BILL ANALYSIS
SB 28X
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Byron D. Sher, Chairman
2001-2002 Regular Session
BILL NO: SB 28X
AUTHOR: Sher
AMENDED: As Proposed to be Amended
FISCAL: Yes HEARING DATE: February 26, 2001
URGENCY: Yes CONSULTANT: Kip Lipper
SUBJECT : EXPEDITED POWERPLANT SITING
SUMMARY :
Existing law :
1) Makes no express provision with respect to the retention of
one hundred percent of the property tax by a county within
which a new electrical generation facility is located.
2) Under the federal Clean Air Act (42 U.S.C. Section 7401 et.
seq.), requires new and modified stationary sources of air
pollution to use Best Available Control Technology (BACT)
and to obtain air emissions offsets for the pollution they
create.
3) Under Division 26 (commencing with Section 39000) of the
Health and Safety Code:
a) Establishes the state Air Resources Board (ARB) and
generally vests it with duties and obligations to
promote air quality improvement on a statewide basis.
b) Establishes local air districts and generally vests
them with the duties and obligations to promote air
quality improvement within the air basins they
represent.
4) Under the Warren-Alquist Energy Resources Conservation and
Development Act:
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a) Establishes the California Energy Commission and
vests it with the authority both to site, and to
expedite the siting of, thermal powerplants which
generate fifty megawatts of more electricity.
b) Establishes detailed procedures for the certification
of new thermal powerplants in the state, including
procedures for the submittal local agency comments on
such plants, judicial review of siting decisions by the
commission, and expedited review for so-called
"single-cycle peaking units."
5) Under Article XII of the State Constitution and under the
Public Utilities Act (Section 200 et. seq. of the Public
Utilities Code) authorizes the California Public Utilities
Commission (PUC) to fix rates, establish rules, and take
other specified actions with respect to public utilities
which operate in the state.
This bill does all of the following :
Air Quality Provisions
1) Requires the ARB to establish an expedited program for the
retrofit of electrical generating facilities in order to
ensure that such facilities comply with applicable statutes
and regulations.
2) Also requires the ARB to implement a statewide program for
the identification of emission reduction credits (ERC's)
for electrical generating facilities and to make such
information available to the public and interested parties.
3) Requires air districts to implement expedited programs for
the retrofit of standby and distributed generation
facilities to ensure that such facilities comply with
applicable statutes and regulations.
4) Upon a demonstration that no air emission offsets are
available, authorizes applicants for thermal powerplants to
pay an air emissions mitigation fee to the applicable air
district in lieu of obtaining offsets and specifies
procedures for the payment, expenditure, and posting of
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such mitigation fees.
Electrical Generation Siting Provisions
1)Require local agencies commenting on applications for
thermal powerplants before the CEC to provide preliminary
comments not later than forty-five days after the filing of
an application for certification, and a final list of such
issues within ninety days of the filing.
2)Requires the CEC to make findings relative to whether or not
the local property taxes from a proposed thermal powerplant
are sufficient to support local improvements and services.
3)Requires the CEC, in its written decision on a proposed
thermal powerplant, to consider any benefits from the
powerplant, including, but not limited to, economic
benefits, environmental benefits, and system reliability
benefits.
4) Requires the CEC to adopt a rule by regulation governing ex
parte communications among parties to the case and
commission staff acting as parties to the case, and
specifies procedures for the disclosure of such
communication.
5)Specify that siting decisions made by the CEC are subject to
judicial review by the state Supreme Court.
6)Establishes a 180-day expedited siting process for
"repowers" of electrical generating facilities provided that
there is substantial evidence that the repower will not have
a significant effect on the environment and it is in
compliance with all applicable standards, ordinances,
regulations, or statutes and the electrical output will be
made available to serve electrical customers in the state.
7)Establishes an expedited process consistent with the
California Environmental Quality Act and the federal Clean
Air Act, for the siting of single-cycle "peaking units"
which can be brought on line on or before December 31, 2002.
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CPUC Related Provisions
1) Require that the use of distributed generation shall be
treated under utility rate schedules established by the PUC
as customer demand side management measures.
2) Prohibit the imposition of additional standby, exit, or
other similar charges, tariffs, or rates against utility
customers for distributed energy resources installations,
and require the withdrawal of any such charges, other than
interconnection rules and requirements.
Property Tax and Other Fiscal Provisions
1)Beginning in the fiscal year 2001-2002, and for each fiscal
year thereafter, require the state Board of Equalization to
allocate in its entirety property tax revenues from the
assessed valuation of an electrical generation property to
the tax rate area of the county within which the electrical
generation property is located, and makes conforming changes
to other provisions of tax laws.
2)Appropriates $50 million dollars to the CEC for the purposes
of increasing rebates for clean renewable distributed
generation resources.
3)Appropriates $3 million to the CEC for the purposes of
providing assistance to local governments in reviewing and
processing applications for electrical generation
facilities.
COMMENTS :
1) Purpose of Bill . According to the author, this measure
represents a series of changes to air quality, CEC siting,
PUC ratemaking, and property tax laws designed to encourage
the expedited siting of clean new generation in the state.
