BILL ANALYSIS                                                                                                                                                                                                                   1
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             SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                            DEBRA BOWEN, CHAIRWOMAN
          

          SB 1776 -  Bowen                                  Hearing  
          Date:  April 13, 2004                S
          As Introduced:  February 20, 2004       FISCAL           B

                                                                       
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                                   DESCRIPTION
           
           Current law  establishes a one-stop permitting process for  
          large thermal powerplants at the California Energy  
          Commission (CEC).

           This bill  reinstates an expedited six month siting process  
          for environmentally benign powerplants and repowering of  
          existing powerplants that expired at the end of 2003.

                                    BACKGROUND
           
          In the summer of 2000, San Diego's electric ratepayers  
          found themselves on the leading edge of California's  
          electricity crisis when they were subjected to bill  
          increases of 50% or more.  Some of the blame for the crisis  
          was placed on California's process for siting powerplants,  
          administered through the CEC, which was characterized as  
          cumbersome and untimely.  

          In response, the Legislature required the CEC to develop an  
          expedited siting process for environmentally benign  
          powerplants to cut the siting timeline in half, from one  
          year to six months.  Where there is substantial evidence  
          that a project won't cause a significant impact on the  
          environment or the electrical system and will comply with  
          all applicable standards, ordinances, or laws, the six  
          month process can be used.  The statute creating this  
          expedited processing expired at the end of 2003.  









               As the electricity crisis spread throughout the state in  
               2001, this expedited process was expanded to include the  
               repowering of existing powerplants.  This provision also  
               expired at the end of 2003.

               This bill reauthorizes those requirements through 2006.

                                          COMMENTS
                
                1.Power Supply Forecast  .  Recent power emergencies in  
                 Southern California, while unusual and perhaps resulting  
                 from human error, are nevertheless ominous, and both the  
                 CEC and the California Independent System Operator (ISO)  
                 have forecast potential supply problems by 2006.  As most  
                 Californians know from 2000 and 2001 (and from looking at  
                 their power bills today), the consequences of electric  
                 shortages are severe.  That knowledge should encourage  
                 the establishment of efficient siting processes which  
                 give full attention to the difficult associated  
                 environmental issues. 


































           2.Did The Expedited Siting Process Work?   The track record  
            for the six month siting processes reauthorized by this  
            legislation is mixed.  While more than ten applications  
            were submitted under this expedited process, none were  
            successfully completed through that process because the  
            criteria were not met, which forced those plants to be  
            sited using the traditional 12 month process.  It's not  
            clear whether the CEC's expedited process wasn't  
            functional, or whether the proposed plants weren't  
            "environmentally benign" and thus were appropriately  
            required to go through the longer, more detailed siting  
            process.  The CEC was considering revising its  
            regulations to make the process more useful, but  
            suspended that work when the requirement for a six month  
            process sunset in January.

           3.Expedited Siting Or Not, Plants Are Being Approved, If  
            Not Built  .  It's difficult to blame the energy crisis on  
            California's powerplant siting process.  The CEC has  
            permitted 36 major powerplants that are either  
            operational or under construction.  Also approved are 12  
            additional major powerplants, capable of producing almost  
            6,000 megawatts (MW) of electricity, where construction  
            is either on hold or the applicant cancelled the project.  
             Investigations by the Federal Energy Regulatory  
            Commission, the federal Governmental Accounting Office,  
            and the California Attorney General have concluded that  
            much of California's energy crisis was due to gaming and  
            other misbehaviors by electricity sellers and marketers.

            A lack of financing is deterring powerplant construction,  
            not the CEC's siting process.  This is illustrated in the  
            letter to shareholders by the Chief Executive Officer of  
            a major California powerplant developer contained in the  
            2002 annual shareholders report:

               "The year's challenges included a weak economic  
               climate, low electricity prices, widespread  
               distrust of corporations and the power industry  
               in particular, credit downgrades, and the virtual  
               drying-up of capital markets and bank  
               financings."

                                    POSITIONS
           
           Sponsor:








               
               Author

                Support:
                
               None on file

                Oppose:
                
               State Building & Construction Trades Council

               
               Randy Chinn 
               SB 1776 Analysis
               Hearing Date:  April 13, 2004