BILL ANALYSIS
SB 1388
Page 1
SENATE THIRD READING
SB 1388 (Peace)
As Amended June 20, 2000
Majority vote
SENATE VOTE :39-0
NATURAL RESOURCES 10-0 UTILITIES AND COMMERCE 10-0
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|Ayes:|Wayne, Aanestad, |Ayes:|Wright, Pescetti, |
| |Dickerson, Jackson, | |Calderon, Cardenas, |
| |Keeley, Lowenthal, | |Frusetta, Maddox, |
| |Machado, Migden, Robert | |Mazzoni, Reyes, Vincent, |
| |Pacheco, Steinberg | |Wesson |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 20-0
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|Ayes:|Migden, Campbell, | | |
| |Ackerman, Alquist, | | |
| |Aroner, Ashburn, Brewer, | | |
| |Cedillo, Corbett, Davis, | | |
| |Kuehl, Papan, Romero, | | |
| |Runner, Shelley, Thomson, | | |
| |Wesson, Wiggins, Wright, | | |
| |Zettel | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Enacts California Energy Commission (CEC) recommended
changes to current electrical power plant siting processes.
This bill also makes several changes to continued implementation
of electrical restructuring in California. Specifically, this
bill :
1)Requires local agencies that provide recommendations on power
plant sitings to CEC to do so within 180 days.
2)Eliminates the requirement that CEC prepare a geothermal
resource sufficiency study whenever it considers a proposal to
site geothermal electrical generation facilities.
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3)Requires the California Public Utilities Commission (CPUC), in
conjunction with the Electrical Oversight Board, to facilitate
approval of reasonable transmission facility planning and
engineering procedures.
4)Requires CPUC to conduct specified pilot projects of certain
customers to gauge small consumer responsiveness to energy
usage and price information.
EXISTING LAW :
1)Provides CEC with authority over licensing of power plants in
California.
2)Provides certain state and local agencies with advisory
responsibilities to CEC during the power plant siting process.
3)Requires CEC to prepare a geothermal resource sufficiency
study whenever it considers a proposal to site a geothermal
electrical generation facility.
4)Provides the Federal Energy Regulatory Commission (FERC) with
the authority to set electric transmission rates.
5)Provides for competition in the generation and sale of
electricity.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis, this bill would have negligible costs.
COMMENTS : This bill contains three main sections: a) the first
reflecting recent recommendations by CEC; b) the second
attempting to address the issue of the need for better
responsiveness to residential and small commercial electricity
customers; and, c) the third to generally help ensure that
electrical corporations continue developing plans to improve the
functioning of the current electrical transmission system.
The first section of this bill, reflecting the addition of the
180 day requirement for comments on the power plant siting
process and the deletion of the geothermal sufficiency study are
both recommendations of CEC, based on a recent report released
in March, 2000 on changes to the electric industry.
According to the author's office, the current power plant siting
SB 1388
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process takes about 12 months, and in order for comments from
local and state agencies to be accommodated in the process, a
time limit is necessary. Thus, a compromise of 180 days was
recommended by CEC.
The state's transmission system was originally constructed to
serve the needs of integrated utilities that owned generation at
various locations throughout the state. AB 1890 (Brulte),
Chapter 254, Statutes of 1996, the electrical restructuring
legislation established generation as a competitive system and
expanded the function of the transmission system to serve as an
open access carrier system which privately owned generators use
to provide power. Electric restructuring has also shifted
jurisdiction of transmission ratemaking to FERC. Although
ordinary transmission planning costs are fully recoverable under
current FERC policy, FERC has a policy of permitting utilities
to recover only 50% of "abandoned plant" costs (i.e., costs for
a plant which might not be built). Investor owned utilities
note that when their planning and engineering costs are not
recoverable they are discouraged from doing the necessary
planning. This bill proposes to resolve that concern by
directing CPUC and the Electricity Oversight Board to jointly
facilitate approval of those "abandoned plant" costs in the
transmission rates approved by FERC in accordance with
California policy that allows the recovery of reasonable to
plan, design and engineer transmission facilities.
The author has proposed a meter replacement and retrofit pilot
project to provide real time information to facilitate
electricity demand responsiveness of residential and small
commercial customers. The author asserts that in California,
electricity buyers, especially residential and small commercial
customers do not have the metering technology or the incentive
to reduce peak demand. CPUC recognizes the benefits of
improving price responsiveness however, its efforts have been
focused on large customers. Recent proceedings currently
pending before CPUC are beginning to address price
responsiveness for small consumers.
This bill also requires CPUC to conduct a pilot study of up to
3% of the residential and small commercial customers of each
electrical corporation where the rate freeze has ended, to
determine the value of information, rate design and metering
innovations for helping those customers better manage their
electricity use. CPUC is required to issue its initial report
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not later than March 31, 2002, and within 15 months after each
electrical corporation ends the rate freeze. Thus, San Diego
Gas & Electric will be the first to conduct its study and
Pacific Gas & Electric and Southern California Edison will
follow as soon as they end the rate freeze.
Analysis Prepared by : Kyra Emanuels / NAT. RES. / (916)
319-2092
FN: 0005796