BILL NUMBER: SBX1 28	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 19, 2001
	AMENDED IN SENATE  MARCH 14, 2001
	AMENDED IN SENATE  MARCH 12, 2001
	AMENDED IN SENATE  MARCH 5, 2001

INTRODUCED BY   Senator Sher
   (Principal coauthors:  Senators Battin  and Brulte
  , Brulte, and Morrow  )
   (Principal coauthor:  Assembly Member Calderon)

                        FEBRUARY 5, 2001

   An act to add Section 42301.15 to, to add Chapter 7 (commencing
with Section 39910) to Part 2 of Division 26 of, and to add and
repeal Section 42314.3 of, the Health and Safety Code, and to amend
Sections 25514, 25523, 25531, and 25552 of, to add Section 25526.1
to, and to add and repeal Sections 25519.5 and 25550.5 of, the Public
Resources Code,  and to add Article 3.5 (commencing with Section
353.1) to Chapter 2.3 of Part 1 of Division 1 of the Public
Utilities Code,  relating to energy resources, making an
appropriation therefor, and declaring the urgency thereof, to take
effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 28, as amended, Sher.   Powerplant  
Energy Commission:  powerplant  siting  :  Public Utilities
Commission:  distributed energy resources  .
   (1) Existing law contains various provisions relative to air
pollution control.
   This bill would require the State Air Resources Board, in
consultation with air districts and the State Energy Resources
Conservation and Development Commission  (Energy Commission)
 , to implement a program for the expedited retrofit of
electrical generating facilities to ensure that the facilities are
permitted to operate in a manner that protects and improves air
quality.  The bill also would require the state board to implement an
expedited statewide program for the identification and banking of
emission reduction credits for electrical generating facilities, make
that information available to the public and interested parties, and
consult with the owners of facilities being retrofitted and other
specified entities to ensure that the program is coordinated with
efforts to ensure electrical grid reliability.
   The bill would require each air pollution control district or air
quality management district to adopt an expedited program for the
permitting of standby electrical generation facilities, distributed
generation facilities, and, where applicable, natural gas
transmission facilities, thereby imposing a state-mandated local
program.
   The bill would, until January 1, 2004, authorize an applicant for
a thermal powerplant to pay an air emissions mitigation fee to the
appropriate air pollution control district or air quality management
district for expenditure by the district.  The bill would require the
district to give first priority to securing emissions reductions
from comparable stationary sources and would require the district to
observe proximity standards of the federal Clean Air Act.  The bill
would authorize the district, to the extent cost-effective stationary
source emissions reductions are not available, to expend the
mitigation fees pursuant to the Carl Moyer Memorial Air Quality
Standards Attainment Program or a similar program established by the
district.  The bill would also authorize an applicant for a thermal
powerplant to post a bond issued by an admitted surety in an amount
sufficient to adequately cover the cost of required emissions
offsets.
   (2) Existing law provides for the restructuring of California's
electric power industry so that the price for the generation of
electricity is determined by a competitive market.
   Existing law requires the  State  Energy 
Resources Conservation and Development  Commission to
certify all sites and related facilities for thermal powerplants in
the state, including a new site and related facility or a change or
addition to an existing facility.  The  commission 
 Energy Commission  is required to prepare a final report
and written decision after a public hearing on the application for
the powerplant.
   Existing law requires the  commission  
Energy Commission  to request the appropriate local, regional,
state, and federal agencies to make comments and recommendations
about the design, operation, and location of facilities.
   This bill would require, until January 1, 2004, each local
government agency reviewing the application to file a preliminary
list of issues regarding the design, operation, location, and
financial impact of the facility with the  commission
  Energy Commission  within 45 days of the date the
application for certification is deemed filed.  The bill would
require the local jurisdiction to provide a final list of those
issues no later than 100 days after the application for certification
is deemed filed.  To the extent that the bill would require the
local jurisdiction to provide a new program or higher level of
service, it would impose a state-mandated local program.
   This bill would require the final report prepared by the 
commission   Energy Commission  to additionally
include findings and conclusions as to whether increased property
taxes due to the construction of the project are sufficient to
support needed local improvements and public services required to
serve the project.
   This bill would require the written decision prepared by the
 commission   Energy Commission  after the
public hearing to include a discussion of any public benefits from
the project including, but not limited to, economic benefits,
environmental benefits, and electricity reliability benefits.
