BILL ANALYSIS                                                                                                                                                                                                              1
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                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                               DEBRA BOWEN, CHAIRWOMAN
          

          SB 68XX -  Battin                                 Hearing Date:   
          May 22, 2001               S
          As Introduced: May 17, 2001             FISCAL           B
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                                      DESCRIPTION
           
           Current law  requires the California Public Utilities Commission  
          (CPUC) to establish priorities among the types of customers of  
          every electric and gas corporation, and among the uses of  
          electricity or gas by such customers.  The CPUC must determine  
          which customers and uses provide the most important public  
          benefit and serve the greatest public need, and categorize those  
          customers and uses in descending priority.

           Current law  requires the CPUC, when establishing those  
          priorities, to include at a minimum a determination of:
           
             q    the customers and uses of electricity and gas which  
               provide the most important public benefits and serve the  
               greatest public need;
             q    the economic, social, and other effects of a temporary  
               discontinuance in electricity and gas service to those  
               customers and uses.

           This bill  requires the CPUC to consider as a priority the effect  
          on the health and safety of people in regions of the state that  
          exceed a temperature of 105 degrees.

           This bill  requires the California Independent System Operator  
          (ISO) to consider the effects on the health and safety of people  
          in areas where the temperature reaches or exceeds 105 degrees  
          before ordering rolling blackouts in those areas.

           This bill  finds that a number of illnesses and deaths result  
          from overexposure to heat, and that without electricity, people  











          in hot climates will be potentially exposed to dangerous  
          circumstances that could lead to illness or death.

                                      BACKGROUND
           
          California's electricity crisis manifests itself in at least two  
          ways: extraordinarily high prices and supply shortages.  Supply  
          shortages may be due to withholding of supply by generators and  
          marketers, drought conditions in the Northwest which vastly  
          reduce available imports, and inadequate generation capacity.   
          The consequence of these shortages is blackouts.  The ISO has  
          estimated there will be 55 hours of outages in California this  
          summer, but a report by the North American Electric Reliability  
          Council, a non-profit electric industry trade group, estimates  
          that number to be 260 hours. 







































          As the committee heard at its May 10 hearing on blackout  
          protocols and procedures, the CPUC recently issued a decision  
          revising the list of essential customers who are exempt from  
          blackouts.  That list is a long one, including essential public  
          services such as police, fire, prisons, and national defense  
          installations, hospitals, specified customers who agree to  
          reduce their usage during blackouts, and more.  With the  
          exception of that last group, blackout exemptions are limited to  
          those circumstances where the public health and safety are at  
          risk - exemptions for economic hardship aren't permitted.

          The electric distribution grid is comprised of circuits which  
          generally serve several thousand customers.  When a planned  
          rolling blackout is instituted, power is cut to the entire  
          circuit, so exempting an "essential customer" from blackouts  
          also exempts every other customer on that circuit.  For example,  
          Pacific Gas & Electric (PG&E) has about 1,700 essential  
          customers, but because the entire circuit serving the essential  
          customer is exempt from blackout, about 2 million customers are  
          exempted from blackouts.  The result is that 43% of the load  
          served by PG&E is exempt from blackouts, meaning when a rolling  
          blackout is called, the remaining 57% of the load has to bear  
          the inconvenience.  The numbers are somewhat inverted  for  
          Southern California Edison (SCE) and San Diego Gas & Electric  
          (SDG&E), since statewide, about 50% of the load is exempt from  
          being blacked out.  

          Adding more people or businesses to the blackout exemption list  
          will concentrate the inconvenience on fewer customers for longer  
          periods of time.  Historic and current utility practice is to  
          limit rotating blackouts to one to two hours.  The utility shuts  
          down a particular circuit for a maximum of one hour, but at the  
          customer end, that shutdown means the power is actually out for  
          1.5 to 2 hours. 

          The CPUC has asked the utilities for suggestions to reduce the  
          number of "free riders" (non-essential customers who are  
          exempted from blackouts solely because they happen to be located  
          on the same circuit as an essential customer) so blackouts can  
          be more equitably spread.  Those reports are due on June 1.  The  
          CPUC is also opening a proceeding to allow customers to ask to  
          be added to the essential customer list.

          PG&E recently stated it may be able to do some amount of circuit  










          shifting (which doesn't require any capital outlay) that could  
          add up to 300 megawatts worth of load to the "eligible to be  
          blacked out" list by June 15.  However, according to PG&E, any  
          reconstruction of circuits to completely eliminate "free riders"  
          could take six to eight months.

                                       COMMENTS
           
           1.Exposure To Extreme Heat Raises Health and Safety Concerns  .   
            Overexposure to heat can cause illness and death.  A 1996  
            report by the National Oceanic and Atmospheric Administration  
            noted that in a normal year, 175 Americans die from  
            overexposure.  

