BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 33X|
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THIRD READING
Bill No: SB 33X
Author: Burton (D), et al
Amended: 2/15/01
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 7-3, 2/13/01
AYES: Bowen, Alarcon, Speier, Vasconcellos, Sher, Vincent,
Dunn
NOES: Battin, Morrow, Poochigian
SENATE APPROPRIATIONS COMMITTEE : 7-4, 2/15/01
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Perata,
Speier
NOES: Battin, Johannessen, Johnson, Poochigian
SUBJECT : Electric power: transmission facilities:
purchase
SOURCE : Author
DIGEST : This bill authorizes the Governor to develop a
plan, as specified, for the state to purchase transmission
facilities owned by electrical corporations.
ANALYSIS : California's transmission facilities, or
"grid," are a network of long-distance, high-voltage lines
that carry bulk electricity throughout the state, and to
and from other states, to local utilities' substations for
distribution to their customers.
Prior to passage of AB 1890 (Brulte), Chapter 854, Statutes
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of 1996, and the advent of electric restructuring, the
transmission facilities owned and maintained by an
investor-owned utility (IOU) were operated by the same IOU.
One of the key features of electric restructuring was the
creation of the Independent System Operator (ISO), which
assumed operational control of the IOUs' grid on March 31,
1998.
The ISO now controls 75 percent of the grid and includes
the transmission systems formerly operated by the three
major IOUs (Pacific Gas and Electric, Southern California
Edison and San Diego Gas and Electric). The ISO control
area consists of over 25,000 miles of transmission lines,
covering 124,000 square miles, or three-quarters of the
state.
The principal functions of the ISO are to:
1.Act as the control area operator, instantaneously
balancing electrical supply and demand, within its
control area.
2.Operate real-time markets for imbalance energy and
ancillary services necessary to accomplish function 1.
3.Act as the grid security coordinator for the entire
state.
The remaining 25 percent of the grid consists mostly of
transmission facilities owned and maintained by local
publicly-owned utilities, such as the Los Angeles
Department of Water and Power and the Sacramento Municipal
Utility District. With some limited exceptions, these
facilities continue to be operated by these local
utilities.
According to the ISO, power plants meeting up to 45,000
megawatts of peak demand are connected to its control area.
This makes the control area the second largest in the U.S.
(the Pennsylvania-New Jersey-Maryland Interconnection, or
"PJM," is the largest) and the fifth largest in the world.
Only France, Japan and England have larger
centrally-dispatched control areas.
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This bill authorizes the Governor, through negotiation with
California's IOUs, to formulate a plan for the state to
purchase the transmission facilities owned by those IOUs.
(The bill clarifies that the electrical corporations
involved are those under the operational control of
Cal-ISO, or its successor agency, as of January 1, 2001.)
The bill requires the Governor to submit the plan to the
Legislature for approval by a majority of the members of
the Assembly and the Senate.
The bill authorizes the Treasurer, upon approval of the
plan by the Legislature, to issue revenue bonds to finance
the state's acquisition of the IOUs transmission facilities
and to finance necessary improvements and expansion of the
facilities.
The bill requires the state to contract with the IOUs for
maintenance, repair, construction, expansion, or
improvement of the transmission facilities purchased by the
state.
The bill specifies that the plan formulated under this bill
shall include provisions for recovery of all General Fund
costs expended in developing the plan.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Unknown, potentially $500,000 one-time cost to the General
Fund.
Senate Appropriations Committee analysis notes the
following:
1.There have been a broad range of acquisition cost
estimates, all in the multibillions.
2.Revenue bond debt and interest could potentially be in
the multibillions.
3.Cost estimates of operations and maintenance of the
transmission grid vary, but are potentially $175 million
annually for PG&E, SCE & SDG&E combined. To the extent
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that the state acquires/operates the transmission
facilities there are potential cost savings to
ratepayers.
4.Gross revenues from the transmission facilities vary but
according to PUC staff are about $750-900 million for
PG&E, SCE, and SDG&E combined.
5.The Cal-ISO currently operates most of the transmission
grid. Cal-ISO's FY 2001 budget is about $220 million,
and it employs about 500 people.
6.Cal-ISO has approved approximately 98 upgrade projects
for 2001-2005 totaling an estimated $805 million.
SUPPORT : (Verified 2/15/01)
Clean Power Campaign
Congress of California Seniors
Gray Panthers of Sacramento
Sierra Club
TURN
UCAN
Foundation for Taxpayer and Consumer Rights
Department of Finance
NC:sl 2/16/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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