BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 28X|
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THIRD READING
Bill No: SB 28X
Author: Sher (D), et al
Amended: 3/19/01
Vote: 27 - Urgency
SENATE ENV. QUALITY COMMITTEE 7-0, 2/26/01
AYES: Sher, McPherson, Chesbro, Figueroa, Kuehl,
McClintock, O'Connell
SENATE ENERGY, U.&C. COMMITTEE : 9-0, 3/6/01
AYES Bowen, Morrow, Battin, Dunn, Poochigian, Sher,
Speier, Vasconcellos, Vincent
SENATE APPROPRIATIONS COMMITTEE : 8-0, 3/12/01
AYES: Alpert, Battin, Bowen, Johnson, Karnette, McPherson,
Perata, Speier
SUBJECT : Powerplant siting; distributed energy resources
SOURCE : Author
DIGEST : This bill contains a series of provisions
intended to accommodate increased construction and
operation of power plants. The bill also provides a
10-year waiver of standby charges" for specified
distributed generation (DG) installations.
Senate Floor Amendments of 3/19/01 add to the bill the
contents of SB 9X (Morrow) which provides for a 10-year
waiver of "standby charges" for specified DG installations.
CONTINUED
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ANALYSIS : Siting provisions (Sections 5 through 10) :
1.Requires the California Energy Commission (CEC) to limit
local jurisdictions'comment period on power plant
applications to 45 days following filing of an
application for initial comments, and 100 days for final
comments. Sunsets January 1, 2004.
2.Requires the CEC, in its written decision on a power
plant application, to discuss any public benefits from
the project (economic, environmental or reliability).
3.Requires the CEC to adopt a regulation governing ex parte
contacts, which allows substantive contacts between
parties and CEC officials, but requires prompt disclosure
and a written summary of the contact.
4.Provides that CEC siting decisions are subject to Supreme
Court review. (Currently, CEC decisions track the appeal
process of California Public Utilities Commission (CPUC)
decisions, which used to go directly to the Supreme
Court. The process applicable to the CPUC was changed to
provide for lower appellate court review of adjudicatory
decisions by SB 1322 (Calderon), Chapter 855, Statutes of
1996. This bill changes the CEC's process back to the
way it was prior to the enactment of SB 1322.)
5.Requires the CEC to issue its final decision for
certification for "re-powering" projects within 180 days
(Decisions on modifications to existing power plants are
currently subject to a 12-month deadline). For purposes
of this section, "re-powering" means a project that:
A. Initial evidence suggests will not cause a
significant adverse impact on the environment or the
electrical system and will comply with applicable
legal standards.
B. Is located within the boundaries of an existing
power plant and will not require significant
additional rights-of-way for transmission or fueling,
but does not necessarily replace the existing plant.
C. Will significantly and substantially increase the
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efficiency of the project, on a per kilowatt-hour
basis, with respect to gas consumption, water use and
discharge, and air pollution.
D. Has a contract for an adequate supply of skilled
labor to construct, operate and maintain the plant.
E. Complies with CEC regulations regarding
environmental justice.
With respect to re-powering projects, limits the comment
period for local, regional and state jurisdictions to
100 days.
These provisions sunset on January 1, 2004.
1.Extends the application of the four-month siting process
for temporary "peaker" power plants. As established by
AB 970 (Ducheny), Chapter 329, Statutes of 2000, plants
had to be in service by August 1, 2001 to qualify. This
bill extends the date 17 months, to December 31, 2002.
2.Expands the application of the "peaker" process to allow
re-certification or replacement by a co-generation
facility within three years. Under AB 970, simple-cycle
peakers were required to be replaced by combined-cycle
plants.
Air quality provisions (Sections 1, 2 and 3) :
1.Requires the Air Resources Board (ARB) to implement a
program for "expedited retrofit" of power plant pollution
controls.
2.Requires ARB to implement an expedited statewide program
for "identification and banking" of emission reduction
credits for power plants and natural gas transmission
facilities.
3.Requires each air district to adopt an expedited program
for permitting of standby or distributed generation
facilities and natural gas transmission facilities.
4.Authorizes payment to air districts of mitigation fees
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for a new power plant in lieu of obtaining actual
emissions offsets, when the owner or operator of the
plant has shown that offsets are not available.
Mitigation fees are to be used first to secure emission
reductions from comparable stationary sources.
5.Authorizes posting of a bond equivalent to the cost of
required offsets for a new power plant. If all required
offsets have not been obtained by the time the plant
starts operating, a share of the bond sufficient to
acquire offsets not obtained is forfeited to the
district.
6.Requires the air district to hold a public hearing to
determine the appropriate amount of fees or bonds to be
paid in lieu of offsets. The amount shall be sufficient
to obtain equivalent emission reductions.
7.Authorizes the air district to suspend or limit these
provisions if it determines their application would
interfere with attainment or maintenance of air quality
standards, or if it determines adequate offsets are
available at a "reasonable" price.
8.These provisions sunset on January 1, 2004.
Tax provisions Section 4 :
Requires the CEC, in its final report on a power plant
application, to address whether increased property taxes
due to construction of the project are sufficient to
support local improvements and public services necessary to
serve the project.