   This bill would require the  commission  
Energy Commission  to adopt a regulation governing ex parte
contacts applicable to an adjudicatory proceeding, as specified.
   This bill would clarify that decisions of the  commission
  Energy Commission  are subject to judicial review
by the Supreme Court of California.
   (3) Existing law authorizes the  commission  
Energy Commission  to establish a process for the expedited
review of applications to construct and operate powerplants and
thermal powerplants and related facilities.
   This bill would require the  commission  
Energy Commission  , until January 1, 2004, also to establish a
process for the expedited review of a repowering project.
   This bill would additionally delete the deadline for completed
applications for an expedited decision on simple cycle thermal
powerplants.
   (4)  Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations and other specified entities.
   This bill would require the commission to require each electrical
corporation to modify tariffs so that all customers that install new
distributed energy resources, as defined, in accordance with
specified criteria are served under rates, rules, and requirements
identical to those of a customer within the same rate schedule that
does not use distributed energy resources, and to withdraw any
provisions in otherwise applicable tariffs that activate other
tariffs, rates, or rules if a customer uses distributed energy
resources.  The bill would require the commission to require each
electrical corporation, as part of its distribution planning process,
to include nonutility owned distributed energy resources as a
possible alternative to investments in its distribution system in
order to ensure reliable electric service at the lowest possible
cost.  The bill would require the commission to require each
electrical corporation to adopt standard contract terms, conditions,
penalties, and enforcement mechanisms for distributed energy
resources units providing distribution reliability services.  The
bill would require the commission, in establishing the rates under
the provisions of the bill, to create a firewall that segregates
distribution cost recovery, as described.
   The bill would require a local publicly owned electric utility, as
defined, or a local publicly owned utility otherwise providing
electrical service, to undertake a review of its rates, tariffs, and
rules, as prescribed, and to hold at least one noticed public meeting
to solicit public comment on the review and any recommended changes.

   The bill would require the commission to require each electrical
corporation to establish new tariffs on or before January 1, 2003,
for customers using distributed energy resources.  The bill would
continue to subject certain distributed energy resources, after
January 1, 2003, to preexisting tariffs under the bill, until June 1,
2011.  The bill would require the commission to prepare and submit
to the Legislature, on or before June 1, 2002, a report describing
its proposed methodology for determining the new rates and the
process by which it will establish those rates.
   Because a violation of a requirement of the commission is a crime,
this bill would impose a state-mandated local program by creating a
new crime.
   (5)  The bill would appropriate not more than $53,250,000
from the General Fund to the commission for expenditure, until
January 1, 2005, in accordance with a prescribed schedule.  
  (5)The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions. 

  (6)  The California Constitution requires the state to
reimburse local agencies and school districts for certain costs
mandated by the state. Statutory provisions establish procedures for
making that reimbursement, including the creation of a State Mandates
Claims Fund to pay the costs of mandates that do not exceed
$1,000,000 statewide and other procedures for claims whose statewide
costs exceed $1,000,000.
   This bill would provide that with regard to certain mandates no
reimbursement is required by this act for a specified reason.
   With regard to any other mandates, this bill would provide that,
if the Commission on State Mandates determines that the bill contains
costs so mandated by the state, reimbursement for those costs shall
be made pursuant to the statutory provisions noted above.
   (7)  The bill would declare that it is to take effect
immediately as an urgency statute.
   Vote:  2/3.  Appropriation:  yes.  Fiscal committee:  yes.
State-mandated local program:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Chapter 7 (commencing with Section 39910) is added to
Part 2 of Division 26 of the Health and Safety Code, to read:

      CHAPTER 7.  EXPEDITED AIR QUALITY IMPROVEMENT PROGRAM FOR
ELECTRICAL GENERATION

   39910.  The Legislature finds and declares that it is in the
interests of the people of the State of California to ensure that the
state board establish an expedited process to assist in the
permitting, retrofit, and operation of electrical generating
facilities in a manner that protects public health and air quality.
   39915.  The state board, in consultation with the districts and
the State Energy Resources Conservation and Development Commission,
shall implement a program for the expedited retrofit of electrical
generating facilities to ensure that those facilities  are operated
in a manner that protects and improves air quality.  The state board
shall consult with the owners of facilities being retrofitted, the
Independent System Operator, and the Public Utilities Commission to
ensure that the program is coordinated with efforts to ensure
electrical grid reliability.  The state board shall establish
standards and timeframes in a manner consistent with existing
requirements to implement this section.
