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