BILL ANALYSIS                                                                                                                                                                                                                   1
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             SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                            DEBRA BOWEN, CHAIRWOMAN
          

          SB 1389 -  Bowen and Sher                               
          Hearing Date:  April 23, 2002        S
          As Amended: April 18, 2002              FISCAL           B

                                                                       
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                                   DESCRIPTION
           
          Under  existing law  (Chapter 4 of the Warren-Alquist Act),  
          the California Energy Commission (CEC) has various energy  
          planning and forecasting duties, including the preparation  
          of periodic reports on electricity and natural gas demand,  
          energy efficiency, renewable technologies, public interest  
          energy research, climate change, environmental performance  
          of power plants, and the use, availability and price of  
          transportation fuels.

           This bill  consolidates and updates the various planning and  
          forecasting reports into a single, biennial Integrated  
          Energy Policy Report, consisting of three volumes:

          1.Electricity and natural gas markets.
          2.Transportation fuels, technologies and infrastructure.
          3.Public interest energy strategies.

           This bill  repeals obsolete or duplicative reports regarding  
          alternative fuel vehicle infrastructure, energy  
          conservation and energy technology development.

           This bill  establishes processes for the CEC to collect data  
          from energy market participants to support its planning and  
          forecasting duties, to maintain the confidentiality of  
          data, and to impose penalties for noncompliance.












                                         BACKGROUND
                
               In 1974, the Warren-Alquist Act established the CEC and  
               required it to develop long-term forecasts of state energy  
               needs, which formerly served as the basis for the planning  
               and certification of individual power plants.  Since the  
               advent of electrical restructuring, the link between the  
               CEC's planning and siting functions has been severed.

               The Act gives the CEC broad authority to undertake a  
               continuing assessment of trends in the consumption and  
               supply of electricity and other forms of energy and to  
               analyze the social, economic, and environmental  
               consequences of these trends.  The CEC is also required to  
               prepare several policy reports on a biennial cycle,  
               including the Biennial Report, Electricity Report, Fuels  
               Report, Energy Efficiency Report, and Energy Development  
               Report. 
               Circumstances in energy markets have changed dramatically  
               since original passage of the Act, but the Act itself  
               hasn't been updated to reflect these changes.  As a  
               consequence, the existing planning and forecasting  
               requirements are not well suited to support analysis of  
               current energy issues.

               For example, the CEC is required to conduct its forecasting  
               and assessment of the electricity industry in the context  
               of the Electricity Report (ER), which is based on forecasts  
               submitted by the investor-owned utilities (IOUs).  One of  
               the primary purposes of the ER was to assess the need for  
               new generating facilities (the Integrated Assessment of  
               Need).  The ER established policies and criteria for  
               determining whether power plant applications before the CEC  
               were in conformance with that assessment of need.  SB 110  
               (Peace), Chapter 581, Statutes of 1999, eliminated the  
               requirement that every power plant licensing decision  
               determine that the need for the facility conformed to the  
               CEC's integrated assessment of need. 

               While the role of IOUs has diminished in the restructured  
               market, the current data collection provisions remain  
               targeted solely at IOUs.  This fails to provide for data  
               collection from new participants in the electricity market,  










          such as merchant generators, wholesale marketers and energy  
          service providers.  According to the CEC, it is in the  
          process of revising its data collection regulations to  
          bring them into conformance with changes in the  
          restructured market.  However, statutory revisions are  
          needed to eliminate obsolete data collection authority and  
          clarify the CEC's authority to collect necessary data from  
          new market participants.  In addition, revisions are  
          necessary to ensure that new data collection regulations  
          can adequately be enforced and to ensure the CEC is able to  
          provide appropriate confidentiality protections to protect  
          customer privacy and commercially sensitive data. 
          
          The purpose of this bill is to consolidate the CEC's  
          reporting requirements into one timely, integrated report,  
          to require the reporting of the energy data necessary to  
          support this report from new market participants, and to  
          develop and maintain the capability to produce the required  
          analyses.
          
                                     COMMENTS
          
           1.Data collection.   In addition to consolidating and  
            updating existing CEC reports, this bill specifies the  
            CEC's authority to collect data from energy market  
            participants to support its planning and forecasting  
            duties (Proposed Section 25320 on Pages 9-11).  These  
            provisions are intended to be consistent with regulations  
            recently adopted by the CEC pursuant to its existing data  
            collection authority.

            Some market participants have expressed concerns that the  
            data collection provisions may expand the CEC's authority  
            to collect data it isn't currently allowed to collect.   
            According to the author, these provisions simply define a  
            process for data collection that is consistent with  
            existing CEC practice and does not amount to an expansion  
            of CEC authority.

            Another concern is that Section 25320, which requires the  
            CEC to adopt a data collection system, will compel the  
            CEC to start a new data collection rulemaking from  
            scratch when it has recently adopted data collection  
            regulations which are sufficient to support the reporting  










                 requirements of this bill.  The April 18th amendments to  
                 the bill are intended to eliminate these concerns.

                2.Generation vs. conservation.   This bill carries over a  
                 provision in existing law which prevents the CEC from  
                 considering conservation, load management or other demand  
                 reducing measures as alternatives to a proposed facility  
                 during the siting process (Proposed Section 25521.5 on  
                 Page 14, existing Section 25305(c)).  This provision  
                 dates to the time when certification of power plants was  
                 dependent on conformance with the CEC's needs assessment,  
                 which took conservation measures into account  prior  to  
                 determining the need for additional power plants.  Since  
                 siting decisions are no longer contingent on the needs  
                 assessment, the basis for excluding consideration of  
                 conservation measures as an alternative to a proposed  
                 power plant in the siting process is uncertain.   The  
                 author and the committee may wish to consider  whether  
                 this provision of existing law is still justified and  
                 whether it should be maintained. 

                3.Double referral.   This bill has been referred to this  
                 committee and the Rules Committee. 

                                         POSITIONS
                
                Sponsor:
                
               Author

                Support:
                
               California Energy Commission
               Independent Energy Producers Association
               Office of Ratepayer Advocates
                
               Oppose:
                
               Western States Petroleum Association

















          
          Lawrence Lingbloom 
          SB 1389 Analysis
          Hearing Date:  April 23, 2002