BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1235|
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THIRD READING
Bill No: AB 1235
Author: Leslie (R)
Amended: 8/14/02 in Senate
Vote: 27 - Urgency
SENATE ENERGY, U.&C. COMMITTEE : 8-0, 6/25/02
AYES: Bowen, Morrow, Alarcon, Battin, Dunn, Murray, Sher,
Vasconcellos
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : Not relevant
SUBJECT : Generation facilities: sale or transfer
SOURCE : Author
DIGEST : This bill exempts, from a prohibition on sale,
four Truckee River hydroelectric projects and two
hydroelectric projects located on the Naches River in the
State of Washington.
ANALYSIS : 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
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assets remain dedicated to service for the benefit of
California ratepayers. (Section 377 of the Public
Utilities Code.)
This bill exempts, from Section 377 of the Public Utilities
Code, four Truckee River hydroelectric projects owned by
Sierra Pacific Power (SPP), as well as two run-of-river
hydroelectric projects located on the Wapatox Canal on the
Naches River in the State of Washington.
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.
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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 from AB 6X's prohibition on sale. Under the bill,
SPP would still need CPUC approval under Section 851 to
sell the projects. The bill also exempts from the
prohibition two run-of-river hydroelectric projects, also
known as the Naches Drop plant and Naches plant, located on
the Wapatox Canal on the Naches River in the State of
Washington.
Comments
Allow vs. require . This bill removes the clear statutory
barrier currently blocking sale of the 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 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 the application to sell.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
NC:sl 8/14/02 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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