   39920.  The state board shall implement an expedited statewide
program for the identification and banking of emission reduction
credits for electrical generating facilities and, where applicable,
natural gas transmission facilities and make that information
available to the public and interested parties.  The board shall
consult with the owners of  affected facilities.
  SEC. 2.  Section 42301.15 is added to the Health and Safety Code,
to read:
   42301.15.  Each district shall adopt an expedited program for the
permitting of standby electrical generation facilities, distributed
generation facilities, and, where applicable, natural gas
transmission facilities which ensures that those facilities may
operate in compliance with applicable air quality standards,
statutes, and regulations.
  SEC. 3.  Section 42314.3 is added to the Health and Safety Code, to
read:
   42314.3.  (a) Notwithstanding any other provision of law, and to
the extent permitted by the federal Clean Air Act (42 U.S.C. Sec.
7401 et seq.), and upon demonstration by the owner or operator of the
facility that those offsets are not available, in lieu of obtaining
emissions offsets, the applicant for a thermal powerplant may pay an
air emissions mitigation fee to the appropriate air pollution control
district or air quality management district for expenditure by the
district.  In expending mitigation fees, the district shall give
first priority to securing emission reductions from comparable
stationary sources and shall observe standards regarding proximity
consistent with regulations and guidance adopted pursuant to the
federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.).  To the extent
cost-effective stationary source emission reductions are not
available, the district may expend mitigation fees for the program
established by Chapter 9 (commencing with Section 44275) of Part 5 or
a similar program established by the district.
   (b) Consistent with subdivision (a), the applicant for a thermal
powerplant may post a bond in an amount sufficient to adequately
cover the cost of required emissions offsets.  The bond shall only be
issued by an admitted surety for the benefit of, and held by, the
local air district.  Prior to commencement of operation, the owner or
operator of the thermal powerplant shall obtain the required
emissions offsets, or shall obtain a portion of the required
emissions offsets and forfeit a proportionate amount of the bond or
letter of credit to the district sufficient to acquire the portion of
the required emissions offsets that are not obtained.  The district
may, by regulation, establish the time period, not to exceed six
months prior to commencement of operations, at which time the offsets
or funds shall be provided.
   (c) With respect to subdivisions (a) and (b), the appropriate
district shall hold a public hearing before the governing board or
air pollution control officer to establish the amount to be paid.
Notice of the hearing shall be published at least 30 days prior to
the hearing in a newspaper of general circulation in the area to be
affected by the powerplant emissions.  The amount shall be sufficient
in the judgment of the district to obtain equivalent emission
reductions as would have been provided by the otherwise required
emissions offsets, and may include an additional amount not to exceed
3 percent to cover the district's administrative costs.  The
district shall use the funds to obtain equivalent emissions
reductions as would have been provided by offsets, to the maximum
extent feasible.
   (d) This section shall apply to all proposed thermal powerplants,
including those subject to the jurisdiction of the State Energy
Resources Conservation and Development Commission.
   (e) The district may, by regulation, suspend or limit the
applicability of this section for any period of time or with respect
to a particular powerplant to the extent the district determines that
application of this section would interfere with attainment or
maintenance of national ambient air quality standards, or to the
extent it determines that adequate offsets are available at a
reasonable price.
   (f) This section shall remain in effect only until January 1,
2004, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2004, deletes or extends
that date.
  SEC. 4.  Section 25514 of the Public Resources Code is amended to
read:
   25514.  After conclusion of the hearings held pursuant to Section
25513 and no later than 300 days after the filing of the notice, a
final report shall be prepared and distributed.  The final report
shall include, but not be limited to, all of the following:
   (a) The findings and conclusions of the commission regarding the
conformity of alternative sites and related facilities designated in
the notice or considered in the notice of intention proceeding with
both of the following:
   (1) The 12-year forecast of statewide and service area electric
power demands adopted pursuant to subdivision (e) of Section 25305,
except as provided in Section 25514.5.
   (2) Applicable local, regional, state, and federal standards,
ordinances, and laws, including any long-range land use plans or
guidelines adopted by the state or by any local or regional planning
agency, which would be applicable but for the exclusive authority of
the commission to certify sites and related facilities; and the
standards adopted by the commission pursuant to Section 25216.3.
   (b) Any findings and comments submitted by the California Coastal
Commission pursuant to Section 25507 and subdivision (d) of Section
30413.