NOTE: Provisions relating to the allotment of property tax
revenues were recently deleted from the bill to be inserted
into SB 30X (Brulte). According to the author's office,
after these provisions have been heard in Senate Revenue
and Taxation Committee, they will be amended back into SB
28X.
Funding provisions (Section 12) :
Appropriates $53,250,000 from the General Fund to the CEC
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until January 1, 2005 as follows:
1.$50 million to increase rebates for clean, renewable,
grid-connected distributed energy systems including fuel
cells smaller than 10 kilowatts.
2.$3 million to assist cities and counties with expedited
review of power plant applications.
3.Not more than $250,000 for a study, in consultation with
the Orange County Sanitation District, of the remedies to
mitigate the effects of shoreline water contamination in
Huntington Beach.
Distributed generation provisions (Section 11) :
This bill provides a 10-year waiver of "standby charges"
for specified distributed generation (DG) installations.
Specifically, this bill:
1.Requires the California Public Utilities Commission
(CPUC) to require each electrical corporation (i.e.,
PG&E, Edison and SDG&E) to charge customers who install
new DG between May 1, 2001 and June 1, 2003 the identical
"rates, rules and requirements" as customers without DG
for a period of 10 years.
2.Establishes exceptions to the waiver of DG charges for
"reasonable" interconnection charges, public purpose
program charges, and obligations resulting from
purchasing power from the Department of Water Resources.
3.Requires the CPUC to require each electrical corporation
to consider non-utility-owned DG as an alternative to
investments in its distribution system.
4.Segregates each customer class so that costs associated
with waiver of standby charges for a customer is
recoverable only from that customer's class.
5.Defines eligible DG as follows:
A. Commences operation between May 1, 2001 and June 1,
2003.
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B. Located within a single facility.
C. Capacity of five megawatts (MW) or smaller.
D. Serves onsite or adjacent facility load.
E. Powered by fuel other than diesel.
F. Meets specified emissions standards.
1.Requires the CPUC to require each electrical corporation
to establish new rates by January 1, 2003 applicable to
new DG installed after June 1, 2003. To the extent
practicable, these rates are to be the same as rates for
other, non-DG customers with similar load profiles.
2.Requires the CPUC to report its proposed new DG rates to
the Legislature by June 1, 2002.
3.Requires each municipal utility to review its rates to
identify barriers to DG.
Background :
In 1974, in response to a previous energy crisis, the
Warren-Alquist Act established an exclusive process for
siting of thermal power plants 50 megawatts and larger.
The siting process was intended to provide comprehensive
environmental review and predictable, one-stop permitting
of applications. It was also integrated with a planning
process that was intended to guard against under or
overbuilding of power plants.
The Act required the CEC to develop long-term forecasts of
state energy needs, which served as the basis for planning
and certification of individual power plants. Since the
advent of electrical restructuring, the planning and siting
functions have been de-coupled, but the Act still grants
the CEC exclusive authority to certify power plants and
authorizes the CEC to override other state, local or
regional decisions and certify a power plant it determines
is required for "public convenience and necessity."
The construction of the CEC's siting review function in the
Warren-Alquist Act strikes a balance between project
applicants' interest in certainty and the public's interest
in environmental protection and prudent planning of
generation resources. The CEC's siting process is a
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CEQA-equivalent project evaluation process and was intended
to be rigorous and comprehensive. In approving a proposed
power plant, the CEC must find that the facility's
construction and operation is consistent with a variety of
environmental standards.
This bill proposes a series of changes to air quality and
CEC siting 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 Governor's office, and other parties to address the
need for clean new generation in the state.
Background on DG installations
DG is typically considered to be a site-specific generation
resource which is owned by the customer and used to meet
some or all of that customer's energy needs, including
electricity and, in many applications, heating.
Examples of DG units range from a residential rooftop solar
array to a collection of large combustion turbines at a
commercial office building or industrial facility. DG can
be used for reliability back-up (standby or emergency
generation), to meet base load requirements, to meet
peaking requirements, or to meet all on-site requirements,
and sell power to adjacent sites ("over the fence"
transactions).
For a customer that owns a DG unit that is connected to the
utility distribution system, on-site generation is
complemented by power purchased through, and delivered by,
the utility. Depending on the reliability, capacity and
purpose of the DG unit, the customer may, at various times,
buy some or all of its power from the utility, or "sell"
power back to the utility through a net-metering
arrangement.
Under existing law, grid-connected DG customers pay a
standby charge to the utility to reserve the capacity need
to serve that customer. The standby charges are based on
the installed capacity of the DG unit.
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These provisions effectively prevent PG&E, Edison and SDG&E
from assessing these charges for customers installing
generation up to five megawatts that serves onsite electric
load. These provisions would allow DG in any of the
applications described above, or any combination of the
applications, to be eligible for the standby charge waiver.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02
2002-03 Fund
CEC appropriation At least $53,250* --
-- General
Air Resources Board $ 59 $ 235
$ 235 General
*Appropriated in the bill until January 1, 2005
CP:jk 3/20/01 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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