BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Tom Torlakson, Chair
BILL NO: SB 1755 HEARING: 4/24/02
AUTHOR: Soto FISCAL: No
VERSION: 2/21/02 CONSULTANT: Detwiler
ELECTRICITY SERVICE BY SPECIAL DISTRICTS
Background and Existing Law
Counties can build and run hydroelectric and wind energy
generating facilities and transmission lines but counties
cannot sell power at retail.
State law allows eight kinds of special districts to
generate or provide electricity:
California Water DistrictsMunicipal Water Districts
Community Services DistrictsPublic Utility Districts
Irrigation Districts Resort Improvement Districts
Municipal Utility DistrictsWater Conservation
Districts
Municipal Water Districts can acquire, build, and run
plants that generate hydroelectric power and related
facilities. Municipal Water Districts can sell their
hydroelectric power to federal agencies, to the state water
project, to local governments, and to private corporations
which sell electricity at retail, or they can use the power
for their own purposes. Using the 1977 statute, five of
the 40 Municipal Water Districts use hydropower to generate
electricity.
County Water Districts can build and run plants that
generate hydroelectric power and transmission lines.
County Water Districts can use the power for their own
purposes but it can't be sold to customers except for
public utilities or public agencies. County Water
Districts cannot use their eminent domain powers to acquire
public utilities' existing hydroelectric power plants,
unless the owner agrees. Although the Legislature granted
this power in 1981, none of the 173 County Water Districts
generate hydroelectric power.
Worried about the reliability of energy supplies purchased
from private corporations, Municipal Water Districts and
County Water Districts in Los Angeles and San Bernardino
SB 1755 -- 2/21/02 -- Page 2
Counties want to get into the wholesale power business.
Some of these districts may use the biogas produced by
their sewage treatment plants to fuel turbines that would
generate electricity. Others may buy natural gas to fuel
their planned turbines.
SB 1755 -- 2/21/02 -- Page 3
Proposed Law
Senate Bill 1755 allows County Water Districts and
Municipal Water Districts to provide electric power by
building and running powerplants and transmission lines.
SB 1755 allows the districts to lease their powerplants and
transmission lines to public agencies and private entities
that distribute or sell electricity. The bill also allows
the districts to use the power for their own purposes.
SB 1755 does not allow the districts to sell electricity at
retail. The bill also prohibits the districts from
acquiring public or private property that is used to
generate or deliver electric power, unless the owner
agrees.
Comments
1. More power to the people . Last year's poor performance
by private utility companies worries special districts in
Los Angeles and San Bernardino Counties. Rate increases
and power interruptions make it hard for district officials
to run their water and sewer systems. Some of these
districts could generate their own electricity by using the
biogas from their sewage treatment plans as fuel for
turbines. Other, more entrepreneurial districts want to
buy natural gas to fuel turbines that generate electricity.
No matter what fuel they use, the districts want to use
the resulting electricity to run their operations and then
sell the surplus at wholesale.
2. Self-reliant or entrepreneurs ? Current law lets water
districts use the hydraulic force of the water they deliver
to generate electricity. That's not much different than
allowing districts to use the biogas from their sewer
plants to fuel turbines that generate electricity. In both
settings electricity is the secondary product of the
districts' primary purpose. But SB 1755 does not limit the
districts to using just biogas to achieve energy
self-reliance. The bill allows Municipal Water Districts
and County Water Districts to become wholesale power
producers, regardless of the fuel. The Committee may wish
to consider whether legislators should encourage more
special districts to become wholesale power producers.
Should the bill limit these districts to using biogas as a
SB 1755 -- 2/21/02 -- Page 4
fuel?
3. Demand and supply . None of the 173 County Water
Districts uses the 1981 statute to generate hydroelectric
power. Just five of the 40 Municipal Water Districts
generate electricity with hydropower. The Committee may
wish to consider amending SB 1755 so that it applies just
to the four special districts that want to be wholesale
electricity producers: the Inland Empire Utilities District
(a Municipal Water District in San Bernardino County), the
Cucamonga County Water District (San Bernardino County),
Central Basin Municipal Water District (Los Angeles
County), and West Basin Municipal Water District (Los
Angeles County). If these four districts perform well,
then legislators could expand the authorization in the
future.
4. Checks and balances . SB 1755 does not give Municipal
Water Districts and County Water Districts complete freedom
to leap into the electricity business. As special
districts, they must first get the approval of the local
agency formation commission (LAFCO) before they can
activate this new latent power. Further, they won't be
able to sell electricity directly to retail customers.
And, they can't use their eminent domain powers to acquire
electricity generating facilities or transmission
facilities, unless the current owners agree.
5. Back to Rules . The Senate Rules Committee has ordered
the double-referral of SB 1755. After the Committee on
Local Government, the bill must go back to the Rules
Committee which may re-refer SB 1755 to another policy
committee.
Support and Opposition (4/18/)
Support : Central Basin Municipal Water District, Chino
Basin Watermaster, Cucamonga County Water District, Inland
Empire Utilities District, Southern California Water
Company, West Basin Municipal Water District.
Opposition : Unknown.