BILL ANALYSIS
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THIRD READING
Bill No: SB 86XX
Author: Peace (D) & Burton (D)
Amended: 8/28/01
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 8-3, 7/10/01
AYES: Bowen, Alarcon, Dunn, Murray, Sher, Speier,
Vasconcellos, Vincent
NOES: Morrow, Battin, Poochigian
SENATE APPROPRIATIONS COMMITTEE : 8-3, 8/20/01
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Murray,
Perata, Speier
NOES: Battin, McPherson, Poochigian
SUBJECT : Powerplant facility and site certification
SOURCE : Author
DIGEST : This bill makes changes to statutes relating to
power plan construction and certification by the California
Energy Commission.
ANALYSIS : 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 conditions 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
CONTINUED
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total).
SB 6X (Burton), Chapter 10, Statutes of 2001, authorized
the creation of the California Consumer Power and
Conservation Financing Authority (Power Authority) to
ensure an adequate and reliable electricity supply. The
Power Authority is authorized to, among other things,
establish, acquire, finance, operate, and construct power
plants. The Power Authority is in the process of being
established.
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
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 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."
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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-25-1, 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 begin construction within six
months of approval. An additional eight projects were
approved, but never built.
According to the author's office, 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 is
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 is
important that the state ensure that the process through
which it licenses power plants is not vulnerable to private
speculative objectives that have no corresponding public
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benefit.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Major Provisions 2001-02 2002-03
2003-04 Fund
CEC Probably
minor costs. General*
Power Authority Potential cost pressures (see
comments Special*
below).
*California Consumer Power and Conservation Financing
Authority Fund
To the extent that the Power Authority elects to pursue a
project that it would not have otherwise, there are
potentially significant construction pressures. The cost
of constructing a 500-megawatt power plant is approximately
$250 million. Presumably, such costs would ultimately be
recovered through rates or sale of the plant.
NC:cm 8/28/01 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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