The author notes that the package of proposals contained in
this measure are similar to many such proposals identified
by generators, the Administration, and other parties to
address the need for clean new generation in the state.
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Several provisions of this bill, most notably the
provisions relating to property tax retention and
elimination of so-called standby generation charges, are
provisions also contained in other bills, which have
already been introduced in the Special Session. This
measure combines those provisions into a single
comprehensive proposal to streamline and expedite clean new
generation in the state.
2) Key Provisions of Bill Taken From Other Legislation And
Administration Proposals . It should be noted that several
of the changes to the bill described in this analysis and
contained in the mock-up before the committee, are
provisions contained in other measure introduced into the
special session affecting new generation. Specifically,
provisions affecting property tax retention are transferred
verbatim from SB 30x (Brulte); provisions prohibiting
imposition of standby generation charges are taken from SB
35x (Morrow/Alpert). Those provisions were added to the
bill as part of an agreement among the members to
consolidate these bill proposals into SB 28x (See attached
summary).
3) Should Bill's Streamlining Provisions Be Made Available
Only to Those Parties Willing To Help Meet State's Urgent
Energy Needs ? As presently drafted, some, but not all, of
the provisions contained in this measure can be exercised
by parties seeking to build new generation in the state;
however, these parties do not require that any of the
electricity being generated be made available on a first
right of refusal basis to the state. These provisions
could result in the potentially vexing outcome of speeding
up new generation built in the state (and at least
temporarily relaxing air emissions requirements) for
powerplants which may well provide no benefit to California
energy users. The committee may wish to consider whether
the bill should be amended to ensure that parties wishing
to take advantage of its provisions make the electricity
they generate available to state consumers at reasonable
rates.
4) Air Board and Air District Provisions Need Greater Detail .
As presently drafted, the provisions of this measure which
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require the ARB and air districts to adopt expedited
procedures for identifying offsets, retrofitting
distributed generation, and retrofitting existing
generation facilities need further clarification and
elaboration. Specifically, the bill should harmonize the
provisions setting forth the ARB's duties to expedite
retrofitting of existing plants with similar duties of the
districts contained in the bill. It should also establish
deadlines for such activities to be undertaken, standards
plants should meet, and provisions which ensure
consultation with appropriate state agencies to ensure that
grid system reliability is not jeopardized. The committee
may wish to consider whether or not to elaborate these
provisions in greater detail.
5) Provisions Allowing Powerplant Applicants To Pay Mitigation
Fees In Lieu of Obtaining Offsets Need Clarification .
There are two provisions in this measure which allow
applicants for powerplant approvals to postpone the
acquisition of air emissions offsets and instead pay
mitigation fees to air districts (Page 4, line 28 and
following, and page 13, lines 35-40, and page 14, lines
1-7). These provisions need to be reconciled to ensure
uniformity in their implementation. Specifically, both
provisions should clarify that the mitigation fee paid in
lieu of offsets should be equivalent to the costs of the
offsets were they available in the basin.
6) Property Tax Provisions Need Further Revisions . As
presently drafted, this measure allows 100% of the
increased amount property taxes which accrue due to the
construction of a new powerplant to be retained by the
local city or county. While this committee is not the
committee of record on issues relating to property tax
distribution, this provision raises several issues. First,
if, as the author of this provision states, the notion is
to "reward" local governments which "step up and approve"
new generation by allowing them to retain all of the
property tax increase such facilities provide, the language
in the bill contains no such limitations. As written, a
local agency which strenuously opposed siting of a new
generation facility would be allowed to keep all of the
property tax revenue. In addition, the provision makes no
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accommodation to ensure that unincorporated areas of
counties or sections of burghs of some larger cities, where
plants are frequently located, would actually benefit from
any property tax funds accruing to a county or city.
Finally, to the extent, as stated above, that the intent of
this provision is to "reward" jurisdictions which agree to
site new generation, it should be noted that, for the most
part, local governments do not "approve" powerplants; that
activity is most often undertaken by the CEC in its siting
process.
7) Provisions Prohibiting Imposition of Standby Generation
Charges Need Further Work .. Once again, while this
committee is not the committee of record on matters
affecting the jurisdiction of the CPUC and its tariffs and
rates, it should be noted that the provisions prohibiting
the imposition of so-called standby generation charges need
further work. For example, the current provisions would
appear to prohibit such charges in the service areas of
municipal utilities, entities over which the PUC has no
regulatory jurisdiction. Moreover, while there are
significant policy disputes over whether standby charges
have been imposed equitably, it is unclear why all
distributed generation (as opposed to clean distributed
generation which helps meet grid reliability needs) should
be totally exempted from such charges. Finally, it should
be noted that to the extent parties are totally exempted
from such charges, the costs of maintaining the system may
fall upon the remaining "captive customers."
8) Technical Amendments Needed . Section 3 of the bill (pages
4 and 5) amends the incorrect section of the Warren-Alquist
Act. The proper section should be Section 25519 of the
Public Resources Code.
SOURCE : Senator Sher
SUPPORT : None on file
OPPOSITION : None on file