BILL NUMBER: AB 1284 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 10, 2003
INTRODUCED BY Assembly Member Leslie
FEBRUARY 21, 2003
An act to amend Section 353.1 of the Public Utilities
Code, relating An act to add and repeal Section
80110.2 of the Water Code, relating to energy resources.
LEGISLATIVE COUNSEL'S DIGEST
AB 1284, as amended, Leslie. Distributed energy
resources Direct transactions: cost responsibility
surcharges .
Under existing law, the Public Utilities Commission regulates
electrical corporations. The Public Utilities Act requires the
commission to authorize direct transactions between electricity
suppliers and retail end-use customers. However, other existing law
suspends the right of retail end-use customers to acquire service
from certain electricity suppliers after a period of time to be
determined by the commission until the Department of Water Resources
no longer supplies electricity under that law. Under existing law,
the commission has imposed certain surcharges on retail end-use
customers that continue to receive service in a direct transaction.
This bill, until January 1, 2009, would exempt from those
surcharges an entity whose sole source of raw fiber material is
recycled or reclaimed wood waste used in a manufacturing process that
does not permit flexible energy consumption.
(1) Existing law requires the Public Utilities Commission to
require each electrical corporation under the operational control of
the Independent System Operator as of January 1, 2001, to modify its
tariffs so that all customers installing new distributed energy
resources are served under rates, rules, and requirements identical
to those of a customer within the same rate schedule that does not
use distributed energy resources, and to withdraw any provisions in
otherwise applicable tariffs that activate other tariffs, rates, or
rules if a customer uses distributed energy resources. Existing law
subjects customers with distributed energy resources to a real-time
pricing program adopted by the commission. Existing law defines
"distributed energy resources" to mean any electric generation
technology that meets certain criteria, including having commenced
initial operation between May 1, 2001, and June 1, 2003.
This bill would modify that initial operation criterion to include
any electric generation technology having commenced initial
operation between May 1, 2001, and June 1, 2005. Because a violation
of a rule or order of the commission is a crime under existing law,
this bill, by expanding the scope of commission regulation, would
change the definition of a crime, thereby imposing a state-mandated
local program.
(2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 353.1 of the Public Utilities Code is
SECTION 1. The Legislature finds and declares all of the
following:
(a) SierraPine is the only company remaining in California that
manufactures fiberboard and is one of two companies producing
particleboard.
(b) The sole source of raw fiber material is recycled or reclaimed
wood waste. SierraPine takes in 371,000 dry tons per year of wood
residuals from sawmills, millworks, furniture companies, and other
woodworks companies, and 31,000 dry tons per year of urban wood waste
from discarded or dismantled sites.
(c) These wood waste products are made into particleboard and
fiberboard. SierraPine provides this state with 29 percent of its
particleboard and 35 percent of its fiberboard. About 85 percent of
the boards are used to manufacture retail products, such as
furniture, shelving, cabinets, countertops, molding, and flooring,
which can be found in nearly every home and office in this state.
The remaining 15 percent is used in actual housing construction in
the state.
(d) Few alternatives exist for disposal of these wood wastes:
(1) Burning, which has serious air quality implications.
(2) Landfill, which overburdens county landfill sites, and should
be used only as a last resort. Recycling is favored.
(3) Use in other industries, although no other industry can use
this large volume of waste on a continuous basis.
(e) All SierraPine production in this state is certified to be
from 100 percent recovered and recycled fiber content.
(f) SierraPine is a 2001 and 2002 recipient of the California
Waste Reduction Award Program (WRAP), which recognizes businesses
that develop innovative and aggressive programs to reduce the amount
of waste sent to landfills.
(g) Ongoing research by SierraPine will enable greater use of
material currently being disposed of in different ways.
(h) The manufacturing processes use large amounts of electricity
to operate equipment.
(i) As a volume-driven business with plants that require lengthy
shut down and startup times, these process lines must operate
continuously; 24 hours per day, 7 days per week, all year, which does
not allow for electric load shaping or flexible operating schedules.
(j) Historically, SierraPine averages a single digit earning
margin (about 5 percent) with a double digit electric cost component
(nearly 10 percent).
