BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1755|
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UNFINISHED BUSINESS
Bill No: SB 1755
Author: Soto (D), et al
Amended: 8/25/02
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
ASSEMBLY FLOOR : 79-1, 8/27/02 - See last page for vote
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 water districts
and county water districts to own and operate electric
power plants whether hydroelectric or otherwise; states
power generated from these plants may be used for the
district's own purposes; and authorizes surplus power may
be sold to any public or private entity that sells
electricity.
CONTINUED
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Assembly amendments add a provision that requires, if a
district elects to provide for its own generation of
electricity, the Public Utilities Commission must determine
a cost-recovery mechanism to be imposed through a
nonbypassable charge, for reimbursement of the Department
of Water Resources and the electrical corporation for
certain electricity purchase costs, to prevent a shifting
of costs to an electrical corporation's bundled customer;
and key the bill a State-mandated local program.
ANALYSIS : 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
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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:
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.
5. Declares legislative intent that each retail customer
that departs from the electricity system served by the
state's investor-owned utilities (IOUs), after the date
that the Department of Water Resources (DWR) began
purchasing electricity on behalf of the insolvent
utilities, should pay a fair share of DWR's power
contract obligations that are recoverable in rates by
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the IOUs.
6. Specifies what costs are outstanding obligations of DWR
and the IOUs in the wake of last year's electricity
purchases by DWR on behalf of the IOUs, and declares
legislative intent that there should not be any shifting
of DWR costs from the departing customers, in this case
the water district, and those who continue to be served
by the IOUs.
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) (unable to re-verify at time
of writing)
Central Basin Municipal Water District (co-source)
Cucamonga County Water District (co-source)
Inland Empire Utilities District (co-source)
West Basin Municipal Water District (co-source)
Chino Basin Watermaster
Southern California Water Company
ARGUMENTS IN SUPPORT : Supporters of this bill want to
use the generated electricity for energy-intensive, water
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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.
ASSEMBLY FLOOR :
AYES: Aanestad, Alquist, Aroner, Ashburn, Bates, Bogh,
Briggs, Calderon, Bill Campbell, John Campbell, Cardenas,
Cardoza, Cedillo, Chan, Chavez, Chu, Cogdill, Cohn,
Corbett, Correa, Cox, Daucher, Diaz, Dickerson, Dutra,
Firebaugh, Florez, Frommer, Goldberg, Harman, Havice,
Hertzberg, Hollingsworth, Horton, Jackson, Keeley, Kehoe,
Kelley, Koretz, La Suer, Leach, Leonard, Leslie, Liu,
Longville, Lowenthal, Maddox, Maldonado, Matthews,
Migden, Mountjoy, Nakano, Nation, Negrete McLeod,
Oropeza, Robert Pacheco, Rod Pacheco, Papan, Pavley,
Pescetti, Reyes, Richman, Runner, Salinas, Shelley,
Simitian, Steinberg, Strickland, Strom-Martin, Thomson,
Vargas, Washington, Wayne, Wiggins, Wright, Wyland,
Wyman, Zettel, Wesson
NOES: Canciamilla
LB:sl 8/28/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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