            A 1995 heat wave in Chicago killed 465 people and the year  
            before, a Coachella Valley resident died from heat exposure.   
            However, it must be noted that these deaths occurred from  
            prolonged exposure to heat.  In the Coachella Valley case, the  
            women died because SCE disconnected her service, not because  
            she was forced to endure a planned rolling blackout.  Since  
            then, SCE has revised its service disconnection procedures and  
            the Legislature has passed AB 3X (Wright), which is pending on  
            the Governor's desk, to make it more difficult for utilities  
            to disconnect electric customers.






























           2.What Areas Of California Are Covered?   The bill refers to  
            people living in zones or regions where the temperature  
            exceeds 105 degrees.  On a given summer day, this could  
            encompass the entire Sacramento and San Joaquin Valley, from  
            Redding to Fresno and Vacaville to Folsom, as well as San  
            Bernardino, Riverside, and Imperial  counties.  At times,  
            parts of the San Francisco Bay Area, greater Los Angeles, and  
            San Diego County may also hit 105 degrees.  Should the CPUC  
            opt to exempt these people and businesses (which, in some  
            areas, could mean exempting the entire city and/or county)  
            from blackouts, that would leave even fewer customers in the  
            rest of the state to bear the brunt of blackouts.  

           3.When And Where Does The Blackout Exemption Begin And End?    
            Unclear is whether the 105 degree figure in the bill is  
            intended to apply to an annual average temperature, a seasonal  
            average temperature, a daily average temperature, or a moment  
            in time.  Assuming it's the latter, does that mean the ISO (if  
            the CPUC acted under this bill to exempt people in these areas  
            from blackouts) is permitted to begin a rolling blackout in an  
            area where the temperature is up to 104 degrees, yet must  
            terminate it if the temperature hits 105?  Conversely, if the  
            temperature is over 105 degrees and then dips to 104 degrees  
            or lower, is the ISO free to begin a rotating blackout in the  
            area?  Or does hitting 105 degrees exempt an area from  
            blackouts for the remainder of the summer?

            Also, just as air pollution doesn't obey city boundary lines,  
            warm weather doesn't abide by utility circuit configurations.   
            So, while it may be 105 where the official city temperature  
            reading is taken, it may be cooler (or warmer) in other parts  
            of a particular city or region.  Exempting everyone on a given  
            circuit where the temperature is 105 degrees results in more  
            "free rider" exemptions, thus increasing the frequency and/or  
            duration of blackouts in other parts of the state.

           4.Why 105 Degrees?   While 105 degrees is undeniably hot, it's  
            unclear why it's an appropriate benchmark instead of 100  
            degrees or 110 degrees.  More importantly is the question of  
            shifting the health and safety impacts of rolling blackouts,  
            because no matter where the temperature line is drawn, those  
            people under the line will be adversely affected by more  
            blackouts and/or longer blackouts.  











            As noted in the "Background" section, the historical and  
            current practice of the utilities is to limit blackouts to 1.5  
            to 2 hours.  If the CPUC opts to exempt people in areas over  
            105 degrees from blackouts as a result of this bill, it means  
            the utilities have fewer customers to rotate blackouts among,  
            so either the duration or the number of blackouts has to  
            increase.  If it's the duration, the question arises as to  
            whether a person in 103 degree weather suffering through a  
            four-hour blackout isn't significantly worse off that a person  
            in 105 degree weather who is subject to a two-hour blackout  
            (as, absent the CPUC acting as a result of this bill, could  
            occur).  
           
           5.Another Benefit For Warm Weather Ratepayers  .  The existing  
            baseline program adjusts a customer's baseline - and, by  
            extension, the amount of money a customer spends on  
            electricity - by climate zone.  Those people in the warm areas  
            of the state have a higher baseline, meaning they have access  
            to more low-priced electricity than people and businesses in  
            temperate areas, and the people in the temperate areas are, to  
            a certain extent, subsidizing that benefit.  This bill, by  
            encouraging the CPUC to exempt many of those same warm weather  
            customers from blackouts, creates an additional subsidy for  
            those areas.






























           6.Additional ISO Responsibilities  .  The ISO is responsible for  
            the overall integrity of the electrical grid.  When it calls  
            for a rotating blackout, it notifies the utilities of the  
            duration and the amount of electrical load that must be shed.   
            The utilities, using the criteria established by the CPUC,  
            then implements the blackout, but the ISO doesn't identify  
            specific areas to be blacked out, except where transmission  
            constraints dictate.  