   (c) Any findings and comments submitted by the San Francisco Bay
Conservation and Development Commission pursuant to Section 25507 of
this code and subdivision (d) of Section 66645 of the Government
Code.
   (d) The commission's findings on the acceptability and relative
merit of each alternative siting proposal designated in the notice or
presented at the hearings and reviewed by the commission.  The
specific findings of relative merit shall be made pursuant to
Sections 25502 to 25516, inclusive.  In its findings on any
alternative siting proposal, the commission may specify modification
in the design, construction, location, or other conditions which will
meet the standards, policies, and guidelines established by the
commission.
   (e) Findings and conclusions with respect to the safety and
reliability of the facility or facilities at each of the sites
designated in the notice, as determined by the commission pursuant to
Section 25511, and any conditions, modifications, or criteria
proposed for any site and related facility proposal resulting from
the findings and conclusions.
   (f) Findings and conclusions as to whether increased property
taxes due to the construction of the project are sufficient to
support needed local improvements and public services required to
serve the project.
  SEC. 5.  Section 25519.5 is added to the Public Resources Code, to
read:
   25519.5.  (a) Each local government agency reviewing an
application pursuant to subdivision (f) of Section 25519 shall file a
preliminary list of issues regarding the design, operation,
location, and financial impacts of the facility with the commission
no later than 45 days after the date an application for certification
is deemed filed for purposes of Section 25522 and shall provide a
final list of those issues with the commission no later than 100 days
after the application for certification is deemed filed.
   (b) This section shall remain in effect only until January 1,
2004, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2004, deletes or extends
that date.
  SEC. 6.  Section 25523 of the Public Resources Code is amended to
read:
   25523.  The commission shall prepare a written decision after the
public hearing on an application, which includes all of the
following:
   (a) Specific provisions relating to the manner in which the
proposed facility is to be designed, sited, and operated in order to
protect environmental quality and assure public health and safety.
   (b) In the case of a site to be located in the coastal zone,
specific provisions to meet the objectives of Division 20 (commencing
with Section 30000) as may be specified in the report submitted by
the California Coastal Commission pursuant to subdivision (d) of
Section 30413, unless the commission specifically finds that the
adoption of the provisions specified in the report would result in
greater adverse effect on the environment or that the provisions
proposed in the report would not be feasible.
   (c) In the case of a site to be located in the Suisun Marsh or in
the jurisdiction of the San Francisco Bay Conservation and
Development Commission, specific provisions to meet the requirements
of Division 19 (commencing with Section 29000) of this code or Title
7.2 (commencing with Section 66600) of the Government Code as may be
specified in the report submitted by the San Francisco Bay
Conservation and Development Commission pursuant to subdivision (d)
of Section 66645 of the Government Code, unless the commission
specifically finds that the adoption of the provisions specified in
the report would result in greater adverse effect on the environment
or the provisions proposed in the report would not be feasible.
   (d) (1) Findings regarding the conformity of the proposed site and
related facilities with standards adopted by the commission pursuant
to Section 25216.3 and subdivision (d) of Section 25402, with public
safety standards and the applicable air and water quality standards,
and with other relevant local, regional, state, and federal
standards, ordinances, or laws.  If the commission finds that there
is noncompliance with any state, local, or regional ordinance or
regulation in the application, it shall consult and meet with the
state, local, or regional governmental agency concerned to attempt to
correct or eliminate the noncompliance.  If the noncompliance cannot
be corrected or eliminated, the commission shall inform the state,
local, or regional governmental agency if it makes the findings
required by Section 25525.
   (2) The commission may not find that the proposed facility
conforms with applicable air quality standards pursuant to paragraph
(1) unless the applicable air pollution control district or air
quality management district certifies that complete emissions offsets
for the proposed facility have been identified and will be obtained
by the applicant prior to the commission's licensing of the project,
to the extent that the proposed facility requires emission offsets to
comply with local, regional, state, or federal air quality
standards.
   (e) Provision for restoring the site as necessary to protect the
environment, if the commission denies approval of the application.
   (f) In the case of a site and related facility using resource
recovery (waste-to-energy) technology, specific conditions requiring
that the facility be monitored to ensure compliance with paragraphs
(1), (2), (3), and (6) of subdivision (a) of Section 42315 of the
Health and Safety Code.
