San Diego Gas & Electric ("SDG&E"), a subsidiary of
) has finally completed the construction of its $1.9 billion
Sunrise Powerlink project and initiated operations at the site. The
project establishes a transmission line connecting San Diego to the
Imperial Valley, a key renewable-rich region in California.
The 500,000-volt transmission line consists of more than 110
miles of overhead 500kV transmission towers and 230kV conductors.
It also consists of 6.2 miles of underground 230kV cable and a
40-acre, 500kV transmission substation that will help in reducing
the use of energy by homes and businesses.
The $1.9 billion project took one and a half years to complete
and involved both overhead and underground technology processes. It
also marked the end of a five-year environmental review and
Overall, the project spanned 4.7 million work hours. The project
utilized 13,200 tons of steel. It has 438 tower foundations. Due to
environmental reasons, 75% of the tower structures had to be
installed using helicopters. It took more than 28,000 flight hours
to complete the aerial construction.
Sunrise Powerlink involved extensive regulatory review and is
considered to be the most comprehensive study of a proposed
transmission power line in state history. During the initial
stages, the project will be able to transmit 800 megawatts of
power. Eventually, it will carry 1,000 megawatts of power
sufficient to serve 650,000 homes.
The project has been completed at a very important time.
Recently, the company had announced the closure of the two-unit San
Onofre nuclear plant at the end of August. The project will help in
maintaining electric supply during the summer and in the absence of
power generation from the San Onofre Nuclear Generating
Sunrise Powerlink is a profitable as well as an environment
friendly project. The project will soon begin delivering a
significant amount of wind and solar power to San Diego. Over the
past three years, SDG&E has signed eight renewable agreements
for more than 1,000 MW of solar and wind power from projects in
Imperial County. The green energy from these projects will be sent
out through the Sunrise Powerlink.
During its construction period, the project created jobs in the
Imperial Valley region, which has suffered a high rate of
unemployment over the years. The development of the regions'
abundant renewable energy resources, it enables preservation of
natural resources and native habitat.
Mainly, it will be a major contributor in achieving the
company's goal of generating 33% of energy from renewable sources
by 2020. In 2011, the company had generated more than 20% of its
energy from renewable resources.
Overall, from the company's point of view, we believe that the
company has a lower risk profile in comparison to its peers. Its
diversified nature of businesses protects its operations to a
significant degree from regulatory rate risks.
Its stable utility earnings, steady progress at its LNG
terminals, renewable power projects in the Pacific Southwest, the
completion of its Sunrise Powerlink transmission line and ongoing
smart meter installations act as key growth drivers. However, we
are concerned due to lack of any near-term positive triggers,
along with trepidation in natural gas prices and pending
Like its peers
), the company retains a short-term Zacks #3 Rank (Hold) that
corresponds with our long-term Neutral recommendation on the
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