BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 86XX - Peace Hearing Date:
July 10, 2001 S
As Introduced: June 12, 2001 FISCAL B
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DESCRIPTION
Under existing law , the California Energy Commission (CEC) may
amend the conditions or revoke certification of a power plant
for a material false statement in the application, significant
failure to comply with the terms or condition of approval, or a
violation of the Warren-Alquist Act. The CEC may impose civil
penalties for false statements or failure to comply of $50,000
per violation plus $1,000 per day up to $25,000 ($75,000 total).
This bill :
1.Increases penalties for false statements or failure to comply
to $75,000 per violation plus $1,500 per day up to $50,000
($125,000 total).
2.Requires a project owner to commence power plant construction
within six months of CEC certification.
3.Authorizes the CEC to revoke its certification or impose
penalties if a project owner fails to meet construction
milestones without demonstrating good cause.
4.Requires the CEC to revoke its certification if a project
owner fails to commence power plant construction within six
months without demonstrating good cause.
5.Requires the CEC to transfer the certification to the
California Consumer Power and Conservation Financing Authority
(Power Authority) if the Power Authority elects to pursue the
project itself.
6.Authorizes the CEC and the Power Authority to adopt emergency
regulations to implement the bill.
BACKGROUND
Under the Warren-Alquist Act, the California Energy Commission
(CEC) has exclusive authority to permit thermal power plants 50
megawatts and larger. The Act provides for comprehensive review
and authorizes the CEC to override other state, local or
regional decisions and certify a power plant it determines is
required for "public convenience and necessity."
The construction of the CEC's power plant siting process strikes
a balance between project applicants' interest in certainty and
the public's interest in environmental protection and prudent
planning of generation resources. In approving a proposed power
plant, the CEC must find that the facility's construction and
operation is consistent with a variety of environmental and
electrical standards.
CEC review of a proposed power plant relates mostly to project
design and the impact of a proposed project. Once a project is
approved, the CEC generally doesn't have continuing regulatory
authority over its construction or operation. The CEC is
authorized to revoke certification of an approved power plant
under certain conditions, although it has not previously done
this.
Executive Order D-25-01, issued by the Governor on February 8,
requires the CEC to establish specific performance milestones
for both initiation of construction within one year of
certification, and for the construction phase of the project.
Under D-25-01, failure to begin construction by the deadline or
failure to perform in accordance with the milestones without
prior approval by the CEC based on a showing of good cause
constitutes a forfeiture of the certification. D-25-01 expires
December 21, 2001.
This bill requires the CEC to revoke its certification if a
project owner fails to begin construction within six months ,
without a demonstration of good cause. According to the CEC, 11
of 35 projects approved and constructed between 1975 and 1996
did not start construction within six months of approval. An
additional eight projects were approved, but never built.
According to the author, an issued license both permits and
obligates the licensee to construct the plant as proposed.
However, to the extent that the licensee can choose not to
exercise the privilege to construct that's embedded in the
license, the state will have invested public resources to
further only a private speculative purpose with no corresponding
public benefit. Thus, it's important that the state ensure that
the process through which it licenses power plants isn't
vulnerable to private speculative objectives that have no
corresponding public benefit.
COMMENTS
1)Will six months always be appropriate? Historically, many
power plants have not started construction within six months
of CEC approval. A six-month deadline may be appropriate for
the typical project, particularly in the current environment
of supply constraints. However, it is possible that a longer
construction timeline may be appropriate under certain
conditions in the future. The author and the committee may
wish to consider whether this bill should authorize the CEC to
adopt an alternative timeline if it's clear prior to approval
that the project will not meet a six-month deadline.
2)Technical amendment. On page 5, lines 2 and 12,
"Conservation" should be inserted after "and".
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
Sempra Energy
Lawrence Lingbloom
SB 86XX Analysis
Hearing Date: July 10, 2001