Developer challenges California 401 denial to 500-MW Lake Elsinore

Developer Nevada Hydro Co. has advised the Federal Energy Regulatory Commission it is appealing the state of California’s denial of Clean Water Act certification to the 500-MW Lake Elsinore pumped-storage project and a related transmission project.

The Lake Elsinore Advanced Pumped-Storage (LEAPS) project has waited for years for state water quality certification under CWA Section 401, a prerequisite to final FERC hydropower licensing. Elsinore Valley Municipal Water District and Nevada Hydro applied in 2004 for a license to construct and operate the project (No. 11858). In 2007, financial services firm Morgan Stanley Commodities agreed to become principal investor in the project, to be built in Cleveland National Forest in southern California. (Hydro Review October 2007)

On Oct. 1, 2009, the California Water Resources Control Board notified Nevada Hydro it had denied 401 certification, declaring a final environmental document had not been filed under the California Environmental Quality Act. Nevada Hydro said the action apparently occurred because the California Public Utilities Commission, the lead agency under CEQA, denied a Nevada Hydro application “and in so doing, discharged its obligation to prepare a final CEQA document for LEAPS.”

In a Nov. 2 petition for reconsideration filed with the California Water Resources Control Board, Nevada Hydro said appropriate CEQA-compliant documentation exists, including an environmental impact statement prepared by FERC. Nevada Hydro noted FERC wrote California Gov. Arnold Schwarzenegger in 2008 complaining about delays in state 401 certifications, and noting that the Lake Elsinore project had sufficient environmental documentation to proceed.

Nevada Hydro also noted that California law requires the state water board to give a 401 applicant the opportunity to withdraw an application prior to a denial, with the understanding the applicant can refile later. In fact, Nevada Hydro said it has filed and refiled Lake Elsinore applications five times. It said this time the state broke its prior policy by failing to give Nevada Hydro an opportunity to withdraw prior to denial.

The developer noted that studies determined the Lake Elsinore project actually would improve water quality by improving dissolved oxygen levels in the lake. Additionally, the pumped-storage project would store off-peak renewable energy from wind and other sources for use on peak, and the new transmission lines would allow delivery of additional power to transmission-restricted San Diego. (HydroWorld 4/16/08)

“LEAPS represents a clean, efficient, cost-effective source of regulation, spinning reserve, and load-following services,” the petition said. “… Without LEAPS and the TE/VS (grid) Interconnect, CAISO (transmission) rate payers will be paying approximately $165 million per year more than they would if the projects were implemented.”

Nevada Hydro asked the water board to rescind its 401 denial and use existing environmental documentation to issue water quality certification. Failing that, the developer asked that it be given the opportunity to withdraw and resubmit its application.

Lake Elsinore is seen as a peak energy resource and as part of a long-term solution to southern California’s transmission congestion bottlenecks. FERC’s EIS noted its Talega-Escondido/Valley-Serrano transmission line could provide up to 1,000 MW of import capability into the San Diego area, with up to 500 MW of this imported power being supplied by the LEAPS project during high-demand periods.

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