BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1143| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 1143 Author: Bowen (D) Amended: 6/4/01 Vote: 21 SENATE ENERGY, U.&C. COMMITTEE : 7-0, 4/24/01 AYES: Bowen, Morrow, Alarcon, Battin, Murray, Speier, Vincent SENATE APPROPRIATIONS COMMITTEE : 13-0, 5/31/01 AYES: Alpert, Battin, Bowen, Burton, Escutia, Johannessen, Johnson, Karnette, McPherson, Murray, Perata, Poochigian, Speier SUBJECT : Energy SOURCE : Author DIGEST : This bill requires the California Energy Commission to (1) submit to the Legislature an assessment of the states need for additional energy resources, as specified, and (2) prepare a plan to increase renewable generation to 15% of the state's total generation by 2006 and to 20% by 2010. ANALYSIS : The Warren-Alquist Act (Act) established integrated planning and siting processes intended to guard against under or overbuilding of power plants. The Act required the California Energy Commission to develop long-term forecasts of state energy needs, which served as the basis for planning and certification of individual CONTINUED SB 1143 Page 2 power plants. These forecasts were known as the Integrated Assessment of Need. Since the advent of electrical restructuring, the planning and siting functions have been de-coupled. In recent years, between 11 and 12 percent of the electricity sold in California has come from renewable resources, such as biomass, geothermal, small hydroelectric, solar and wind. Geothermal is the biggest contributor to existing renewable resources, providing about five percent of the state's electricity. This bill requires the CEC to submit to the Legislature and the Governor an assessment of the need for new energy resources. The first assessment is due December 31, 2002, and annually thereafter. This bill also requires the CEC to prepare a plan to increase renewable generation to 15 percent of the state's total generation by 2006, and 20 percent by 2010. The bill specifies that the assessment is to be done with existing resources. Comments Link to SB 110 . SB 110 (Peace), Chapter 581, Statutes of 1999, eliminated the requirement that proposed power plants comply with the CEC's integrated assessment of need, and repealed the assessment of need itself. This bill reestablishes the assessment of need as it relates to electrical generation resources, but it would not make CEC siting decisions contingent on conformance with the assessment of need. While an evaluation of overall energy needs may not be needed as a benchmark upon which to judge proposed power plants which rely on private capital, it may be useful to ensure a wise investment of public dollars in projects financed by a public power authority. According to the author's office, this is one of the primary arguments in favor of restoring a pro-active assessment of generation needs. SB 1143 Page 3 Significant Expansions, All Natural Gas . For many years, every major power plant proposed in California has been fueled by natural gas. Some attribute the severity of the current energy crisis to an over-reliance on natural gas. If the trend in private development of power plants continues as expected, the state's reliance on natural gas will increase in the coming years. Given this trend, the renewable share of total generation, currently hovering around 12 percent, may decrease. This may make it harder to achieve the 15 and 20 percent renewable levels called for in the bill. However, relative scarcity, and high prices, of natural gas may make it more important to achieve greater diversity in generation resources. Existing Renewables Faltering . Much of the existing, and potential for future, renewable generation is from biomass, solar and wind resources. Existing projects powered by these sources are typically non-utility Qualifying Facilities (QFs). Many of these QFs have shut down in recent months due to the failure of the state's insolvent investor-owned utilities to pay them. The expanded investment in renewable resources contemplated by this bill relies on first ensuring that existing investments are returned to financial health. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 5/31/01) Clean Power Campaign NC:cm 6/4/01 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****