BILL ANALYSIS
AB 1667
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CONCURRENCE IN SENATE AMENDMENTS
AB 1667 (Olberg) - As Amended: June 20, 1995
ASSEMBLY VOTE: 77-0 ( June 1, 1995 ) SENATE VOTE: 34-0 ( August
21, 1995 )
Original Committee Reference: U. & C.
DIGEST
Existing law directs the California Public Utilities Commission
(CPUC) to establish rates for natural gas utilized in solar
electric generation station technology projects which are not
higher than the rates established for natural gas utilized by an
electric plant in the generation of electricity.
As passed by the Assembly, the bill:
1) Limited the special natural gas rates to existing solar
electric generation facilities.
2) Deleted the January 1, 1996 sunset date indefinitely.
The Senate amendments extended the sunset date until January 1,
2001.
FISCAL EFFECT
None
COMMENTS
The author introduced this bill, which deletes the statutory
sunset date and limits the special gas rates to existing solar
electric generation facilities, in order to continue the current
CPUC practice of providing solar energy projects with gas rates
that are in parity with rates that are paid by electric utilities.
To provide support for solar electric generation station
AB 1667
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technology projects, in 1987, the Legislature directed the CPUC to
order that natural gas rates for solar thermal power plants be set
no higher than natural gas rates to Utility Electric Generators.
The purpose of this action was to allow solar thermal power plants
to compete with electric utilities on the basis of efficiency,
without distortions introduced by natural gas rate design. Parity
in gas rates facilitates competition based solely on electric
project efficiency.
The solar electric generation station projects are nine solar
thermal power plants operating at three sites in the Mojave
Desert. The projects use parabolic trough solar collectors to
produce steam, which in turn is used to generate electricity. The
projects produce about 350MW of power for sale to Southern
California Edison (SCE).
When weather conditions reduce the amount of solar energy
collected, the projects are allowed to burn natural gas for up to
25% of their energy production. The combined use of 75% solar/25%
natural gas allows the projects to provide reliable power with low
emissions. The gas-fired backup capability is used to assure that
the projects can maintain full output during SCE's on-peak period.
According to the sponsor, Kramer Junction Company, these solar
projects that use back-up gas fuel are able to remain competitive
and cost-effective so long as their fuel costs are not greater
than the fuel costs for utility gas-fired electric generation.
Supporters of current law believe that gas rate differentials
should not bias the choice of an electricity generation resource.
Which means, if gas rates are set at the same rate, the most
efficient electricity generation resource in terms of gas
utilization will be used. Without this law, utility-owned
generation that had the benefit of the lower gas rates would enjoy
an artificial cost advantage, regardless of the comparative
operating efficiency.
Related Legislation:
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SB 2303 (Rosenthal), Chapter 840, Statutes of 1984, directs the
CPUC to establish gas rates for cogeneration projects no higher
than the rates established for gas used by electric utilities in
the generation of electricity.
AB 1631 (T. Friedman), Chapter 419, Statutes of 1987, directs the
CPUC to establish gas rates for solar electric generation projects
no higher than the rates established for gas used by electric
utilities in the generation of electricity.
AB 3578 (Margolin), Chapter 1119, Statutes of 1992, extends the
sunset special gas rates solar electric generation (Public
Utilities Code 454.6).
Analysis prepared by: Sedrick M. Spencer / auc/ 445-4246
FN 018574