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  ****