   (g) In the case of a facility, other than a resource recovery
facility subject to subdivision (f), specific conditions requiring
the facility to be monitored to ensure compliance with toxic air
contaminant control measures adopted by an air pollution control
district or air quality management district pursuant to subdivision
(d) of Section 39666 or Section 41700 of the Health and Safety Code,
whether the measures were adopted before or after issuance of a
determination of compliance by the district.
   (h) A discussion of any public benefits from the project
including, but not limited to, economic benefits, environmental
benefits, and electricity reliability benefits.
  SEC. 7.  Section 25526.1 is added to the Public Resources Code, to
read:
   25526.1.  The commission shall adopt a regulation, applicable to
any adjudicatory proceeding before the commission, governing ex parte
contacts.  The regulation shall provide for prompt disclosure of any
ex parte contact. The rule shall apply to any contact regarding a
substantive, nonprocedural matter at issue in the adjudicatory
proceeding between any party to the proceeding and commission staff
where the staff is acting as a party to the proceeding, and any
commissioner, commissioner's advisor, or hearing officer. The
regulation shall not restrict exchanges of information among the
public and any parties to the proceeding, including contacts between
parties and commission staff, other than a commissioner, commissioner'
s advisor, or hearing officer.  The commission staff shall docket a
written summary of the substance of any ex parte contact between
staff and a party.
  SEC. 8.  Section 25531 of the Public Resources Code is amended to
read:
   25531.  (a) The decisions of the commission on any application for
certification of a site and related facility are subject to judicial
review by the Supreme Court of California.
   (b) No new or additional evidence may be introduced upon review
and the cause shall be heard on the record of the commission as
certified to by it.  The review shall not be extended further than to
determine whether the commission has regularly pursued its
authority, including a determination of whether the order or decision
under review violates any right of the petitioner under the United
States Constitution or the California Constitution.  The findings and
conclusions of the commission on questions of fact are final and are
not subject to review, except as provided in this article.  These
questions of fact shall include ultimate facts and the findings and
conclusions of the commission.  A report prepared by, or an approval
of, the commission pursuant to Section 25510, 25514, 25516, or
25516.5, or subdivision (b) of Section 25520.5, shall not constitute
a decision of the commission subject to judicial review.
   (c) Subject to the right of judicial review of decisions of the
commission, no court in this state has jurisdiction to hear or
determine any case or controversy concerning any matter which was, or
could have been, determined in a proceeding before the commission,
or to stop or delay the construction or operation of any thermal
powerplant except to enforce compliance with the provisions of a
decision of the commission.
   (d) Notwithstanding Section 1250.370 of the Code of Civil
Procedure:
   (1) If the commission requires, pursuant to subdivision (a) of
Section 25528, as a condition of certification of any site and
related facility, that the applicant acquire development rights, that
requirement conclusively establishes the matters referred to in
Sections 1240.030 and 1240.220 of the Code of Civil Procedure in any
eminent domain proceeding brought by the applicant to acquire the
development rights.
   (2) If the commission certifies any site and related facility,
that certification conclusively establishes the matters referred to
in Sections 1240.030 and 1240.220 of the Code of Civil Procedure in
any eminent domain proceeding brought to acquire the site and related
facility.
   (e) No decision of the commission pursuant to Section 25516,
25522, or 25523 shall be found to mandate a specific supply plan for
any utility as prohibited by Section 25323.
  SEC. 9.  Section 25550.5 is added to the Public Resources Code, to
read:
   25550.5.  (a) Notwithstanding subdivision (a) of Section 25522 and
Section 25540.6, the commission shall establish a process to issue
its final decision on an application for certification for the
repowering of a thermal powerplant and related facilities within 180
days after the filing of the application for certification that, on
the basis of an initial review, shows that there is substantial
evidence that the project will not cause a significant adverse impact
on the environment or electrical system and that the project will
comply with all applicable standards, ordinances, regulations, and
statutes.  For purposes of this section, filing has the same meaning
as in Section 25522.
   (b) The repowering of a thermal powerplant and related facilities
reviewed under this process shall satisfy the requirements of Section
25520 and other necessary information required by the commission by
regulation, including the information required for permitting by each
local, state, and regional agency that would have jurisdiction over
the proposed repowering of a thermal powerplant and related
facilities but for the exclusive jurisdiction of the commission and
the information required for permitting by each federal agency that
has jurisdiction over the proposed repowering of a thermal powerplant
and related facilities.
