BILL ANALYSIS
AB 1235
Page A
Date of Hearing: August 23, 2002
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
AB 1235 (Leslie) - As Amended: August 14, 2002
SUBJECT : Generation facilities: sale or transfer.
SUMMARY : This bill exempts four Truckee River hydroelectric
projects and two hydroelectric projects located on the Naches
River in the State of Washington from a prohibition on sale of
electric generating facilities by a public utility, which is
currently in effect until January 1, 2006. Specifically, this
bill :
1)Exempts four run-of-river hydroelectric project works located
on the Truckee River and two run-of-river hydroelectric
projects<1> in the State of Washington from laws prohibiting
public utility sales of electric generation facilities.
2)Declares that a special statute is necessary because a statute
of general applicability cannot be enacted under the
circumstances.
3)Contains an urgency clause.
EXISTING LAW prohibits any public utility from disposing of a
facility for the generation of electricity prior to January 1,
2006.
FISCAL EFFECT : Unknown.
COMMENTS : Section 851 of the Public Utilities Code requires a
public utility to obtain California Public Utilities Commission
(PUC) approval of utility property that is "necessary or useful"
to the utility as it performs its duties to the public.
AB X1 6 (Dutra)<2> prohibited the sale of any public
utility-owned power plant until January 1, 2006, and required,
in any event, that PUC ensure that generation assets remain
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<1> The projects are the Naches Drop plant and Naches plant,
both located on the Wapatox Canal on the Naches River.
<2> Chapter 2, Statutes of 2001.
AB 1235
Page B
dedicated to service for the benefit of California ratepayers.
Out-of-state utilities also regulated by California's PUC
In 1999, Sierra Pacific Power (SPP) merged with Nevada Power and
became the largest utility in the State of Nevada. In approving
the merger, the Public Utilities Commission of Nevada (PUCN) and
the Federal Energy Regulatory Commission (FERC) ordered SPP to
divest themselves of electric generation assets to avoid the
potential for them to exercise market power as a result of the
merger.<3> Thus, SPP agreed to sell off its municipal water
system, which serves Reno and Sparks. Among the assets in the
system are four hydroelectric facilities,<4> one in
California<5> and three in Nevada. If the sale of these assets
to the Truckee Meadows Water Authority is completed, it will
also serve to essentially complete the final steps needed to
make the Truckee River Operating Agreement (TROA) become
operative.<6>
The other PUC-regulated electric utility whose principal place
of business is currently outside the state is PacificCorp, an
Oregon-based company that serves Del Norte and Siskiyou Counties
in Superior California. This bill also permits PacificCorp to
sell its hydroelectric assets located in the State of
Washington, notwithstanding the prohibition in AB X1 6.
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<3> PUCN and FERC have jurisdiction over 95 percent of SPP's
electric generation assets.
<4> The total electric output from these facilities is about 10
megawatts, a very small portion of the load in the service area.
<5> The hydroelectric facility in California was destroyed
during recent floods, but the sale agreement requires SPP to
repair the facility in California.
<6> The TROA is outlined in federal law, and deals with an
equitable interstate allocation of water on Lake Tahoe, and the
Carson and Truckee Rivers. Among other things, TROA allows
California to make use of its Truckee River Basin water
allocation, and permits California to store part of its Truckee
River allocation in federal reservoirs for environmental,
industrial and municipal use.
AB 1235
Page C
The Bonneville Power Administration (BPA), in a cost-sharing
arrangement with the U.S. Bureau of Reclamation (USBOR), has set
a high priority on the purchase of the water rights for
Wapatox/Naches Power Plant diversions from the Naches River for
the benefit of anadromous fish species.<7> The acquisition of
these assets by project serves several purposes from a
biological perspective, is a cost share between USBOR and BPA,
was a recommended project in the 1994 U.S. Fish and Wildlife
Plan, has been approved by Yakima Nation and is part of the
Tribal Recovery Plan. The Washington State Department of Fish
and Wildlife, Washington Department of Ecology, as well as USBOR
and BPA supports the project and sale.
REGISTERED SUPPORT / OPPOSITION :
Support
Sierra Pacific Power Company
Nevada Governor Kenny Guinn
PacifiCorp
Opposition
None on file.
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083
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<7> Anadromous fish are born in fresh water, migrate to the
ocean to grow into adults, and then return to fresh water to
spawn, and include Salmon, Steelhead Trout, Pacific Cod and
Pacific Herring.