BILL ANALYSIS 1 1 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 X 2 6 8 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