BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1709 - Kelley Hearing
Date: April 11, 2000 S
As Introduced: February 22, 2000 FISCAL B
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DESCRIPTION
Current law defines an electrical corporation as every
corporation or person owning, controlling, operating, or
managing any electric plant for compensation in the state -
except where the electricity is generated for its own use
or the use of its tenants and not for sale or transmission
to others.
Current law has two different definitions for activities
that would not qualify a person or company as an
"electrical corporation."
This bill clarifies that providers of anaerobic or digester
gas technologies are exempt from regulation by the
California Public Utilities Commission (CPUC).
KEY QUESTIONS
1.Should providers of anaerobic or digester gas
technologies be exempt from regulation by the CPUC?
2.Does a desire to promote alternative electrical supplies
justify providing those technologies with such an
exemption?
3.If so, under which exemption in current law should the
digester gas technology be placed?
BACKGROUND
According to the sponsor of this bill, the Association of
California Water Agencies, there are approximately 200-250
water treatment plants in the state and many of them use an
anaerobic - without oxygen - process to break down
wastewater for final disposal. The process is carried out
in a large metal or concrete tank and during the treatment
process, a methane gas is created and released.
The sponsor asserts that roughly 100 water treatment
organizations, notably Inland Empire Water Agency, are
capturing the gas that would otherwise be burned and
released into the open air, and are turning it into
electric power for their own use and for sale to others.
This bill appears to be a response to a problem that
occurred in the Inland Empire Utilities Agency where,
according to the sponsor, the Agency's ability to use
digester gas technology and provide electricity across a
natural easement was called into question.
COMMENTS
1) Two Ways To Not Be An Electrical Corporation . Under
Public Utilities Code 218 (b), a company isn't an
electrical corporation subject to CPUC regulation if it
employs cogeneration technology or is producing power from
a non-conventional power source to generate electricity for
any one of the following purposes:
(a) Its own use or use of its tenants;
(b) The use of or sale to not more than two other
corporations or people solely for use on the property
where the electricity is generated or immediately
adjacent to that property (with some further
limitations, such as the property can't be under
common ownership, the useful thermal output of the
facility can't be used for petroleum production or
refining, and the electricity furnished to the
adjacent property can't be used by a subsidiary or
affiliate or the company generating the electricity);
or,
(c) Sale or transmission to an investor-owned utility
or state or local agency - but not for sale or
transmission to others unless the corporation or
person is otherwise an electrical corporation.
Under Public Utilities Code 218 (c), a company isn't an
electrical corporation subject to CPUC regulation if it
employs landfill gas technology to generate electricity for
any one of the following purposes:
(a) Its own use or use of not more than two of its
tenants located on the property where the electricity
is generated;
(b) The use of or sale to not more than two other
corporations or persons solely for use on the property
where the electricity is generated; or
(c) Sale or transmission to an investor-owned utility
or state or local public agency.
Arguably, a company generating electricity by using
digester gas technology is already exempt from CPUC
regulation under the first definition because it's
producing power from a non-conventional power source.
2) Exemption Differences . The main differences between the
two exemptions appear to be that under PU Code 218 (b), a
company becomes subject to CPUC regulation as an electrical
corporation if it wants to:
(a) Provide electricity to facilities on adjacent
property that's under common ownership or control;
(b) Provide electricity for the purposes of petroleum
production or refining on the adjacent property;
(c) Provide electricity to a subsidiary or affiliate
of the corporation on the adjacent property; or
(d) Provide electricity to anyone other than an
investor-owned utility or state or local public agency
(except for the "adjacent property" exemptions).
If the issue is whether or not electricity generated by
digester gas technology is currently considered to be
exempt from regulation by the CPUC, the author and
Committee may wish to consider simply specifying "digester
gas technology" in the current code on Page 2, Line 10 of
this bill to ensure that this technology enjoys the same
exemption as cogeneration and other non-conventional power
generators enjoy.
If the issue is that those wanting to distribute
electricity using digester gas technology feel the
exemption in (b) is too restrictive, the author and
Committee may wish to explore exactly what types of
electricity services these companies wish to supply prior
to granting them the exemption proposed in this bill.
3) Subsidizing The Cost Of Waste Disposal? Wastewater
treatment plants are under pressure to create an
alternative way to dispose of waste water in light of a
recent ordinance adopted in Kern County that precludes
Class B bio solids (sewage sludge) from being spread on
agricultural land. According to the Inland Empire Water
Agency, if other counties follow suit, it will cost water
agencies across the state "hundreds of millions of dollars"
to create an alternative treatment and disposal method.
According to the Agency, treatment plants will have to be
upgraded at considerable expense - $1 million to $7 million
- to comply with any similar ordinances adopted by other
local agencies. Although the Inland Empire Water Agency
isn't affected by the Kern County ordinance, it believes
using digester gas technology to generate electricity for
sale will help facilities in Los Angeles, Orange and
Ventura counties offset the cost of any facility upgrades
that would be required should those counties adopt
ordinances similar to Kern County's.
While generating and selling electricity to offset the
costs of improving or operating wastewater treatment
facilities may very well be appropriate, the author and
Committee may wish to consider whether those electricity
operations should be exempt from CPUC regulation, as this
bill proposes.
POSITIONS
Sponsor:
Association of California Water Agencies
Support:
California Association of Sanitation Agencies
Inland Empire Utilities Agency
Los Angeles County Sanitation Districts of Los Angeles
County
Sierra Club California
Oppose:
Sempra Energy
Anna Ferrera
SB 1709 Analysis
Hearing Date: April 11, 2000