BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1776 - Bowen Hearing Date:
April 27, 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 slow.
In response, the Legislature required the CEC to develop an
expedited siting process for environmentally benign powerplants
to cut the siting timeline 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 expedited processes 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
environmental issues associated with building or repowering a
powerplant.
2.Did The Expedited Siting Process Work? The track record for
the six month siting processes reauthorized by this
legislation is mixed. Twelve applications were submitted
under this expedited process, two of which were successfully
completed through that process. Five of the remaining
projects were discontinued; the other five were sited using
the traditional 12 month 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 actions taken 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:
Duke Energy
Oppose:
State Building & Construction Trades Council
Randy Chinn
SB 1776 Analysis
Hearing Date: April 27, 2004