BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 28XX - Migden Hearing Date:
June 26, 2001 A
As Amended: June 21, 2001 FISCAL B
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DESCRIPTION
This bill establishes procedures governing the operating
availability of power plants and transmission facilities.
Specifically, this bill:
1.Requires the Electricity Oversight Board (EOB), in
consultation with the Independent System Operator (ISO), to
adopt protocols for scheduling of transmission and generation
equipment outages for maintenance, repair or upgrade;
2.Requires the EOB, in consultation with the ISO, to schedule
such outages according to the protocols;
3.Requires the EOB to direct the ISO to prepare, and the EOB to
adopt, generation maintenance, operation and availability
standards;
4.Authorizes the California Public Utilities Commission (CPUC)
to adopt and enforce such standards for facilities under its
jurisdiction;
5.Requires the ISO to maintain records of power plant outages
and provide them to the EOB each day;
6.Requires owners or operators of power plants over 10 megawatts
to report any periods of unavailability each month to the ISO,
and requires the ISO to immediately transmit this information
to the EOB and the CPUC;
7.Requires the CPUC, in consultation with the EOB, to adopt a
penalty schedule for violations of this bill and the rest of
the article governing the EOB;
8.Authorizes the CPUC to assess monetary penalties for
non-compliance upon request of the EOB;
9.Authorizes a court to provide injunctive relief to compel
compliance with outage plans, standards or protocols;
10. Exempts local, publicly-owned (municipal) electric
utilities, nuclear generating facilities and qualifying
facilities (QFs) from the foregoing provisions and requires
these entities instead to file with the EOB:
a. An annual maintenance schedule.
b. A report of any significant deviations from the schedule.
c. A monthly report of actual planned and unplanned outages.
d. A daily report of operational status.
Municipal utilities are further required to adopt, and file
with the EOB, maintenance standards for transmission and
generation facilities.
This bill also authorizes the EOB to obtain specified records of
the ISO, the Power Exchange (PX), and owners of generation and
transmission facilities, and maintain the confidentiality of the
records.
In addition, this bill gives the EOB the following general
powers:
1.Acting on any matter made subject to its approval or
determination under law.
2.Investigating any matter and otherwise acting consistent with
the electrical restructuring statutes to serve, protect and
represent the interest of consumers.
3.Directing the ISO to report to the EOB as it determines
necessary and appropriate to the exercise of its public
oversight duties.
BACKGROUND
In recent months, California has been plagued by unprecedented
generator outages which have increased the price of electricity,
undermined service reliability, and threatened public health and
safety. The factors contributing to the high level of generator
outages include ordinary seasonal maintenance, mechanical
failure of aging equipment, installation of air pollution
control devices, refusal to operate for financial reasons, as
well as a failure to adequately apportion foreseeable outages
through a rational and enforceable scheduling mechanism.
Currently, the ISO maintains a schedule of generation and
transmission outages for planned maintenance. Participating
generators and transmission owners in the ISO control area are
required to submit notice of their planned outages to ISO. This
allows the ISO to be informed of unit outages, but there is no
mechanism for the ISO to proactively plan outages on a
system-wide basis and the ISO has limited authority to prevent
or reschedule a proposed outage in advance. Further, while the
ISO has a unique ability to monitor unscheduled outages, it is
not a public agency and does not have independent enforcement
authority.
Among the allegations of the current energy market crisis is
that generators have engaged in physical withholding of
electricity to increase prices. Physical withholding is when a
generator deliberately stops generating power in order to
increase the price for a later sale, or for another generator's
sale. These allegations have been the subject of investigations
and inquiries conducted by the Federal Energy Regulatory
Commission (FERC), the ISO, the EOB, the CPUC, the California
Attorney General, and the State Senate. Investigations are
ongoing, although at least one case of physical withholding has
been documented and sanctioned by FERC.
On February 8, Governor Davis issued Executive Order D-23-01
relating to generator outages. The Order requires the ISO to:
1.Obtain planned outage schedules from generators.
2.Prepare a coordinated outage plan.
3.Identify maintenance criteria.
4.Provide records of unplanned outages to the EOB daily.
5.Establish performance benchmarks for generators.
6.Audit generators that fail to meet ISO benchmarks.
7.Consider seeking state or federal authority to impose fines
for such failures.
The ISO has interpreted the Order to apply to all generators in
the state, including those outside its control area. Some of
its elements have been implemented, although, according to the
ISO, a stakeholder committee formed to implement the Order has
not reached consensus on the issues of outage coordination and
sanctions. The mechanism for enforcement of the order is still
in question.
This bill attempts to establish a mechanism for the rational
scheduling of planned outages, as well as monitoring,
investigation and enforcement related to unplanned outages. It
essentially codifies certain elements of the Order, with the
notable difference that requirements related to ISO functions
are assigned to the EOB in the bill, rather than directly to the
ISO, as in the Order. The bill also establishes other related
and unrelated powers for the EOB.
