BILL ANALYSIS
SB 1755
Page 1
Date of Hearing: August 14, 2002
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Darrell Steinberg, Chair
SB 1755 (Soto) - As Amended: June 30, 2002
Policy Committee: Local
GovernmentVote:11-0
Utilities and Commerce 15-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill allows municipal and county water districts (CWDs) to
own and operate electric power plants, whether hydroelectric or
otherwise, and to use power generated from these plants for the
district's own purposes, and sell surplus power to a 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)Specifies that electricity produced by a district must first
be used by the water district for its own purposes, including
pumping operations, water treatment operations, barrier
intrusion operations and desalination operations.
3)Authorizes municipal and county water districts to sell any
surplus energy generated that is not used for the district's
own purposes.
4)Prohibits those districts from acquiring property employed in
the generation or delivery of electric power unless mutually
agreed between the district and property owner.
FISCAL EFFECT
No state costs. The bill requires the reimbursement of stranded
costs to the electrical corporation that previously serviced the
SB 1755
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district (i.e., the Department of Water Resources).
COMMENTS
1)Background . Current law 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. Current law also 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.
2)Rationale . 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. 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. The electricity also
could be used for energy-intensive, water supply purposes such
as desalinization and other water treatment projects. The
bill specifies that nothing in the bill authorizes water
districts to sell electricity to retail end users.
3)DWR Stranded Costs . AB 1X (Keeley, Ch. 4, of 2001) authorizes
the Department of Water Resources (DWR) to contract for energy
procurement. Prior to the enactment of AB 1X, customers had
the right to obtain power from alternate providers. AB 1x
suspended that right until such time as DWR no longer supplies
power. To the extent that MUDs and CWDs generate their own
electricity, rather than obtaining it from DWR, DWR could
incur stranded costs. Rather than shifting that burden to
remaining ratepayers, a number of bills (e.g. SB 23XX (Soto),
SB 27XX (Bowen), and SB 1172 (Kuehl)), require that DWR be
reimbursed for its uncollected costs.
Consistent with the other bills, this bill requires a district
that elects to provide for its own power to reimburse DWR for
its uncollected costs of providing power to that district,
including financing costs.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081