            To require the ISO to factor in health and safety effects in  
            particular areas is a new duty which will complicate the ISO's  
            already substantial responsibility.  Furthermore, the ISO  
            isn't a public entity and therefore has no public process for  
            rendering the judgments it would be required to make under  
            this bill (i.e. what areas of the state have temperatures over  
            105 and what is the potential harm to customers in hot areas  
            from a power outage).  To the extent there's a desire to  
            factor in the health and safety effects of a blackout, that  
            process should occur at the CPUC.  Therefore,  the author and  
            committee may wish to consider  deleting this section of the  
            bill.

           7.CPUC Programs & Responsibilities  .  Ensuring the public's  
            health and safety has consistently been the driving force  
            behind the CPUC's outage exemption program, but all of those  
            exemptions are weighed against the impact they would have on  
            non-exempt customers.  

            The CPUC also requires Participating Transmission Owners and  
            Utility Distribution Companies to have 40% of their load  
            available for rotating outages.  Right now, only about 50% of  
            the total statewide load is available for rotating outages.   
            Any increase in the number of people or groups that are exempt  
            from outages - and the free riders that come with those  
            exemptions - will drop the amount of load available for  
            rotating outages.

            Rather than decide the issue in this bill without sufficient  
            evidence to quantify the health and safety impacts, if any, of  
            a rolling blackout, and without knowing the impact of more  
            blackout exemptions on all the other electric customers in the  
            state,  the author and committee may wish to consider  simply  
            instructing the CPUC to consider the effect of rolling  
            blackouts on the health and safety of customers living in  










            areas of extreme temperatures, balancing that impact against  
            the potential detriments of additional and longer blackouts to  
            other customers.

           8.Related Legislation  .  AB 30XX (Dutra), formerly AB 57X  
            (Durtra), proposes to put oil refineries and pipelines "last  
            in line" on the rotating blackout list.

                                       POSITIONS
           
           Sponsor:
           
          Author

           Support:
           
           ------------------------------------------------------------- 
          |Ace Printing Company          |Ageless Reflection, Inc.      |
          |------------------------------+------------------------------|
          |American Leak Detection       |Best, Best & Krieger LLP      |
          |------------------------------+------------------------------|
          |Burtronics Business Systems   |CB Richard Ellis              |
          |------------------------------+------------------------------|
          |California State University   |Castello Cities Internet      |
          |                              |Network, Inc.                 |
          |------------------------------+------------------------------|
          |Support (continued):          |                              |
          |                              |                              |
          |------------------------------+------------------------------|
          |City of Blythe                |City of Palm Springs          |
          |------------------------------+------------------------------|
          |City of Rancho Mirage         |CLK, Inc./CLK New-Star        |
          |------------------------------+------------------------------|
          |Coachella Valley Economic     |Coachella Valley Water        |
          |Partnership                   |District                      |
          |------------------------------+------------------------------|
          |Coldwell Banker: Sandpiper    |County of Riverside           |
          |Realty                        |                              |
          |------------------------------+------------------------------|
          |Del Webb's Sun City Palm      |Desert Business Machines      |
          |Desert                        |                              |
          |------------------------------+------------------------------|
          |Desert Challenge              |Desert Healthcare District    |
          |Merchandising Company         |                              |










          |------------------------------+------------------------------|
          |Desert Springs Marriott       |Digital Internet Services     |
          |                              |Corporation                   |
          |------------------------------+------------------------------|
          |Eisenhower Memorial Hospital  |First Community Bank          |
          |------------------------------+------------------------------|
          |Guy Evans, Inc.               |Korek Land Company, Inc.      |
          |------------------------------+------------------------------|
          |KMIR 6                        |Lyle Commercial               |
          |------------------------------+------------------------------|
          |Martin Communications         |Mission Springs Water         |
          |                              |District                      |
          |------------------------------+------------------------------|
          |Mizell Senior Center          |O'Connor Realty               |
          |------------------------------+------------------------------|
          |Oliphant Enterprises, Inc.    |Palm Springs View Estates     |
          |------------------------------+------------------------------|
          |Prorealty & Investments       |RBF Consulting                |
          |------------------------------+------------------------------|
          |Rancho Las Palmas Marriott    |Selzer, Ealy, Hemphill &      |
          |                              |Blasdel, LLP                  |
          |------------------------------+------------------------------|
          |Shelter from the Storm        |Spherion                      |
          |------------------------------+------------------------------|
          |Tenet Health System           |Time Warner Cable             |
          |------------------------------+------------------------------|
          |Wilson Johnson Desert Empire  |Waste Management              |
          |Specialists                   |                              |
          |------------------------------+------------------------------|
          |Over 300 Individuals          |                              |
           ------------------------------------------------------------- 

           Oppose:
           
          None on file


























          


          Randy Chinn
          SB 68XX Analysis
          Hearing Date:  May 22, 2001