BILL ANALYSIS
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THIRD READING
Bill No: SB 1755
Author: Soto (D), et al
Amended: 5/20/02
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 6-0, 4/24/02
AYES: Torlakson, Ackerman, Machado, Margett, Perata, Soto
SENATE ENERGY, U.&C. COMMITTEE : 5-0, 5/14/02
AYES: Bowen, Morrow, Battin, Dunn, Sher
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/20/02
AYES: Alpert, Battin, Burton, Johannessen, McPherson,
Perata, Speier
SUBJECT : Electricity service by special districts
SOURCE : Central Basin Municipal Water District
Cucamonga County Water District
Inland Empire Utilities District
West Basin Municipal Water District
DIGEST : This bill authorizes municipal utility districts
and county water districts to own and operate electric
power plants, and to use the power for their own purposes
or sell it wholesale.
ANALYSIS : Counties can build and run hydroelectric and
wind energy generating facilities and transmission lines
but counties cannot sell power at retail.
CONTINUED
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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
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.
This bill allows County Water Districts and Municipal Water
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Districts to provide, generate, and deliver electric power,
and to construct, operate, and maintain works, facilities,
improvements, and property for that generation and
delivery.
This bill prohibits those districts from acquiring property
employed in the generation or delivery of electric power,
except by mutual agreement between the district and the
property owner. If a district elects to provide for its
own power, this bill sets forth the formula for
reimbursement to the Department of Water Resources and the
electrical corporation that previously serviced the
district.
This bill requires the Public Utilities Commission to
publish, and update as necessary, a formula for calculating
unrecovered costs.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2002-03 2003-04
2004-05 Fund
DWR power Potential unknown uncollected
costs,Special*
purchasing program offset by cost recovery
revenues.
PUC publication Unknown, probably not
substantial costs. Special**
Costs should be offset by fee revenues.
*Electric Power Fund
**Public Utilities' Reimbursement Account
SUPPORT : (Verified 5/21/02)
Central Basin Municipal Water District (co-source)
Cucamonga County Water District (co-source)
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Inland Empire Utilities District (co-source)
West Basin Municipal Water District (co-source)
Chino Basin Watermaster
Southern California Water Company
ARGUMENTS IN SUPPORT : According to Senate Local
Government Committee analysis, 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.
LB:sl 5/22/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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