   (c) After  an application is filed under this section, the
commission shall not be required to issue a final decision on the
application within 180 days if it determines there is substantial
evidence in the record that the thermal powerplant and related
facilities may result in a significant adverse impact on the
environment or electrical system or does not comply with an
applicable standard, ordinance, regulation, or statute. Under this
circumstance, the commission shall make its decision in accordance
with subdivision (a) of Section 25522 and Section 25540.6, and a new
application shall not be required.
   (d) For an application that the commission accepts under this
section, any local, regional, or state agency that would have had
jurisdiction over the proposed thermal powerplant and related
facilities, but for the exclusive jurisdiction of the commission,
shall provide its final comments, determinations, or opinions within
100 days after the filing of the application. The regional water
quality control board, as established pursuant to Chapter 4
(commencing with Section 13200) of Division 7 of the Water Code,
shall retain jurisdiction over any applicable water quality standard
that is incorporated into any final certification issued pursuant to
this chapter.
   (e) The repowering of a thermal powerplant and related facilities
that demonstrate superior environmental or efficiency performance
improvement shall receive first priority in review by the commission.

   (f) With respect to the repowering of a thermal powerplant and
related facilities reviewed under the process established by this
chapter, it shall be shown that the applicant has contracted for an
adequate supply of skilled labor to construct, operate, and maintain
the plant.
   (g) With respect to a repowering of a thermal powerplant and
related facilities reviewed under the process established by this
chapter, it shall be shown that the thermal powerplant and related
facilities complies with all regulations adopted by the commission
that ensure that an application addresses disproportionate impacts in
a manner consistent with Section 65040.12 of the Government Code.
   (h) To implement this section, the commission may adopt emergency
regulations in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code. For
purposes of that chapter, including, without limitation, Section
11349.6 of the Government Code, the adoption of the regulations shall
be considered by the Office of Administrative Law to be necessary
for the immediate preservation of the public peace, health, safety,
and general welfare.
   (i) For purposes of this section, "repowering" means a project for
the modification of an existing generation unit of a thermal
powerplant that meets all of the following criteria:
   (1) The project complies with all applicable requirements of
federal, state, and local laws.
   (2) The project is located on the site of, and within the existing
boundaries of, an existing thermal facility.
   (3) The project will not require significant additional
rights-of-way for electrical or fuel-related transmission facilities.

   (4) The project will result in significant and substantial
increases in the efficiency of the production of electricity,
including, but not limited to, reducing the heat rate, reducing the
use of natural gas, reducing the use and discharge of water, and
reducing air pollutants emitted by the project, as measured on a per
kilowatthour basis.
   (j) This section shall remain in effect only until January 1,
2004, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2004, deletes or extends
that date.
  SEC. 10.  Section 25552 of the Public Resources Code is amended to
read:
   25552.  (a) The commission shall implement a procedure, consistent
with Division 13 (commencing with Section 21000) and with the
federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.), for an expedited
decision on simple cycle thermal powerplants and related facilities
that can be put into service on or before December 31,  2002,
including a procedure for considering amendments to a pending
application if the amendments specify a change from a combined cycle
thermal powerplant and related facilities to a simple cycle thermal
powerplant and related facilities.
   (b) The procedure shall include all of the following:
   (1) A requirement that, within 15 days of receiving the
application or amendment to a pending application, the commission
shall determine whether the application is complete.
   (2) A requirement that, within 25 days of determining that an
application is complete, the commission, or a committee of the
commission, shall determine whether the application qualifies for an
expedited decision pursuant to this section.  If an application
qualifies for an expedited decision pursuant to this section, the
commission shall provide the notice required by Section 21092.
   (c) The commission shall issue its final decision on an
application, including an amendment to a pending application, within
four months from the date on which it deems the application or
amendment complete, or at any later time mutually agreed upon by the
commission and the applicant, provided that the thermal powerplant
and related facilities remain likely to be in service on or before
December 31, 2002.
   (d) The commission shall issue a decision granting a license to a
simple cycle thermal powerplant and related facilities pursuant to
this section if the commission finds all of the following:
   (1) The thermal powerplant is not a major stationary source or a
modification to a major stationary source, as defined by the federal
Clean Air Act, and will be equipped with best available control
technology, in consultation with the appropriate air pollution
control district or air quality management district and the State Air
Resources Board.
   (2) The thermal powerplant and related facilities will not have a
significant adverse effect on the environment or the electrical
system as a result of construction or operation.
   (3) With respect to a project for a thermal powerplant and related
facilities reviewed under the process established by this section,
the applicant has contracted for an adequate supply of skilled labor
to construct, operate, and maintain the thermal powerplant.
