BILL ANALYSIS                                                                                                                                                                                                    



                                                             


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|SENATE RULES COMMITTEE            |                   SB 110|
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                    UNFINISHED BUSINESS
                              

Bill No:  SB 110
Author:   Peace (D)
Amended:  8/26/99
Vote:     21

  
  SENATE ENERGY, U.&C. COMMITTEE  :  8-0, 4/13/99
AYES:  Bowen, Baca, Brulte, Kelley, Mountjoy, Peace, Solis,  
  Speier
NOT VOTING:  Alarcon, Hughes, Vasconcellos

  SENATE APPROPRIATIONS COMMITTEE  :  13-0, 5/10/99
AYES:  Johnston, Alpert, Bowen, Burton, Escutia, Johnson,  
  Karnette, Kelley, Leslie, McPherson, Mountjoy, Perata,  
  Vasconcellos

  SENATE FLOOR  :  39-0, 5/17/99
AYES: Alarcon, Alpert, Baca, Bowen, Brulte, Burton,  
  Chesbro, Dunn, Escutia, Figueroa, Hayden, Haynes, Hughes,  
  Johannessen, Johnson, Johnston, Karnette, Kelley, Knight,  
  Leslie, Lewis, McPherson, Monteith, Morrow, Mountjoy,  
  Murray, O'Connell, Ortiz, Peace, Perata, Polanco,  
  Poochigian, Rainey, Schiff, Sher, Solis, Speier,  
  Vasconcellos, Wright
NOT VOTING: Costa

  ASSEMBLY FLOOR  :  77-0, 9/8/99 (Passed on Consent) - See  
  last page for vote
 

  SUBJECT  :    Energy conservation:  power facility and site  
certification

  SOURCE  :     Author
                                                 CONTINUED





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  DIGEST  :    This bill amends the California Energy  
Commission's powerplant siting process to eliminate the  
"integrated assessment of need" requirement and expand the  
exemption of natural gas powerplants from the site  
evaluation process.  The bill also requires CEC to provide  
reports to the Governor and the Legislature concerning  
improvements to the power plant siting process, data  
collection in the restructured electricity market and  
environmental performance of electric generation  
facilities.

  Assembly Amendments  (a) add the report requirements, and  
(b) make technical, clarifying changes.

  ANALYSIS  :    The Warren-Alquist Act established an  
exclusive process for siting of thermal powerplants 50  
megawatts and larger that was intended to guard against  
overbuilding of powerplants and provide comprehensive  
environmental review and predictable, one-stop permitting  
of applications.

The Act requires the California Energy Commission (CEC) to  
develop long-term forecasts of state energy needs, which  
serve as a basis for planning and certification of  
individual powerplant facilities.  The Act grants the CEC  
exclusive authority to certify powerplants and authorizes  
the CEC to override other state, local or regional  
decisions and certify a powerplant it determines is  
required for "public convenience and necessity."

The first step in the siting process is the requirement  
that an applicant file a notice of intention (NOI), which  
is intended to provide alternative sites for the CEC to  
evaluate.  An NOI describes the location, design and  
operation of the preferred site and alternative sites.  The  
CEC evaluates the sites based on environmental impact,  
connection to grid, need and compatibility with the  
existing system.

The NOI process also includes specific requirements for CEC  
consultation with other federal, state, regional and local  
agencies, including detailed analysis and comment  







                                                      SB 110
                                                       Page  
3

requirements for the California Coastal Commission and the  
San Francisco Bay Conservation and Development Commission  
for sites proposed to be located within their  
jurisdictions.

The law generally requires that at least two alternative  
sites be identified prior to moving to the next step in the  
siting process, the application for certification (AFC).   
However, since the siting process was established in 1975,  
a number of statutory exemptions to the NOI requirement  
have been established.  Current statutorily exempt projects  
include modifications to existing facilities, demonstration  
projects, site-specific facilities like geothermal  
powerplants, and natural gas powerplants that result from  
competitive solicitation or negotiation.

