In December, the U.S. Department of Energy announced that PNM (formerly known as Public Service Co. of New Mexico) was dropping plans to link to the Sonoran grid. That leaves Tucson Electric Power as the sole player in this high-voltage drive toward international power ties.
At the same time, the Arizona Corporation Commission is discussing a vastly reduced TEP line that would enhance power reliability in Santa Cruz County--the original impetus for TEP's project--but stop short of crossing the border. Such a move may short-circuit the utility's hopes of becoming a cross-border energy player.
In January 2002, Tucson Electric Power received ACC approval to run a 345-kv transmission line to a substation in the Sonoran burg of Santa Ana. If completed, the project would place 150-foot towers through the environmentally sensitive Coronado National Forest. But Coronado officials have steadfastly opposed that ACC-favored route, instead preferring a path along an existing gas line easement in the forest, or through populated areas near Interstate 19--a possibility that has stirred resident anger.
The line would also connect to Nogales, Ariz., fulfilling an ACC mandate that Tucson Electric upgrade its service to the border city by December 2003. That deadline has come and gone, with the mandate muddled in the utility's attempts to build the larger line.
Now, TEP and project opponents are awaiting an environmental assessment of each route's potential impact. While PNM's departure "will have no effect" upon TEP's proposal, release of the Environmental Impact Statement will open a new round of discussions, says Tony Como, U.S. DOE deputy director of electric power regulation.
Como spearheads the federal process for awarding a Presidential Permit, required for power companies to make international linkages. He says affected agencies--from the Arizona Land Department to the U.S. Forest Service and Bureau of Land Management--are hustling to get the EIS completed. "At this point, we're hoping to have it out by the end of January. We're danged close."
In the late 1990s, PNM applied for a federally required permit to run a power line from the Palo Verde Nuclear Generating Plant near Phoenix to the Mexican border. But shifts in the wholesale power industry made the project unfeasible, says company spokeswoman Amy Miller. "Over the last few years, the whole (energy) market has changed. As a result, we gave notice that we were discontinuing the project."
But TEP has struggled to its keep its own plan alive, amidst energy industry upheavals, shifting politics and a recent business failure; in December, the ACC rejected a proposed $3 billion buyout of Unisource, the utility's parent company, by Wall Street investment firms Kohlberg Kravis Roberts & Co., J. P. Morgan Partners and Wachovia Capital Partners.
One commissioner, Jeff Hatch-Miller, noted "too much uncertainty about the financial health of the company" for him to support the deal. "I had to wait and see if there was clear and convincing evidence that this was good for Arizona, and I didn't see it."
How this blow will affect TEP's power line project remains unknown. Attempts to obtain information from the utility proved unsuccessful. "We are a pretty open company," spokesman Joe Salkowski tells the Tucson Weekly. "But when I came here, I was told that I could talk to everyone but you."
According to Salkowski, a former reporter, TEP officials refuse to share information on the power line project because the Weekly has "an agenda."
But a more probable reason for Tucson Electric's evasiveness is that intense public scrutiny has severely slowed the project's approval, says Brian Segee, staff attorney for Defenders of Wildlife in Washington, D.C. "TEP initially set out to pitch residents against environmentalists. But now the residents and environmental groups have had time to combine their forces in opposition."
Aside from environmental concerns, the DOE has long been concerned about connecting TEP's line directly to Sonora's unstable grid, according to an energy industry source who requests anonymity. "Under TEP's proposal, if there's a significant (power) event that occurs in Mexico while TEP has that Mexican load on their system, it could domino on them," says the source.
Other factors could likewise work against TEP's project. For example, a proposal forwarded by Arizona Congressman Raul Grijalva would create an 84,000-acre wilderness area in the Tumacacori Highlands--in the path of a proposed TEP line route. And endangered jaguars have been photographed several times in the area. Although the pending Environmental Impact Statement contains no mention of jaguar habitat, the sightings could complicate approval, says Segee.
In addition, TEP must overcome the dispute between the ACC and Coronado Supervisor Jeanine Derby concerning preferable routes. In light of Derby's opposition to the western forest route, TEP officials have reportedly gone above her head to meet with top Forest Service officials in Washington. "We're hearing that they've been in meetings with (Forest Service head) Mark Ray," Segee says. "They're trying to put pressure on the local supervisor."
Attempts to confirm these meetings were unsuccessful. Heidi Valetkevitch, a Forest Service spokeswoman in Washington, pledged to look into the matter, but did not return a call from the Weekly. According to Gail Aschenbrenner, a spokeswoman for the Coronado National Forest, "We were aware that (high level) meetings were taking place early on. But we aren't aware of any meetings since (Derby) came in as supervisor."
Derby assumed her post in January 2003, replacing supervisor John McGee.
But an internal ACC staff document, dated March 11, 2004, describes discussions taking place in Washington between TEP and Vice President Dick Cheney's controversial energy task force. According to the ACC document, those discussions included federal officials from the Forest Service, the DOE and the Bureau of Land Management. Under a section tilted "White House Task Force Discussions," the report notes that "the results of those discussions were encouraging" in terms of "expediting the environmental evaluations process."
Regardless, plenty of individuals close to the action describe a project hamstrung between federal and state route preferences. At the same time, TEP now faces trouble on a different front: The ACC is expected to open a separate series of hearings to discuss the so-called "Marshall Plan," named after retired engineer and Santa Cruz Valley activist Marshall Magruder. For years, Magruder has argued that a less-intrusive 46-kv line would fulfill the electricity reliability needs of Nogales. But since that alternative has not been officially evaluated, the ACC is expected to create a separate process for doing so.
"If separating the two means we could solve our needs in Santa Cruz County," says Magruder, "we don't need the 345-kv line."
And that could be the beginning of the end for Tucson Electric's hopes for a massive, 345-kv connection to Mexico. "TEP has already been discussing the timing of this, for tax purposes," Magruder says.
Is TEP preparing to write-off the approximately $9 million--spent for project environmental studies--and simply call it a day?
"That's certainly one possibility," says a source close to the regulatory process, who asked not to be named. "Part of TEP's overall motivation (for helping Nogales) was making that international connection with Mexico."