   (e) In order to qualify for the procedure established by this
section, an application shall satisfy the requirements of Section
25523, and include a description of the proposed conditions of
certification that will do all of the following:
   (1) Assure that the thermal powerplant and related facilities will
not have a significant adverse effect on the environment as a result
of construction or operation.
   (2) Assure protection of public health and safety.
   (3) Result in compliance with all applicable federal, state, and
local laws, ordinances, and standards.
   (4) A reasonable demonstration that the thermal powerplant and
related facilities, if licensed on the expedited schedule provided by
this section, will be in service before  December 31, 2002.
   (5) A binding and enforceable agreement with the commission, that
demonstrates either of the following:
   (A) That the thermal powerplant will cease to operate and the
permit will terminate within three years.
   (B) That the thermal powerplant will be recertified, modified,
replaced, or removed within a period of three years with a
cogeneration or combined-cycle thermal powerplant that uses best
available control technology and obtains necessary offsets, as
determined at the time the combined-cycle thermal powerplant is
constructed, and that complies with all other applicable laws,
ordinances, and standards.
   (6) Where applicable, that the thermal powerplant will obtain
offsets or, where offsets are unavailable, pay an air emissions
mitigation fee to the air pollution control district or air quality
management district based upon the actual emissions from the thermal
powerplant, to the district for expenditure by the district pursuant
to Chapter 9 (commencing with Section 44275) of Part 5 of Division 26
of the Health and Safety Code, to mitigate the emissions from the
plant.  To the extent consistent with federal law and regulation, any
offsets required pursuant to this paragraph shall be based upon a
1:1 ratio, unless, after consultation with the applicable air
pollution control district or air quality management district, the
commission finds that a different ratio should be required.
   (7) Nothing in this section shall affect the ability of an
applicant that receives approval to install simple cycle thermal
powerplants and related facilities as an
               amendment to a pending application to proceed with the
original application for a combined cycle thermal powerplant or
related facilities.
   (f) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2003, deletes or extends
that date except that the binding commitments in paragraph (5) of
subdivision (e) shall remain in effect after that date.
  SEC. 11.   Article 3.5 (commencing with Section 353.1) is added
to Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code,
to read:

      Article 3.5.  Distributed Energy Resources

   353.1.  As used in this article, "distributed energy resources"
means any electric generation technology that meets all of the
following criteria:
   (a) Commences initial operation between May 1, 2001 and June 1,
2003, except that gas-fired distributed energy resources that are not
operated in a combined heat and power application must commence
operation no later than July 1, 2001.
   (b) Is located within a single facility.
   (c) Is five megawatts or smaller in aggregate capacity.
   (d) Serves onsite loads or over-the-fence transactions allowed
under Sections 216 and 218.
   (e) Is powered by any fuel other than diesel.
   (f) Complies with emission standards and guidance adopted by the
State Air Resources Board pursuant to Sections 41514.9 and 41514.10
of the Health and Safety Code.  Prior to the adoption of those
standards and guidance, for the purpose of this article, distributed
energy resources shall meet emissions levels equivalent to nine parts
per million oxides of nitrogen, averaged over a three-hour period,
or best available control technology for the applicable air district,
whichever is lower.
   353.3.  (a) The commission shall require each electrical
corporation to modify its tariffs so that all customers installing
new distributed energy resources in accordance with the criteria
described in Section 353.1 are served under rates, rules, and
requirements identical to those of a customer within the same rate
schedule that does not use distributed energy resources, and to
withdraw any provisions in otherwise applicable tariffs that activate
other tariffs, rates, or rules if a customer uses distributed energy
resources.
   (b) To qualify for the tariffs described in subdivision (a), each
customer shall participate in a real-time metering and pricing
program, in which rates for any energy purchased from the electrical
corporation reflect the actual cost to the electrical corporation of
energy at the time it is consumed.
   (c) Except as specified in Section 353.7, customers may not be
subject to the application of additional rates or tariffs solely
because of their use of distributed energy resources to serve onsite
loads or over-the-fence transactions allowed under Sections 216 and
218.
   353.5.  The commission shall require each electrical corporation,
as part of its distribution planning process, to include nonutility
owned distributed energy resources as a possible alternative to
investments in its distribution system in order to ensure reliable
electric service at the lowest possible cost.  The commission shall
require each electrical corporation to adopt standard contract terms,
conditions, penalties, and enforcement mechanisms for distributed
energy resources units providing distribution reliability services.
