BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1235 - Leslie Hearing
Date: June 25, 2002 A
As Amended: June 19, 2002 FISCAL B
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DESCRIPTION
Under existing law , the California Public Utilities Commission
(CPUC) must authorize the sale of property owned by a public
utility that is "necessary or useful in the performance of its
duties to the public" (Section 851 of the Public Utilities
Code).
Existing law further prohibits without exception the sale of
any public utility-owned power plant until January 1, 2006,
and requires the CPUC to ensure that generation assets remain
dedicated to service for the benefit of California ratepayers
(Section 377 of the Public Utilities Code).
This bill exempts from Section 377 four Truckee River
hydroelectric projects owned by Sierra Pacific Power (SPP), as
well as any electric generation facility located outside the
state and owned by a company whose primary place of business
is outside the state.
BACKGROUND
Section 851 of the Public Utilities Code requires any public
utility to secure CPUC authorization prior to disposing of any
property "necessary or useful in the performance of its duties
to the public." In the case of an application to sell a power
plant, CPUC review under Section 851 would entail a finding of
public interest and environmental review under the California
Environmental Quality Act (CEQA).
AB 6X (Dutra), Chapter 2, Statutes of 2001, flatly prohibited
the sale of any public utility-owned power plant until January
1, 2006, and required, in any event, that the CPUC ensure that
generation assets remain dedicated to service for the benefit
of California ratepayers.
SPP is an electric utility which serves most of northern
Nevada and a small part of California around Lake Tahoe. To
the extent it operates as a public utility in California, SPP
is subject to CPUC regulation. The other CPUC-regulated
electric utility whose primary place of business is currently
outside the state is PacificCorp, an Oregon-based company
which serves Del Norte and Siskiyou Counties in Superior
California.
Among SPP's generation assets are four small hydroelectric
projects (12.5 megawatts total) on the Truckee River which are
part of the municipal water system for Reno, Sparks and Washoe
County, Nevada. Three of the projects are located in Nevada,
one is in California. SPP has agreed to sell these facilities
to the Truckee Meadows Water Authority pursuant to a condition
placed on its merger with Nevada Power by the Federal Energy
Regulatory Commission.
Following California's enactment of AB 6X, Nevada enacted a
two-year moratorium on power plant sales. Truckee River
hydroelectric projects under 15 megawatts were specifically
exempted from the Nevada law.
This bill would exempt SPP's Truckee River hydroelectric
projects, as well as any other electric generation facility
located outside the state and owned by a company whose primary
place of business is outside the state, from AB 6X's
prohibition on sale. Under the bill, SPP would still need
CPUC approval under Section 851 to sell the projects.
However, SPP is seeking to add an exemption from Section 851
to this bill in order to bypass CPUC review of the sale.
COMMENTS
1)Allow vs. Require. This bill removes the clear statutory
barrier currently blocking SPP's sale of the Truckee
projects, but it does not compel the CPUC to approve the
transaction. As such, it essentially turns the matter over
to the CPUC for it to decide on the merits, under the
traditional process governing sale of utility assets
(Section 851 review) which was confirmed by AB 6X.
While this bill may facilitate the sale of the Truckee
projects by creating an exemption to the AB 6X prohibition
on sale, the CPUC still must find the sale is in the public
interest in order to approve SPP's application to sell.
2)Broader consequences. While subdivision (a) of the bill
(Page 3, Lines 3-5) is clearly limited to the four Truckee
projects owned by SPP, subdivision (b) would apply to other
out of state generation facilities owned by SPP and
PacificCorp. It could also apply to regulated generation
facilities owned by one of the state's major investor-owned
utilities if its parent company relocated to another state.
The author and committee may wish to consider whether it is
necessary or desirable to enact this broader exemption from
AB 6X at this time.
ASSEMBLY VOTES
Assembly Floor (75-0)*
Assembly Appropriations Committee (20-0)*
Assembly Utilities and Commerce Committee(16-0)*
*Votes reflect a previous, unrelated version of the bill
POSITIONS
Sponsor:
Author
Support:
Pacific Gas and Electric Company (if amended)
Smitty's Heating & Cooling
Oppose:
Sempra Energy
Lawrence Lingbloom
AB 1235 Analysis
Hearing Date: June 25, 2002