COMMENTS
1.The Evolution of the EOB. The EOB was originally established
in AB 1890 (Brulte), Chapter 854, Statutes of 1996, to oversee
the ISO and the PX. Its main duties were to appoint the
stakeholder boards, approve bylaws, and hear appeals of
stakeholder board decisions.
FERC actions, the demise of the PX and recent legislation to
replace the ISO's stakeholder governing board with a board
appointed by the Governor have diminished the powers of the
EOB significantly. Of the statutory powers originally
conferred by AB 1890, the EOB maintains general, largely
unenforceable, oversight of the ISO and the ability to decline
to confirm the Governor's appointments to the ISO board, a
power it is unlikely to meaningfully exercise. Under SB 47
(Bowen), pending in the Assembly Appropriations Committee, the
latter power would be removed and replaced with Senate
confirmation.
According to the EOB's web site, "(t)he demands of the new
market structure expanded the responsibilities of the board to
include operational oversight, continuous monitoring of the
market, and representation of the state in litigation with the
(FERC). The board has earned a reputation for its high-level
advisory capabilities in serving the governor, the
legislature, and the people of California."
This bill revises the statutory duties of the EOB to
specifically include adoption of outage protocols and
schedules, as well as auditing the records of the ISO, the PX,
and owners of generation and transmission facilities.
2.EOB as Auditor. The purpose of the provision of this bill
(proposed Section 341.6) authorizing the EOB to direct the
production of confidential information from the ISO, the PX,
and owners or operators of generation and transmission
facilities, as well as sellers of electricity, is uncertain.
The scope of information potentially covered by this provision
is enormous and may or may not relate to the duties of the
EOB. Neither existing law, nor this bill, specify the use to
which audited information will be put.
Analogous statutes (e.g. Public Resources Code Section 25364)
authorizing the California Energy Commission to obtain
confidential industry data for its planning and forecasting
functions provide a process for public release of data in
which the obligation to justify confidential treatment is on
the source of the data, rather than the agency, and prohibit
employees from using the data for purposes other than the
purpose for which it was supplied. If the EOB is given audit
powers, the author and the committee may wish to consider
whether this bill should include similar requirements. A
requirement for security measures to protect confidential data
from inappropriate access by unauthorized employees and the
public may also be warranted.
The audit provision of this bill may duplicate a similar duty
specifically delegated to the CPUC under the Federal Power Act
(FPA). Under Section 201 (g) of the FPA, state utility
commissions are authorized to issue orders to examine "books,
accounts, memoranda, contracts, and records" of regulated
utilities, exempt wholesale generators, and affiliates that
sell electricity to regulated utilities. Authorizing the EOB
to engage in inspections or audits of these same entities may
duplicate a well-established CPUC regulatory function. If
this bill would provide useful access to additional
information or entities, the author and the committee may wish
to consider whether the EOB should be required to share its
findings with the CPUC.
3.EOB Today, Power Authority Tomorrow? As part of an energy
agency reorganization plan, the Davis Administration has
informally proposed transferring EOB functions and staff to
the recently-created California Consumer Power and
Conservation Financing Authority (SB 6X (Burton), Chapter 10,
Statutes of 2001).
As established by SB 6X, the Power Authority is likely to have
significant financial interests, if not outright ownership, of
electricity generation facilities in California. The proposed
reorganization plan also contemplates the Power Authority
assuming the power purchase duties of the Department of Water
Resources and potentially managing any state-owned
transmission facilities. If the Power Authority also assumed
the duties related to oversight of generation and transmission
facilities proposed in this bill, it would be regulating
itself, as well as its competitors.
Should the EOB be transferred to the Power Authority, the
author and the committee may wish to consider whether
functions related to oversight of generators and transmission
facilities should be assigned to the CPUC, or repealed. This
can be addressed if and when a bill to effect such a transfer
comes before the committee, or by placing a condition in this
bill providing for reassignment or repeal in the event of a
transfer.
4.Related Legislation. SB 39XX (Speier) authorizes the CPUC, in
consultation with the ISO, to prescribe inspection,
maintenance and operating procedures for generators to ensure
public health and safety and reliability. SB 39XX is pending
in the Assembly Energy Costs and Availability Committee.
ASSEMBLY VOTES
Assembly Floor (63-6)
POSITIONS
Sponsor:
Author
Support:
Pacific Gas and Electric Company
Oppose:
City of Alameda
City of Burbank
City of Glendale
City of Los Angeles Department of Water and Power
City of Palo Alto Utilities Department
City of Pasadena
City of San Marcos
County Sanitation District of Los Angeles County
Imperial Irrigation District
Modesto Irrigation District
Sacramento Municipal Utility District
Silicon Valley Power
Lawrence Lingbloom
AB 28XX Analysis
Hearing Date: June 26, 2001