BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1269 - Peace Hearing Date:
May 14, 2002 S
As Amended: May 9, 2002 FISCAL B
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DESCRIPTION
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 condition 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
total).
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 12 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.Authorizes the CEC to extend the start of construction an
additional 12 months if the project owner reimburses the CEC
for its costs of licensing the project.
5.Authorizes the CEC to transfer the certification to the
California Consumer Power and Conservation Financing Authority
(Power Authority) if the Power Authority elects to pursue the
project itself. In this case, the Power authority is required
to reimburse the original certificate holder for its costs
associated with permitting the project.
6.Allows a project owner to sell its license, which would reset
the 12-month deadline for the new project owner.
7.Authorizes the CEC and the Power Authority to adopt emergency
regulations to implement the bill.
8.Modifications to, or replacement of, existing power plants, as
well qualifying facilities and self-generation projects, are
exempt from the bill.
BACKGROUND
Under the Warren-Alquist Act, the California Energy Commission
(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."
The CEC's power plant siting process is designed to strike 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 the 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,
2001, 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-25-01, 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 expired
December 21, 2001.
This bill generally requires the CEC to revoke its
certification, or impose other unspecified penalties, if a
project owner fails to begin construction within 12 months,
without a demonstration of good cause. This requirement is
subject to numerous exceptions and exemptions.
According to the author, 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's 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's important that the state ensure the
process through which it licenses power plants isn't vulnerable
to private speculative objectives that have no corresponding
public benefit.
COMMENTS
This bill is similar to SB 86XX (Peace), which was approved by
this committee on July 10, 2001, had been pending in the
Assembly Energy Costs and Availability Committee, and has now
died due to the adjournment of the Second Extraordinary Session.
This bill differs from SB 86XX in the following respects:
1.The deadline for commencement of construction has been
extended from six months to 12 months.
2.Project owners may "buy" an additional 12 months by
reimbursing the CEC for its costs of licensing the project.
3.Sale of a license prior to its "expiration" would trigger a
new 12-month deadline for the new project owner.
4.Modifications to, or replacement of, existing power plants, as
well qualifying facilities and self-generation projects, are
exempt from the bill.
These changes likely would make enforcement of a 12-month "use
it or lose it" deadline the exception, rather than the rule,
and would seem to diminish the original bill's objective of
preventing the CEC's siting process from being used for
speculative purposes.
For example, a project owner could earn an additional 12 months
by selling its license to an affiliate, who in turn could earn
another 12 months by selling it back. Or an applicant seeking
to construct a 500 megawatt power plant could qualify the
project for exemption from the bill as a "replacement" by
decommissioning an existing 50 megawatt power plant. Given that
the bill grants the CEC broad discretion to issue extensions
upon a showing of good cause, or impose penalties short of
license revocation, the author and the committee may wish to
consider whether these additional specific exceptions are
necessary or desirable.
This bill authorizes the CEC and the Power Authority to adopt
emergency regulations to implement the bill. The author and the
committee may wish to consider whether this approach, which
exempts the regulations from Office of Administrative Law
review, is justified.
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None on file
Lawrence Lingbloom
SB 1269 Analysis
Hearing Date: May 14, 2002