BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1055 - Morrow Hearing Date:
June 12, 2001 S
As Amended: May 22, 2001 FISCAL/URGENCY B
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DESCRIPTION
Current law requires the California Public Utilities Commission
(CPUC) to establish priorities for electric and gas service.
The prioritization shall determine which customers and uses
provide the most important public benefits and serve the
greatest public need.
This bill requires the CPUC to determine that any nursing
facility or skilled nursing facility shall have access to
uninterruptible supplies of electricity.
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 both higher prices for the
electricity the state can buy and blackouts when there just
isn't enough electricity to purchase. A report by the North
American Electric Reliability Council, a non-profit electric
industry trade group, estimates California will have 260 hours
of rolling blackouts this summer, though the California
Independent System Operator (ISO) believes that estimate is
high.
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 2,600
essential customers, but because the entire circuit serving the
essential customer is exempt from blackout, about 2.4 million
customers are exempted from blackouts. The result is that 48%
of the load served by PG&E is exempt from blackouts, meaning
when a rolling blackout is called, the remaining 52% of the load
has to bear the inconvenience. The numbers are similar for
Southern California Edison (SCE) and San Diego Gas & Electric
(SDG&E). The CPUC's goal is to keep at least 40% of load
eligible for rotating blackouts. If blackouts occur with some
frequency this summer, it will be increasingly hard to defend as
equitable in the current blackout priority system if customers
find that half (or more) of the customers never get blacked out
simply because they're fortunate enough to share a circuit with
an exempt facility.
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, 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.
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 opened a process to allow
customers to ask to be added to the essential customer list and
it has received over 10,400 requests from cemeteries,
nightclubs, ice cream parlors, hair salons, oil refineries and
thousands of others.
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 were due on June 1.
PG&E has said 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 (MW) 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.
As defined in the Health and Safety Code, a "nursing facility"
is a licensed health facility certified to provide care either
as a skilled health facility in the federal Medicare program or
as a nursing facility in the federal Medicaid program. A
"skilled nursing facility" is a health facility that provides
skilled nursing care and supportive care to patients whose need
access to skilled nursing care on an extended basis. According
to the sponsors, the two types of facilities provide identical
services and the terms are used interchangeably.
There are approximately 1,300 nursing or skilled nursing
facilities in California and they serve 140,000 patients
statewide. Patients may be recovering from serious, invasive
medical procedures or may be in need of specialized medical care
utilizing high-tech medical devices.
Nursing facilities are required by regulation to have an
emergency electrical system to serve all lighting, signals,
alarms, elevators, some heating, ventilation, and air
conditioning equipment, and, optionally, additional equipment
and receptacles (Title 22, California Code of Regulations,
Section 72641). However, these requirements were developed
during a time when blackouts were rare and of uncertain, though
probably extended, duration. Thus, the emergency electrical
system powered devices necessary to accommodate an evacuation of
the facility. The current blackout circumstances are different:
Blackouts will be more frequent and the duration will likely be
about an hour. Rather than being forced - or having a desire -
to evacuate, it's more likely that nursing facilities will wait
out the outage.
The Department of Health Services has issued a memo to all
long-term care health facilities reminding them to expect
rolling blackouts and to use portable fans and other temporary
cooling devices. In Executive Order D-38-01, the Governor
required all utilities, including municipal utilities, to
provide customers with at least one hour of notice prior to
implementing blackouts, including recognition of the safety
considerations for persons in nursing homes.
COMMENTS
1)No Statutory Exemptions From Blackouts . State law delegates
to the CPUC the responsibility for determining who should be
defined as an "essential customer" that is exempted from
rolling blackouts. That list - which the CPUC is considering
expanding - includes police stations, fire stations, prisons,
hospitals, and a number of others. However, none of those
entities or any other entity enjoys a statutory exemption from
rolling blackouts. The author and committee may wish to
consider whether it's appropriate to begin creating statutory
exemptions and if so, whether nursing facilities and skilled
nursing facilities should take priority over police services,
hospitals, and others that are on the CPUC's "essential
customer" list.
2)Request Pending Before CPUC . Nursing facilities and skilled
nursing facilities have generally been subject to rolling
blackouts, even in municipal utility territories such as the
Sacramento Municipal Utility District (SMUD). The nursing
facilities have asked the CPUC for an exemption from rolling
blackouts. The CPUC turned down that request, but opened a
process whereby business customers can petition for a blackout
exemption, which the nursing facilities and thousands of
others have done. Given that, the author and the committee
may wish to consider whether creating a statutory exemption
for one group of customers, regardless of the merits of the
customer's claim, will simply lead other businesses to abandon
the CPUC process and come to the Legislature to seek their own
statutory exemption.
3)Impact of Nursing Home Exemption . The CPUC has asked the
utilities to report on the effect of including nursing
facilities on the essential customer list, including an
estimate on the amount of megawatts that would be removed from
rotating outage and the effect on other, non-exempted
customers. PG&E estimates including skilled nursing
facilities will exempt another 1,200 MW of load from rotating
outages, which would reduce the percentage of customers
subject to blackout from 52% to less than 46%. For SCE,
exempting nursing facilities will exempt 658 MW from rotating
outages, reducing the load available to be blacked out from
54% to 51%.
4)Weighing The Risk In A Vacuum . Whether nursing homes should
be provided a blackout exemption requires a careful weighing
of the risk to human lives and the effect on other customers.
It also requires a comprehensive look at other facilities
where blackout exemption might also be justified. Should
outpatient surgery centers be included? Dentist offices? Oil
refineries? Obviously, the ideal solution is to provide every
customer with reliable service, but that goal simply isn't
possible to meet this summer.
Further, exempting too many customers may make the entire
electric grid unreliable, increasing the likelihood of an
unplanned blackout, which would jeopardize electric service to
any and all customers who have a blackout exemption.
The Legislature doesn't have sufficient information, nor an
appropriate process, to sift through and analyze the
information to comprehensively understand the big picture of
grid reliability and circuitry to determine how much load
should be exempt from blackouts and what that load should
consist of. That process is now happening at the CPUC, which
has the expertise to develop a solution that, in the best of
all possible worlds, will take into account the health and
safety needs of all Californians.
The committee has so far, regardless of the merits that an
individual case may present, declined to create specific
statutory exemptions or to order the CPUC to create such
exemptions. As such, the author and committee may wish to
consider expanding on existing policy by requiring the CPUC to
consider public health and safety effects when it considers
blackout exemptions. This is similar to the approach the
committee took when it passed SB 68XX (Battin), which requires
the CPUC to consider the potential effect of extreme
temperatures on the health and safety of residential customers
when it considers priorities for rolling blackouts.
POSITIONS
Sponsor:
Author
Support:
California Association of Health Facilities
Oppose:
None on file
Randy Chinn
SB 1055 Analysis
Hearing Date: June 12, 2001