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CAISO considers new transmission corridor to Palo Alto; CAISO fees, not city capital, would fund project
Summary
Staff told the Utilities Advisory Commission that the CAISO board is set to consider a proposal to add a new transmission line from NASA Ames/Mountain View to Palo Alto; CAISO’s cost estimate is $42–84 million and would be allocated through transmission access charges, not paid directly as a city capital cost.
Palo Alto Utilities staff told the Utilities Advisory Commission on May 7 that the California Independent System Operator (CAISO) has included a proposed secondary transmission corridor in its work plan that would create a new line from the NASA Ames area in Mountain View to Palo Alto.
Alan Kuratore, Palo Alto Utilities’ chief operating officer, said CAISO will consider the project for approval. Staff characterized the development as a major step in a multi‑decade effort to increase transmission redundancy and reliability for Palo Alto. “We are very fortunate to get our project included as quickly as it has,” Kuratore said.
A staff slide estimated the project cost in CAISO planning documents at roughly $42 million to $84 million; staff clarified that this is CAISO’s capital estimate, not a line item on the city’s capital budget. Kuratore and other staff members said the project’s costs will be allocated through CAISO transmission access charges assessed across utilities in the CAISO service territory rather than as a direct bill to Palo Alto’s capital program. “It costs the city nothing,” Kuratore said during the meeting when asked whether the city would be responsible for the project’s capital cost.
Why it matters: A second high‑voltage corridor would increase the city’s long‑term reliability by reducing dependence on a single transmission connection. Staff said the project would likely not be in service until the early 2030s because of the regulatory, design and construction timeline for transmission projects.
Staff noted this CAISO project is a different path than prior discussions about a direct Stanford‑area partnership for a second connection; staff confirmed it had communicated Palo Alto’s interest to Stanford but said the CAISO proposal is independently developed and not mutually exclusive with any Stanford options.
Funding and rate implications: Staff said the project would be paid for through CAISO allocation methodologies and transmission access charges, which are spread among utilities and ultimately flow into generation/transmission costs and rates. Kuratore said Palo Alto would pay only a share of those charges as a CAISO participant. Commissioners asked whether the CAISO allocation would affect Palo Alto customer bills; staff said the charge would be an item in future transmission access or wholesale cost allocations and could affect wholesale cost components, but not as a direct city capital appropriation.
Ending: Commissioners welcomed improved transmission redundancy but sought clarity on the timeline, expected customer cost impacts and the interplay with local reliability projects and the grid modernization effort at Palo Alto Utilities. Staff said CAISO consideration is ongoing and that the commission and council will be updated as the project proceeds through CAISO’s approval process.
