through the CPUC IRP proceeding or through the CAISO emergency procurement provisions. The capacity payments alone for the 2,859.3 MW of LA Basin strategic reserve from the Long Beach, Huntington Beach and Oxnard gas power plants ranged from $8.82/kw/mo. to $10.95 /kw/mo.[10] We now find that those prices were a bargain compared the prices recently paid for RA Procurement where the average price of RA was $11.05 /kw/mo. and RA procurement prices in many local area were an additional $5.00/kw/mo. [11]
Cal Western submits that the CAISO TPP will not achieve its objective of providing helpful information to State policy makers and regulatory agencies by continuing to use “conservatively” low or outdated values for local capacity.
We agree with and support the CAISO’s previous comment to the CPUC that transmission solutions can have long lead times and, therefore “planning for transmission-dependent projects should start as soon as possible.”[12] Indeed, if the State is to reach its 2030, 2035, and 2045 greenhouse gas (“GHG”) SB 100 requirements in a reliable and least-cost manner, the CAISO must begin planning now for transmission solutions that reduce LCRs that currently cause reliance on local fossil fuel-fired resources. To do so, CAISO will need to change its highly conservative assumptions and use realistic capacity values in its economic analysis and begin to incorporate the actual market price that is being paid for RA Procurement, a price that is currently 400%+ higher the CAISO’s conservative cost of operating and maintaining the generation plants that has been used in previous LCR capacity studies.
We appreciate CAISO’s consideration of this request to re-study the PTEP in the 2025-26 TPP consistent with the comments herein. We are available to discuss PTEP’s many benefits with CAISO transmission planners at your convenience.
Thank you for your consideration.
Sincerely,
Marty Walicki
Martin Walicki
on behalf of California Western Grid Development, LLC
[1] We are simultaneously submitting comments on the 2025-2026 Draft Study Plan through the ISO’s commenting tool, using the template provided on the process webpage: • ttps://stakeholdercenter.caiso.com/RecurringStakeholderProcesses/2025-2026-Transmission-planning-process
[2] See footnote 4 below.
[3] Decision Transmitting Electricity Resource Portfolios To The California Independent System Operator For 2025 2026 Transmission Planning Process signed by the Commission at its February 20, 2025, meeting. https://docs.cpuc.ca.gov/SearchRes.aspx?docformat=ALL&docid=557879249
[4] See CPUC IRP portfolio fact sheet: https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/integrated-resource-plan-and-long-term-procurement-plan-irp-ltpp/2024-2026-irp-cycle-events-and-materials/assumptions-for-the-2025-2026-tpp/2025-02-20-25_26tpp_d_factsheet.pdf
[5] CPUC Decision 24-02-047 dated February 15, 2025, page 79.
[6] See CPUC 2025-2026 Transmission Planning Process (TPP) Proposed Decision dated 1-10-25 slide 11:
https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/integrated-resource-plan-and-long-term-procurement-plan-irp-ltpp/2024-2026-irp-cycle-events-and-materials/assumptions-for-the-2025-2026-tpp/25-26-tpp-pd-resolve-and-servm-analysis-slide-deck.pdf
[7] (“October 14th Filing.)” See, pp 30-32 of Attachment A.
[8] See also, October 14th Filing at 32.
[9]
[10] See Cal Matters article by Rachel Becker dated August 15, 2023, which states: “……. three power plants in Long Beach, Huntington Beach and Oxnard will be kept in reserve for three more years to feed energy into the state’s grid during power emergencies” ……” The state agreed to pay the plants’ operating companies about $1.2 billion from 2024 through the end of 2026 to stand by during energy events, such as heatwaves.” https://calmatters.org/environment/2023/08/southern-california-natural-gas-plants-remain-open/
[11] Workshop on Track 3 Revised LOLE Study and Price Mitigation Proposals 01/23/2025, see slide 36 from Appendix B to Loss of Load Expectation Study for 2026: Revised Slice of Day Tool Analysis deck. file:///C:/Users/smeta/OneDrive/Documents/CPUC%20RA%20WorkshopSlides_1-23-2025%20RA%20Prices.pdf;
See also: See CPUC paper on Local Capacity Requirement Reduction Compensation Mechanism 3/22/2024: https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/resource-adequacy-homepage/resource-adequacy-compliance-materials/lcr-rcm-2024.pdf
[12] See CAISO comments filed on March 12, 2020, with respect to the Administrative Law Judge’s Proposed Decision on the “2019-2020 Electric Resource Portfolios to Inform Integrated Resource Plans and Transmission Planning”.
