Government could speed grid projects at no cost

LOS ANGELES (Reuters) - Instead of laying out billions to upgrade the nation's power grid, the U.S. government could stimulate investment without spending a dime by streamlining the process for getting infrastructure projects started, the chief financial officer of Sempra Energy (SRE.N) said on Monday.

With its ready access to capital, the California utility will likely have little need for any financial assistance from the government this year, except perhaps to apply for low-interest loans for renewable energy projects, CFO Mark Snell said in an interview.

"But frankly I think we'll have a fairly robust program without any government assistance," Snell said. "We are more constrained by the time it takes to get infrastructure projects started. If we could streamline that process and start putting steel in the ground sooner it wouldn't cost anybody anything."

Sempra's controversial Sunrise Powerlink transmission project is one example of how long the planning for big transmission projects can take.

The utility first proposed the power line -- which has been fought by environmentalists and ratepayer groups -- in 2005. Approved by utilities regulators late last year, the project should be "shovel ready" in 2010, Snell said, and will begin delivering power in 2012.

And, the Sunrise Powerlink was only proposed after the failure of a similar transmission project that Sempra first sought in 2001. The Valley Rainbow line would have cost one-fifth of Sunrise's projected $1.9 billion.

The 123-mile-long Sunrise Powerlink transmission line is to run from the Imperial Valley east of San Diego, an area that has potential for geothermal and solar power development, to the densely populated areas of San Diego County.

A shortage of power lines is widely considered to be the major challenge to expanding development of "green" power sources such as wind farms and solar plants, which need to be built in deserts and on plains far from population centers.

The major obstacle, however, Snell said, is the "not-in-my-backyard" mentality of residents who don't want unsightly power lines put up in their communities.

"For all of the talk about environmental impacts and all of it, it's all about aesthetics," Snell said. "People just don't want to look at it."

Power lines may one day be able to run underground, Snell added, but today that technology is still too expensive.

San Diego Gas & Electric Co, the natural gas- and power-delivery utility owned by Sempra, has a distinction that Snell said the Sunrise Powerlink will change.

San Diego is the largest U.S. city that is served by a single 500-kilovolt transmission corridor, making it a sort of electricity "island," more vulnerable to power outages.

San Diego is the eighth-largest city in the United States, with about 1.3 million population. The Sunrise Powerlink 500-KV line will serve about 650,000 homes.

Southern California wildfires in October 2007 nearly caused the city to go dark when the 500-KV line to San Diego went off-line as it was threatened by the fires. Only help from the Mexican government which sent San Diego power on a 230-KV line helped keep the lights on.

Even Sunrise, however, will not be enough to serve electricity demand that will return to growing 2 to 3 percent a year once the economy recovers.

"It's never enough," Snell said. "Even the most ardent opponents of Sunrise would probably agree that at some point in time you have to have some more transmission."

(Reporting by Nichola Groom; editing by Richard Chang)