The commission shall review for the purpose of compliance with this
section, on an annual basis, the progress of each corporation in
incorporating these changes into their planning processes.
   353.7.  Notwithstanding Section 353.3, nothing in this article may
result in any exemption from reasonable interconnection charges,
lead to any reduction in contributions by each customer class to
public purpose programs funded under Section 399.8, or relieve any
customer of any obligation determined by the commission to result
from participation in the purchase of power through the Department of
Water Resources pursuant to Division 27 (commencing with Section
80000) of the Water Code.
   353.9.  In establishing the rates required under this article, the
commission shall create a firewall that segregates distribution cost
recovery so that any net costs, taking into account the actual costs
and benefits of distributed energy resources, proportional to each
customer class, as determined by the commission, resulting from the
tariff modifications granted to members of each customer class may be
recovered only from that class.
   353.11.  A local publicly owned electric utility, as defined in
subdivision (d) of Section 9604, or a local publicly owned utility
otherwise providing electrical service, shall review at the earliest
practicable date its rates, tariffs, and rules to identify barriers
to and determine the appropriate balance of costs and benefits of
distributed energy resources in order to facilitate the installation
of these resources in the interests of their customer-owners and the
state, and shall hold at least one noticed public meeting to solicit
public comment on the review and any recommended changes.  However,
notwithstanding any other provision of this article, such an entity
has the sole authority to undertake such a review and to make
modifications to its rates, tariffs, and rules as the governing body
of that utility determines to be necessary.
   353.13.  (a) The commission shall require each electrical
corporation to establish new tariffs on or before January 1, 2003,
for customers using distributed energy resources, including, but not
limited to, those which do not meet all of the criteria described in
Section 353.1. However, after January 1, 2003, distributed energy
resources that meet all of the criteria described in Section 353.1
shall continue to be subject only to those tariffs in existence
pursuant to Section 353.3, until June 1, 2011. Those tariffs required
pursuant to this section shall ensure that all net distribution
costs incurred to serve each customer class, taking into account the
actual costs and benefits of distributed energy resources,
proportional to each customer class, as determined by the commission,
are fully recovered only from that class.  The commission shall
require each electrical corporation, in establishing those rates, to
ensure that customers with similar load profiles within a customer
class will, to the extent practicable, be subject to the same utility
rates, regardless of their use of distributed energy resources to
serve onsite loads or over-the-fence transactions allowed under
Sections 216 and 218.  Customers with dedicated facilities shall
remain responsible for their obligations regarding payment for those
facilities.
   (b) The commission shall prepare and submit to the Legislature, on
or before June 1, 2002, a report describing its proposed methodology
for determining the new rates and the process by which it will
establish those rates.
  SEC. 12.   The sum of not more than fifty-three million two
hundred fifty thousand dollars ($53,250,000) is hereby appropriated
from the General Fund to the State Energy Resources Conservation and
Development Commission for expenditure, until January 1, 2005, for
the following purposes:
   (a) Fifty million dollars ($50,000,000) to increase rebates for
clean, renewable, grid-connected distributed energy systems,
including fuel cells, smaller than 10 kilowatts.
   (b) Three million dollars ($3,000,000) to provide assistance to
cities and counties to expedite the review and analysis of
applications for electrical generating facilities which will assist
the state in meeting its urgent energy needs and ensuring system
reliability.  The moneys available pursuant to this subdivision shall
not be used to supplant funding available to a city or county
through the exercise of its existing fee authority.
   (c)  Not more than two hundred fifty thousand dollars ($250,000)
to contract or conduct a study, in consultation with the Orange
County Sanitation District, of the remedies to mitigate effects of
shoreline water contamination located in the vicinity of the City of
Huntington Beach to be conducted concurrently with the Huntington
Beach Shoreline Contamination Study conducted by the Orange County
Sanitation District.  
  SEC. 12.  Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
  SEC. 13.  
  SEC. 13.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution for certain
costs  that may be incurred by a local agency or school district
because in that regard this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
   However, notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
other costs mandated by the state, reimbursement to local agencies
and school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
  SEC. 14.   This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  The facts constituting the necessity are:
   In order to address the rapid, unforeseen shortage of electric
supply and energy available in the state, which endangers the health,
welfare, and safety of the people of this state, it is necessary for
this act to take effect immediately.