Feds Propose Future Guidance For SDG&E, Other Utility Solar Farm Sites

Starting with recommendations from the Bureau of Land Management, the Obama administration's Energy and Interior Departments have opened up a 90-day comment period on new guidelines for locating solar farms in the future. The guidelines will cover sites in Arizona, California, Colorado, Nevada, New Mexico and Utah, involving more than 21 million acres of government land to be opened for potential solar energy projects.

Hopefully, BLM will get it right this time.

Earlier this week, federal District Court here in San Diego granted the Quechan tribe's motion for an injunction against Tessera Solar's planned construction of an Imperial Valley solar farm that infringes on some 300 sacred Quechan cultural sites with project boundaries. In ordering the injunction, Judge Larry Burns specifically cited BLM's failure to advise and consult with Quechan tribal officials as to Tessera's potential to disturb or destroy those sacred sites.

According to East County Times reporter Miriam Raftery, "The ramifications could extend beyond solar plants to also impact major wind farm projects and the Sunrise Powerlink project planned on public lands in San Diego’s East County."

For the $2 billion Tessera project, the injunction could cause a loss of some $600 million in federal grants if not lifted by the end of 2010, a difficult task to accomplish this late in December right and after the injunction was issued. A grant extension may be a moot point this year with this week's defeat of the pork-laden omnibus appropriations bill, pulled from Senate consideration due to lack of support and critical comments regarding $8 billion in earmarks.

The tribal issues that gave rise to the injunction can be seen in the context of the recently dismissed civil suit by a Mexican rancher who claims Sempra Energy had him illegally evicted from his land for the construction of the Energia Costa Azul LNG project near Ensenada, Baja California. Plaintiff's attorney has pledged to refile the complaint to address the issues causing the dismissal. The LNG project is also under fire due to allegations that Mexican officials were bribed and a Sempra Energy whistle blower was fired for revealing the exclusive $20 million Costa Azul retreat for senior Sempra executive Donald Felsinger, allegedly paid for by SDG&E ratepayers. An internal audit by Sempra Energy found no wrongdoing, an expected discovery at this stage of litigation.

The County of San Diego Board of Supervisors has voted to request state and federal investigations of Sempra Energy and SDG&E regarding the allegations surrounding the Costa Azul mansion hideaway, its funding sources, and bribery of Mexican officials.

Lately, Sempra Energy's San Diego Gas and Electric Company has been scrambling to sign contracts for solar and other alternative energy sources under a California mandate that 20 percent of SDG&E power be alternatively sourced by the end of this year. A failure to get the Tessera project on schedule will be a major blow to SDG&E's effort to comply with the law. Fortunately for Sempra Energy, there are no punitive provisions to invoke if SDG&E fails to meet the 20 percent 2010 mandate.

SDG&E spokespersons have repeatedly cited the potential availability of solar generated electricity and other alternative energy sources in the Imperial Valley region to justify the expense and scenic blight of SDG&E's Sunrise Powerlink project.

The Tessera injunction decision does not appear to be a factor in last month's ratings downgrade and Negative Outlook advisory issued by Fitch Ratings for both Sempra Energy (SRE) and SDG&E debt and equity. Ratings agencies may issue further statements clarifying any outstanding issues.

Sempra Energy continues to offer quarterly dividends to shareholders of record at 35-40 percent of retained earnings. With the sale of RBS Sempra Commodities assets nearing or at completion this year, Sempra has vowed to concenrate its efforts more on its owned utilities, SDG&E and Southern California Gas as part of Southern California Edison Company.

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