BILL ANALYSIS
SB 1755
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SENATE THIRD READING
SB 1755 (Soto)
As Amended June 30, 2002
Majority vote
SENATE VOTE : 39-0
LOCAL GOVERNMENT 11-0 UTILITIES AND COMMERCE 15-0
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|Ayes:|Wiggins, Salinas, |Ayes:|Wright, Pescetti, |
| |Cogdill, Correa, Daucher, | |Calderon, |
| |Harman, La Suer, | |John Campbell, |
| |Lowenthal, Keeley, | |Canciamilla, Cardenas, |
| |Thomson, Vargas | |Diaz, Horton, Kelley, |
| | | |La Suer, Maddox, Nation, |
| | | |Papan, Reyes, Simitian |
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APPROPRIATIONS 23-0
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|Ayes:|Steinberg, Bates, | | |
| |Alquist, Aroner, | | |
| |Ashburn, Cohn, Corbett, | | |
| |Correa, | | |
| |Daucher, Diaz, Firebaugh, | | |
| |Goldberg, Maldonado, | | |
| |Negrete McLeod, | | |
| |Robert Pacheco, Papan, | | |
| |Pavley, Runner, Simitian, | | |
| |Keeley, Wiggins, Wright, | | |
| |Zettel | | |
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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. Surplus power may
be 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
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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.
5)Requires a district that elects to provide for its own power
to reimburse the Department of Water Resources (DWR) for its
uncollected costs of providing power to that district,
including financing costs.
EXISTING LAW authorizes:
1)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)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 : No state costs. This bill requires the
reimbursement of stranded costs to the electrical corporation
that previously serviced the district (i.e., DWR).
COMMENTS : 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, the state water
project, local governments, and 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
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type.
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.
This bill authorizes water districts to own and operate any type
of powerplant to serve their own needs and to sell surplus
electricity to other public or private entities engaged in the
distribution of electricity. Supporters 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.
AB 1X (Keeley), Chapter 4, Statutes of 2001, authorizes DWR to
contract for energy procurement. Prior to the enactment of AB
1X, customers had the right to obtain power from alternative
providers. AB 1X suspended that right until such time as DWR no
longer supplies power. To the extent that municipal and county
water districts 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 from this session (e.g., SB 23XX (Soto) and
SB 27XX (Bowen), reported from the Assembly without further
action; SB 1172 (Kuehl), vetoed by the Governor), 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 : Joanne Wong / L. GOV. / (916) 319-3958
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