BILL ANALYSIS
SB 1755
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Date of Hearing: June 19, 2002
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Patricia Wiggins, Chair
SB 1755 (Soto) - As Amended: May 20, 2002
SENATE VOTE : 39-0
SUBJECT : County water districts and municipal water districts:
electric power.
SUMMARY : Authorizes municipal water districts and county water
districts to own and operate electric power plants whether
hydroelectric or otherwise. Power generated from these plants
may be used for the district's own purposes or otherwise sold to
any public or private entity that sells electricity.
Specifically, this bill :
1)Authorizes municipal and county water districts to provide,
generate, and deliver electric power, and to construct,
operate, and maintain works, facilities, improvements, and
property for that generation and delivery.
2)Prohibits those districts from acquiring property employed in
the generation or delivery of electric power unless mutually
agreed between the district and property owner.
3)Sets forth a formula for reimbursement to the Department of
Water Resources and the electrical corporation that previously
serviced the district.
EXISTING LAW :
1)Authorizes municipal water districts to operate hydroelectric
plants and use the power for their own purposes or sell the
power to federal agencies, the state water project, local
governments, and private corporations which sell power at
retail.
2)Authorizes county water districts to operate hydroelectric
plants and use the power for their own purposes or sell the
power to public utilities or public agencies.
FISCAL EFFECT : Unknown
SB 1755
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COMMENTS :
1)Municipal water districts can acquire, build, and run plants
that generate hydroelectric power and related facilities (e.g.
dams and reservoirs). 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. This bill broadens municipal water
districts' authority by allowing them to own and operate
electric generation projects of any type.
2)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 the
power cannot 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. This
bill broadens county water districts' authority by allowing
them to own and operate electric generation projects of any
type.
3)This bill authorizes the water districts to own and operate
powerplants to serve their own needs and to sell electricity
to other public or private entity engaged in the distribution
of electricity. It specifically states that nothing in the
bill authorizes water districts to sell electricity to retail
end users.
4)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
difficult 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 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.
SB 1755
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5)This bill authorizes water districts to own and operate any
type of powerplant to serve their own needs and to sell
electricity to other public or private entities engaged in the
distribution of electricity. The sponsors of this bill want
to use the generated electricity for energy-intensive, water
supply purposes such as desalinization and other water
treatment projects. Because the generated electricity
supplements a project typical of a water district, there is a
strong nexus between the production of energy and the duties
of a water district.
6)The sponsors intend to sell the surplus of energy not utilized
in running their operations. However, as this bill is
currently written, the language allows a water district to
produce any type of energy solely for selling. A question
arises as to whether it would be prudent to allow a water
district to unconditionally enter into the biogas or natural
gas energy business. The author proposes the following
amendment to clarify that the electricity produced must first
be utilized to supplement the purposes of the water district
and that the water district is authorized to sell any surplus
of energy generated:
The electric powerplant or plants and transmission lines
constructed pursuant to this section may be leased for
operation. The power generated must be used by the district
for its own purposes, however, any surplus power may be
sold to any public or private entity that is engaged in the
distribution or sale of electricity. For purposes of this
section, "for its own purposes" may include, but not be
limited to, at least one of the following: pumping
operations, water treatment operations, barrier intrusion
operations, desalination operations, or any other function
performed by the district when operating in its capacity as
a water district.
7)This bill is double-referred to the Local Government Committee
and the Utilities and
Commerce Committee.
REGISTERED SUPPORT / OPPOSITION :
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Support
Central Basin Municipal Water District [CO-SPONSOR]
Chino Basin Watermaster [CO-SPONSOR]
Cucamonga County Water District [CO-SPONSOR]
Inland Empire Utilities District [CO-SPONSOR]
West Basin Municipal Water District [CO-SPONSOR]
Association of CA Water Agencies
Municipal Water District of Orange County
Opposition
None on file
Analysis Prepared by : Joanne Wong / L. GOV. / (916) 319-3958