BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1776|
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THIRD READING
Bill No: SB 1776
Author: Bowen (D)
Amended: As introduced
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 8-0, 4/27/04
AYES: Bowen, Morrow, Alarcon, Battin, Dunn, Murray, Sher,
Vasconcellos
NO VOTE RECORDED: McClintock
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Electrical energy: thermal powerplants
SOURCE : Author
DIGEST : This bill, until January 1, 2007, reinstates
provisions establishing a process for the expedited review
of applications to construct and operate thermal
powerplants and for the expedited review of repowering
projects.
ANALYSIS : 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
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In Summer 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
percent 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
will not 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
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.
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
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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.
Expedited Siting or Not, Plants are Being Approved, if Not
Built . It is 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 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 State
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."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/7/04)
Duke Energy
OPPOSITION : (Verified 5/7/04)
State Building and Construction Trades Council
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NC:mel 5/11/04 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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