BILL ANALYSIS                                                                                                                                                                                                              1
          1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                               DEBRA BOWEN, CHAIRWOMAN
          

          SB 68XX -  Battin                                 Hearing Date:   
          May 24, 2001               S
          As Proposed to be Amended               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, as proposed to be amended  , requires the CPUC to  
          consider, when establishing the priorities in a rolling  
          blackout, the effect on the health and safety of customers who  
          live in areas of extreme temperatures.  When looking at  
          additional outage exemptions the CPUC must:

               q      consult with medical experts;
               q      take into account the potential health, safety, and  
                 reliability effects on other customers resulting from  
                 potentially more frequent and longer blackouts;
               q      only provide additional outage exemptions to those  
                 customers when the temperature is extreme; and,










               q      consider whether alternatives to a complete  
                 exemption from rolling blackouts, such as a reduced  
                 outage duration or an outage at a different time of day,  
                 are appropriate.

                                      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  
          one to two 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.































          As proposed to be amended, this bill will require the CPUC to  
          consider, when establishing the priorities in a rolling  
          blackout, the effect on the health and safety of customers who  
          live in areas of extreme temperatures.  When looking at  
          additional outage exemptions the CPUC must:

               q      consult with medical experts;
               q      take into account the potential health, safety, and  
                 reliability effects on other customers resulting from  
                 potentially more frequent and longer blackouts;
               q      only provide additional outage exemptions to those  
                 customers when the temperature is extreme; and,
               q      consider whether alternatives to a complete  
                 exemption from rolling blackouts, such as a reduced  
                 outage duration or an outage at a different time of day,  
                 are appropriate.

           1.CPUC Programs & Responsibilities  .  Ensuring the public's  
            health and safety has consistently been the driving force  
            behind the CPUC's outage exemption program.  

            The CPUC also requires each utility company 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.

            According to SCE, 51% of its load is already exempt from  
            blackouts, meaning when rolling blackouts are ordered, they're  
            rotated among the 49% of the load available to be interrupted.  
             Should the CPUC, pursuant to this bill, choose to exempt  
            customers who live in areas of extreme temperatures from  
            rolling blackouts, that will shrink the pool of load that must  
            endure the blackouts even further, subjecting them to longer  
            and/or more frequent outages.  

            At some point, decisions or mandates to exempt customers from  
            rolling blackouts will conflict with the CPUC regulation  
            requiring utilities to have 40% of their load available to  
            take part in rotating outages.  

            As proposed to be amended, this bill requires the CPUC to  
            consider the health, safety, and reliability effect of  









            granting additional blackout exemptions on remaining  
            customers.

           2.Exemptions or Limitations?   As noted in the "Background"  
            section, the historical and current practice of the utilities  
            is to limit blackouts from 1 to 2 hours.  If the CPUC opts to  
            exempt people in areas over extreme temperature areas 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,  
            for example, 98 degree weather suffering through a five-hour  
            blackout isn't significantly worse off that a person in 110  
            degree weather who is subject to a one-hour blackout (as,  
            absent the CPUC acting as a result of this bill, could occur).  


            As proposed to be amended, this bill requires the CPUC to  
            consult with medical experts  and to consider whether  
            alternatives to a complete exemption from rolling blackouts,  
            such as a reduced outage duration or an outage at a different  
            time of day, are appropriate for these customers.
































           4.Another Benefit For Warm Weather Ratepayers .  The existing  
            baseline program adjusts a customer's baseline allotment -  
            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.

           5.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.                 |
          |------------------------------+------------------------------|
          |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:
           
          Southern California Edison



          Randy Chinn
          SB 68XX Analysis









          Hearing Date:  May 24, 2001