BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 28XX - Migden Hearing Date:
July 17, 2001 A
As Amended: July 12, 2001 FISCAL B
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DESCRIPTION
(Strikeouts and italics indicate changes from June 21 version)
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 California Public Utilities Commission
(CPUC) and 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 CPUC and 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 for units 10 megawatts or larger;
4.Authorizes the CPUC to adopt and enforce such standards for
facilities under its jurisdiction;
5.Prohibits this bill from resulting in any modification, delay
or abrogation of any environmental standard.
6.Requires the ISO to maintain records of power plant outages
and provide them to the EOB and the CPUC each day;
7.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;
8.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;
9.Authorizes the CPUC to assess monetary penalties for
non-compliance upon request of the EOB;
10. Authorizes the EOB, in consultation with the CPUC, to seek
an injunction from a court to require a court to provide
injunctive relief to compel compliance with outage plans,
standards or protocols;
11. Exempts local, publicly-owned (municipal) electric
utilities, public water or water treatment agencies that
generate electricity, 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.
12. Exempts generation units installed, operated and maintained
at a customer site, exclusively serving that customer's load,
from the foregoing provisions.
This bill also authorizes the EOB to obtain specified records of
the ISO , and the Power Exchange (PX), and owners of generation
and transmission facilities, and maintain the confidentiality of
the records pursuant to a process analogous to the one currently
applicable to the California Energy Commission (CEC). The EOB
is required to share information with the CPUC at the CPUC's
request .
This bill provides for repeal of the above provisions upon a
determination of the Attorney General that the EOB has been
abolished, merged, replaced or duplicated by statute, executive
order or otherwise.
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 related to the wholesale
electricity market to serve, protect and represent the
interest of consumers in relation to the availability of
generation and transmission and related costs during periods
of peak demand.
3.Directing the ISO to report to the EOB as it determines
necessary and appropriate to the exercise of its public
oversight duties.
This bill requires the EOB to provide a quarterly report of its
progress implementing this act to the Legislature's appropriate
policy committees.
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's
not a public agency and doesn't 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
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 on the Assembly Floor, 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 and the
PX.
2.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.
3.July 12 Amendments. When this bill was heard in this
committee on June 26, a series of issues was discussed and the
bill was put over. A summary of each issue and its
disposition follows:
Sunset - conditional and date certain. To address the concern
described in Comment 2 and discussed in the last hearing, this
bill now contains a conditional sunset which is triggered by
the abolition, merger, replacement or duplication of the EOB
by statute, executive order or otherwise. Because these
criteria are subjective, the sunset is not self-executing.
Instead, the Attorney General is empowered to determine
whether such a condition has been met.
In the hearing, the Chair also asked for a date certain sunset
of the end of summer 2002. The date certain sunset is not in
the bill.
Scope and purpose of EOB audit authority. Concerns were
raised that the scope of the EOB's audit authority in Section
2 of this bill was overly broad and that its purpose was
uncertain.
The amendments narrow the bill's scope to records of the ISO
and PX - the entities the EOB is currently charged with
"overseeing." EOB authority to directly compel generation and
transmission owners to produce records has been deleted.
The need for a "statement of purpose" for the audit authority
is apparently addressed in the revised function added to
Section 1 of the bill, which authorizes the EOB to investigate
matters related to the availability of generation and
transmission and related costs during periods of peak demand.
Treatment of confidential documents. Concerns were raised
about appropriate treatment of documents obtained pursuant to
confidentiality agreements, both regarding the degree of
consistency with the Public Records Act and the EOB's ability
to maintain the confidentiality of documents.
The amendments establish a process for disclosure of
confidential documents which uses an existing statute
governing treatment of confidential documents by the CEC as a
model. The CEC model has been proven and provides a more
definitive process for treatment of confidential documents
than the prior version of this bill. As amended, the bill
provides 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. However, it also
effectively prevents the EOB from releasing any information
deemed confidential by the FERC.
Coordination with CPUC. A concern was raised that 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.
The amendments intend to reduce any duplication with existing
CPUC functions by limiting the EOB's authority to audit
records of the ISO and PX, and not the utilities, generators
and affiliates which the CPUC is currently authorized to
audit.
A second concern was raised that the EOB's activities be
coordinated with the CPUC. The amendments require the EOB to
share confidential information requested by the CPUC and
require consultation with the CPUC in the development of
outage protocols and schedules.
Conformity with environmental laws. A concern was raised that
the adoption of availability standards for generators may
interfere with standards adopted by air quality agencies
governing installation of air pollution control equipment. In
response, existing language in the bill was strengthened and
broadened to generally prevent any action that conflicts with
any environmental or public health protection regulation.
Exemptions. Publicly-owned electric utilities had already
been exempted from the enforceable requirements of this bill
and instead required to report applicable information to the
EOB. Public water and sewer agencies that own electrical
generation incidental to their operations argued they too
should be exempt. The amendments provide such an exemption
for these agencies.
In addition, the amendments exempt generation units located on
a customer's site that exclusively serve that customer's load.
These units are not subject to any reporting requirements.
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.
5.Technical Amendments. On page 7, line 13, page 11, line 26
and page 12, line 31 "chairperson of the commission" should be
replaced with "Attorney General".
In addition, this bill has a technical conflict with SB 47.
Both bills amend Section 335 of the Public Utilities Code. SB
47 repeals an existing subdivision of Section 335 and this
bill adds a new subdivision. The author and committee may
wish to consider adopting "chaptering out" amendments to
resolve this conflict.
ASSEMBLY VOTES
Assembly Floor (63-6)
POSITIONS (Prior Version)
Sponsor:
Author
Support:
Pacific Gas and Electric Company
Oppose:
California Manufacturers and Technology Association
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 Roseville
City of San Marcos
County Sanitation District of Los Angeles County
Imperial Irrigation District
Modesto Irrigation District
Plumas-Sierra Rural Electric Cooperative
Sacramento Municipal Utility District
Silicon Valley Power
Lawrence Lingbloom
AB 28XX Analysis
Hearing Date: July 17, 2001