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