BILL ANALYSIS
SB 110
Page 1
Date of Hearing: August 23, 1999
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
SB 110 (Peace) - As Amended: August 16, 1999
SENATE VOTE : 39-0(not relevant to amended version)
SUBJECT : Energy conservation: power facility and site
certification.
SUMMARY : Revises the California Energy Commission (CEC) power
plant siting process to eliminate the "integrated assessment of
need" (IAN) requirement, and exempts natural gas-fired power
plants from the requirement that alternative sites be considered
prior to certification. Requires CEC to report to the
Legislature and Governor regarding potential improvements to the
power plant siting process, and requires the Secretary of the
Resources Agency (Resources Agency) to review its certification
of CEC's siting process. Specifically, this bill :
1)Eliminates the requirement that proposed power plants must be
in conformance with CEC's IAN in order to be certified.
2)Makes various changes with regard to the information and
analyses contained in CEC's biennial Electricity Report.
3)Exempts natural gas-fired power plants from the notice of
intention (NOI) process, in which three or more alternative
sites are studied prior to the formal licensing phase.
4)Makes various changes with respect to the information required
to be provided in an application for certification, and to be
contained in CEC's written decision concerning the
application.
5)Requires CEC to prepare a report to the Governor and
legislature by March 31, 2000 that identifies administrative
and statutory measures that would improve CEC's power plant
siting and licensing process while preserving environmental
protections. The report shall include recommendations for
administrative and statutory measures for improving the siting
and licensing process.
6)Requires CEC to promptly implement any administrative
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recommendations, and provides that regulations adopted for
this purpose within six months of the effective date of this
bill would be eligible for the expedited "emergency
regulation" process.
7)Requires the Resources Agency on or before January 1, 2000, to
review CEC's siting process to determine if it meets the
requirement necessary for designation as a "certified
regulatory program." If the Resources Agency determines that
the regulatory program meets those criteria, the Secretary
would be required to continue the certification of the
regulatory program.
8)Makes findings and declarations relating to a competitive
electricity generation market, power plant siting, and the
need for timely construction of new electricity generating
capacity.
EXISTING LAW :
1)Requires CEC to develop long-term forecasts of state energy
needs, which serve as the basis for planning and certification
of individual power plant facilities.
2)Grants CEC exclusive authority to certify power plants and
authorizes CEC to override other state, local, or regional
decisions and certify a power plant it determines is required
for "public convenience and necessity."
3)Requires that an application for certification of a power
facility submitted to CEC contain specified information that
CEC may require by regulation.
4)Requires CEC to prepare a written decision after a public
hearing on an application for certification, which contains
specified information.
5)Prohibits CEC from certifying any facility, unless it makes
specified findings relating to conformity of the proposed
facility with an IAN for the new facility.
6)Authorizes CEC to exempt from certification requirements
thermal power plants with a generating capacity of up to 100
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megawatts, and modifications to existing generating
facilities, that do not add capacity in excess of 100
megawatts, if CEC finds that no substantial adverse impact on
the environment or energy resources will result from the
construction or operation of the proposed facility or
modification of an existing facility. This exemption is
permitted only if CEC finds that the additional generating
capacity is not in excess of the IAN for new resource
additions, as determined.
FISCAL EFFECT : Unknown.
COMMENTS :
1)The Warren-Alquist Act (the Act) provides CEC with exclusive
authority to certify power plants and authorizes CEC to
override other state, local, or regional decisions and certify
a power plant it determines is required for "public
convenience and necessity." Additionally, the Act requires
CEC to develop long-range forecasts of the state's energy
needs, which serve as the basis for planning and certification
of individual power plant facilities.
2)In 1996, the California Legislature restructured the
electricity generation market AB 1890 (Brulte), [Statutes of
1996]. AB 1890 provided incentives for the state's three
investor-owned utilities (IOUs), Pacific Gas and Electric,
Southern California Edison, and San Diego Gas and Electric to
divest their electric generating plants, paving the way for a
competitive electricity generation market. This bill
streamlines CEC's siting and licensing process to conform with
a competitive generation market, where ratepayers are no
longer on the hook for the cost of building and maintaining
power plants. In a competitive generation market, the owners
of these new "merchant" generating facilities, and not
ratepayers, bear the risks.
3)This bill requires CEC to prepare a report to the Legislature
and Governor identifying administrative and statutory measures
to improve the power plant siting and licensing process, and
requires CEC to promptly implement any recommendations that it
can implement administratively. This report, and the
recommendations contained within, would serve as the basis for
future legislation to improve the power plant siting and
licensing process.
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4)The licensing of power plants is a two-phased process. The
first phase requires submission of NOI and the second phase is
the filing of an application for certification, (AFC). The
primary purpose of the NOI process is to examine three or more
alternative sites before the formal licensing phase begins.
CEC evaluates the sites based on it's environmental impact,
connection to the electricity grid, and need and compatibility
with the existing system. During the NOI process, CEC is also
required to consult with federal, state, regional, and local
agencies, including the California Coastal Commission and the
San Francisco Bay Conservation and Development Commission for
facilities proposed to be located within their jurisdictions.
5)During the NOI phase, at least two alternative sites must be
identified. In the years following the establishment of the
siting process in 1975, a number of exemptions have been
provided for in the statutes. These exemptions include
demonstration projects, geothermal power plants, modifications
to existing facilities, and natural gas power plants that
result from competitive solicitation or negotiation. CEC has
interpreted the natural gas power plant exemption to apply to
any gas-fired power plant that intends to sell its product
into the California Power Exchange.
6)All recent applications for gas-fired plants have been granted
an exemption from the NOI process. This bill codifies the
CEC's practice, and expands it by exempting all natural
gas-fired plants, regardless of their competitive status. A
blanket exception for natural gas power plants seems prudent
in light of the newly competitive electric generation market.
The NOI function of identifying an acceptable site properly
belongs to the applicant, not CEC.
7)The second, more substantial phase of the siting process is
the review of the AFC, a California Environmental Quality
Act-equivalent project evaluation process. In order to
approve an AFC, CEC must certify that the facility's
construction and operation is in accord with various
environmental standards and that the facility is compatible
with CEC's IAN.
8)The IAN is ascertained through the development of CEC's
biennial Electricity Report, a comprehensive planning and
forecasting assessment related to the supply and demand for
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electricity. The most recent IAN set a numerical cap (6737
megawatts) at which point the state's peak demand and system
reliability needs would be fully realized. The IAN stated
that any proposed project would be needed if the total number
of megawatts falls short of the numerical ceiling. Given that
the cap is sufficiently high, and not likely to be exceeded,
for all practical purposes, the IAN has virtually no effect on
individual facility certification. This bill eliminates the
requirement that proposed power plants be in conformance with
the IAN in order to be certified.
9)The requirement for a finding of "need" was enacted in 1974 in
order to ensure that ratepayers would not be obligated to pay
for the construction and maintenance of utility power plants
that were not needed to meet electricity demand. This bill's
elimination of the requirement for a finding of need is
consistent with a deregulated electricity industry. In a
competitive electricity generation market, market
consequences, and the business savvy of power plant
applicants, should determine whether the power plants are
needed.
REGISTERED SUPPORT / OPPOSITION :
Support
California Manufacturers Association
Independent Energy Producers
Opposition
None on file.
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083