(k) Due to this extreme sensitivity to electricity costs, an
increase in that cost component significantly affects the earning
margin and the ability to remain competitive. Competitors are
outside of California where electricity costs are significantly
lower. The addition of surcharges on top of higher market prices for
electricity has caused the plants to curtail operations due to high
costs. In the worst case, these costs have made the fiberboard plant
unable to compete in California, even though it is the only such
plant in the state.
(l) SierraPine has taken significant steps in attempting to
control its electrical cost structure: it has been an interruptible
end user for over eight years with full compliance, has participated
in demand response programs during critical energy periods for
California, has installed energy efficient motors and equipment in
facilities, and has elected to use direct transactions from the
beginning of electrical restructuring. SierraPine was involuntarily
returned to bundled utility service but moved back to direct access
before July 1, 2001.
(m) For every job created by SierraPine, 2.2 nonmanufacturing jobs
are created in this state. For every dollar earned by a SierraPine
employee, two dollars and 30 cents ($2.30) are added to the total
pool of income earned by the employees in other employment sectors
throughout the state. Based on the above factor, SierraPine's
California facilities are providing a labor earnings impact of
forty-seven million five hundred thousand dollars ($47,500,000)
annually.
(n) SierraPine provides excellent pay and benefits, which fills
the critical gap between service and high-tech jobs. The
least-skilled job pays thirteen dollars and seventy-nine cents
($13.79) per hour. Employees receive full healthcare benefits,
including medical, dental, and vision which cost the company an
average of between five hundred fifty dollars ($550) per employee per
month. Employees have retirement plans that include company
contributions through 401(k) and defined benefit plans. Other
benefits such as life insurance, short-term and long-term disability,
and Section 125 plans are also provided. Unskilled workers can hold
year-round steady employment.
(o) The SierraPine particleboard plant is one of the largest
employers in Amador County with 150 employees and an annual payroll
of six million dollars ($6,000,000). It has complete emissions
compliance, spends about forty million dollars ($40,000,000) annually
on the cost of their product, pays about two hundred fifty thousand
dollars ($250,000) annually in property taxes, and has operated at
its present location for 31 years.
(p) The SierraPine fiberboard plant has over 200 employees at its
Placer County facility, with an annual payroll of eight million four
hundred thousand dollars ($8,400,000). It has state-of-the-art
emissions control providing for full compliance in a residential
neighborhood, it spends about sixty million dollars ($60,000,000)
annually on the cost of their product, pays about five hundred
seventy-five thousand dollars ($575,000) annually in property taxes,
and has operated at its present location for 29 years.
SEC. 2. Section 80110.2 is added to the Water Code, to read:
80110.2. (a) Notwithstanding Section 80110, an entity whose sole
source of raw fiber material is recycled or reclaimed wood waste used
in a manufacturing process that does not permit flexible energy
consumption shall be exempt from cost recovery surcharges under
commission Decision 02-11-022, or any subsequent commission decision,
order, or regulation.
(b) This section shall remain in effect only until January 1, 2009,
and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2009, deletes or extends that date.
amended to read:
353.1. As used in this article, "distributed energy resources"
means any electric generation technology that meets all of the
following criteria:
(a) Commences initial operation between May 1, 2001, and June 1,
2005, except that gas-fired distributed energy resources that are not
operated in a combined heat and power application must commence
operation no later than September 1, 2002.
(b) Is located within a single facility.
(c) Is five megawatts or smaller in aggregate capacity.
(d) Serves onsite loads or over-the-fence transactions allowed
under Sections 216 and 218.
(e) Is powered by any fuel other than diesel.
(f) Complies with emission standards and guidance adopted by the
State Air Resources Board pursuant to Sections 41514.9 and 41514.10
of the Health and Safety Code. Prior to the adoption of those
standards and guidance, for the purpose of this article, distributed
energy resources shall meet emissions levels equivalent to nine parts
per million oxides of nitrogen, or the equivalent standard taking
into account efficiency as determined by the State Air Resources
Board, averaged over a three-hour period, or best available control
technology for the applicable air district, whichever is lower,
except for distributed generation units that displace and therefore
significantly reduce emissions from natural gas flares or reinjection
compressors, as determined by the State Air Resources Board. These
units shall comply with the applicable best available control
technology as determined by the air pollution control district or air
quality management district in which they are located.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.