The CEC has interpreted the natural gas powerplant  
exemption to apply to any natural gas powerplant that  
intends to sell its product into the Power Exchange.  As a  
result, all recent applications submitted to the CEC have  
been granted an exemption from the NOI process.

This bill codifies the CEC's practice by expanding the  
existing exemption to include all natural gas powerplants,  
regardless of their competitive status.  This assumes that  
all future applicants would sell their products into the  
competitive market and would make the CEC exemption  
determination a "no-brainer," thereby easing the burden on  
applicants filing for exemptions.  The rationale for  
allowing a blanket exemption for natural gas powerplants is  
that, in a competitive market, the NOI function of  
identifying an acceptable site is the obligation of the  
applicant, not the CEC.

The more substantive next step in the siting process is  
consideration of the AFC, which is a CEQA-equivalent  
project evaluation process.  In approving an AFC, the CEC  
must find that the facility's construction and operation is  
consistent with a variety of environmental standards and  
that the facility conforms with the CEC's integrated  
assessment of need (IAN).

The IAN is determined through the development of the CEC's  
Electricity Report, which is a comprehensive planning and  







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forecasting assessment addressing the supply and demand for  
electricity.  According to the CEC, in response to  
restructuring, the most recent IAN stated that any proposed  
project is found to be needed if the total number of  
megawatts does not exceed a numerical cap that the CEC  
determined could be needed to satisfy statewide peak demand  
and maintain system reliability (6737 MW).  Because this  
cap is sufficiently high that it is not likely to be  
exceeded, as a practical matter, the current IAN will have  
no effect on individual facility certification.

This bill eliminates the IAN and contingent siting  
considerations.  Again, the rationale is that, in a  
competitive market, the determination of whether a facility  
is needed is the obligation of the applicant, not the CEC.   
Theoretically, market consequences will discourage  
applicants from building facilities that aren't needed.

This bill requires the CEC to prepare and submit the  
following reports:

1. By April 2000, recommendations to improve the  
   application and certification process for siting power  
   plants.

2. By April 2000, recommendations to consolidate and  
   clarify existing reporting requirements regarding  
   electric utility generating loads and emerging trends in  
   energy supply and demand.

3. By April 2000, a workplan for completing a subsequent  
   report by July 2001.

4. By July 2001 and every two years thereafter, an  
   assessment of the environmental performance of the  
   state's electric generation facilities.

  FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
Local:  No


  SUPPORT  :   (Verified  5/12/99) (Unable to reverify at time  
of writing)








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5

California League of Food Processors
California Municipal Utilities Association
Independent Energy Producers
Sempra Energy

  ASSEMBLY FLOOR  :  77-0, 9/8/99
AYES:  Aanestad, Ackerman, Alquist, Aroner, Ashburn,  
  Baldwin, Bates, Battin, Baugh, Bock, Brewer, Briggs,  
  Calderon, Campbell, Cardenas, Cardoza, Cedillo, Corbett,  
  Correa, Cox, Cunneen, Davis, Dickerson, Ducheny, Dutra,  
  Firebaugh, Florez, Floyd, Gallegos, Granlund, Havice,  
  Hertzberg, Honda, House, Jackson, Keeley, Knox, Kuehl,  
  Leach, Lempert, Leonard, Longville, Lowenthal, Machado,  
  Maddox, Maldonado, Margett, Mazzoni, McClintock, Migden,  
  Nakano, Olberg, Oller, Robert Pacheco, Rod Pacheco,  
  Papan, Pescetti, Reyes, Romero, Runner, Scott, Shelley,  
  Soto, Steinberg, Strickland, Strom-Martin, Thompson,  
  Thomson, Torlakson, Vincent, Washington, Wayne, Wiggins,  
  Wildman, Wright, Zettel, Villaraigosa
NOT VOTING:  Frusetta, Kaloogian, Wesson


NC:cm  9/8/99  Senate Floor Analyses 

               SUPPORT/OPPOSITION:  SEE ABOVE

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