BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1055|
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THIRD READING
Bill No: SB 1055
Author: Morrow (R)
Amended: 6/19/01
Vote: 27 - Urgency
SENATE ENERGY, U.&C. COMMITTEE : 9-0, 6/12/01
AYES: Bowen, Morrow, Alarcon, Battin, Murray, Sher,
Speier, Vasconcellos, Vincent
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Public Utilities Commission: customer
priorities
SOURCE : California Association of Health Facilities
DIGEST : This bill requires the California Public
Utilities Commission (CPUC) to establish priorities
relative to public health and safety in the usage of
electricity and gas.
ANALYSIS : Existing law requires CPUC to establish
priorities among the types or categories of customers of
every electrical corporation and every gas corporation, and
among the uses of electricity or gas by those customers.
In establishing those priorities, the commission is
required, among other things, to identify those customers
and uses that provide the most important public benefits
and serve the greatest public need in descending order of
priority.
CONTINUED
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This bill would require the commission to also include as a
consideration when establishing these priorities a
determination of unacceptable jeopardy or imminent danger
to public health and safety that creates substantial
likelihood of severe health risk requiring medical
attention. The bill would also require the commission to
consider the effect of providing a high priority to some
customers on nonpriority customers.
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
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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 Senate Energy, Utilities and Communications
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
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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
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recognition of the safety considerations for persons in
nursing homes.
Comments
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%.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/11/01)
California Association of Health Facilities (source)
ARGUMENTS IN SUPPORT : California's more than 1,200 state
nursing facilities (SNFs) care for the most medically
fragile of the state's population. In recent years there
has been a dramatic increase in the acuity levels of
patients in nursing homes. With an emphasis on lowering
the overall costs of health care, sicker patients are being
discharged earlier from hospitals to SNFs with increasingly
complex and difficult care needs. Also, nursing homes are
caring for more short-stay residents - categories of
patients that only a few years ago would have been in
hospitals. The average age of residents in a SNF is 85
years old. It is common for these higher acuity residents
to be dependent on oxygen tanks, feeding tubes, drip IVs,
dialysis machines, electric therapeutic beds, and
ventilators, and to be recovering from serious medical
procedures such as a hip replacement, tracheotomy, or organ
transplant.
The health and well-being of these elderly and disabled
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residents depends greatly on the facility's ability to
provide quality care in a safe, low stress environment,
which depends on temperature control, lighting, infection
control and the use of high-tech medical equipment.
Because of the fragile nature of the patient population, an
interruption in power in a SNF can result in serious injury
and/or death.
NC:sl 7/11/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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