BILL ANALYSIS
SB 1565
Page 1
Date of Hearing: June 21, 2004
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
SB 1565 (Bowen) - As Amended: March 30, 2004
SENATE VOTE : 24-12
SUBJECT : State Energy Resources Conservation and Development
Commission: strategic plan.
SUMMARY : Requires the California Energy Commission (CEC) to
include in its biennial Integrated Energy Policy Report (IEPR) a
strategic plan for the state's electric transmission grid.
Specifically, this bill requires CEC in consultation with the
California Public Utilities Commission (CPUC), the California
Independent System Operator (ISO), transmission owners, users,
and consumers to develop a strategic plan for the state's
electric transmission grid. The plan shall identify and
implement investments needed to ensure reliability and to meet
future growth in load and generation in renewable generation,
energy efficiency, and demand reduction programs. This bill
requires CEC to include the plan in IEPR adopted on November 1,
2005.
EXISTING LAW : Requires CEC, every two years, to adopt an IEPR
that contains an overview of major energy trends and issues
facing the state, including, but not limited to, supply, demand,
pricing, reliability, efficiency, and impacts on public health
and safety, the economy, resources, and the environment. The
report is broken down into three sections; electricity and
natural gas markets; transportation fuels, technologies, and
infrastructure; and public interest energy strategies.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of this bill: This bill requires CEC to develop a
strategic plan for the state's electric transmission grid in
consultation with other regulatory agencies, transmission
owners, users, and consumers. The plan is to identify and
implement investments needed to ensure reliability to meet
future growth in load and generation in renewables, energy
efficiency, and demand reduction.
SB 1565
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IEPR silent on transmission planning: SB 1389 Bowen (Chapter
568, Statutes of 2002) which created IEPR does not include
transmission planning as an integral component. This bill seeks
to solve the problem by including the requirement that CEC using
the same process as in IEPR develop a strategic plan for the
state's electric transmission grid to be completed in time for
the November 1, 2005 IEPR.
Language referencing CEC's ability to implement investments to
respond to the strategic plan should be deleted. The wording on
page 2 line 7 regarding "implement investments?" should be
deleted because CEC has no authority to take actions other than
approving the siting of generation facilities over 50 MW.
Language should also be added to direct CEC in the plan to
review and make recommendations on deliverability constraints
and transmission needs. Currently California ratepayers are
faced with growing costs related to Reliability-Must-Run (RMR)
contracts that are in excess of $700 million annually. These
generation facilities with RMR contracts are increasingly posing
an economic burden on the ratepayers of California. A process
to review and make recommendations on how to lower these costs
through increased transmission improvements must be taken into
consideration in any strategic plan.
Need for a comprehensive and efficient transmission planning
process: The state has three entities that have varying degrees
of responsibility for transmission planning. CPUC has most of
the authority over approving cost recovery and siting for
transmission infrastructure built by investor owned utilities
(IOUs). ISO is responsible for determining reliability or need
for transmission infrastructure but this doesn't result in
automatic approval or funding for the project. Lastly CEC has
authority to approve generation siting for facilities over 50
MW, which includes the transmission interconnection. For
generation under 50 MW the approval process to site generation
lies with the municipal board.
While IEPR is the best available process in place to develop a
strategic transmission plan in the future the Legislature should
consider developing a more durable energy policy by integrating
transmission planning, generation and procurement together.
Other states have developed separate biennial transmission plans
that review transmission infrastructure in coordination with
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capacity needs within a time horizon of 10 years. Currently,
CPUC is working with ISO to develop a economic methodology for
universal application in transmission evaluation that would make
the process for efficient. Also, CPUC is now formally involved
in ISO planning and project development process, which in the
past it hasn't.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Daniel Kim / U. & C. / (916) 319-2083