2003 California Energy Legislation Summary

Lon W. House

530.676.8956

February 21 was the deadline for introducing new bills in California. Here’s a summary of the important bills.

Summaries of air pollution bills

SB 700: Repeals a decades-old rule in state law that has shielded farms from needing air pollution permits for diesel-powered irrigation pumps and for confined-animal feeding operations such as dairies. Requires farmers to obtain permits for those sources by Jan. 1, 2005. Mandates that local air districts adopt rules to reduce or eliminate air pollution caused by everyday farming activities, such as harvesting, tilling or discing, by Jan. 1, 2005.

SB 701: Creates a low-interest loan program to help farmers pay for new equipment or for installing measures to limit air pollution.

SB 702: Expands an existing state grant program that has helped farmers pay to replace or retrofit dirty, diesel-powered irrigation pumps. Allows grant money to be used for upgrading other farm equipment such as tractors.

SB 703: Revokes "standby" charges that agricultural customers must pay utilities to keep irrigation pumps connected to the electricity grid. Could encourage farmers to use electricity rather than cheaper, but dirtier, diesel fuel.

SB 704: Requires biomass facilities to regularly burn agricultural waste -- at least 30% of their total fuel -- to produce electricity.

SB 705: Bans open-field burning by June 1, 2005, and requires local air districts to help farmers find alternatives for disposing of farm waste.

SB 706: Prohibits most wood-burning fireplaces in all new homes starting Jan. 1, 2004, except those that meet certain U.S. EPA standards.

SB 707: Sets up buffer zones between dairies and cities by blocking new dairy construction within 3 miles of an urbanized area or school. Prevents schools or homes from being built within 3 miles of an existing dairy.

SB 708: Requires older cars and trucks to comply with state air emission standards through the Smog Check program, but continues an exemption for vehicles older than 45 years -- a concession to seldom-driven antique or classic cars.

SB 709: Adds three public members with expertise in health, economics and the environment to the San Joaquin Valley Air Pollution Control District Board. Members would be appointed by the governor, the Senate Rules Committee and the Assembly speaker.

Energy Bills Summary

SB 171: Establish policies to reform the regulation of public utilities. Spot bill.

SCA 6: Constitutional amendment that would require members of the California Public Utilities Commission to be chosen during general elections rather than appointed by the Governor. Commissioners would serve a maximum two 6 year terms

SB 46: Under current law customers using distributed generation sources must be subject to the same rates as customer not using DG, as long as DG begin operation between May 1, 2001, and June 1, 2003. This would expand the time frame to June 1, 2005. CPUC has failed to require that new tariffs be created to account for DG costs and benefits or to report to the Legislature how stand by rates are to be determined for DG customers. This results in current standby fees discouraging customers from installing distributed generation.

SB 67: States utilities would not have to achieve investment grade ratings to purchase electricity from renewables.

SB 72: Dismantles California ISO, and restores utilities to controllers.

SB 107: Current language refers to report that the California Independent system operator must file with the Legislature following FERC approval of the ISO. Spot bill.

SB 118: Deals with the CPUC conflict-of-interest code. Spot bill.

SB 119: Requires ISO to adopt rules that make more of its activities and prices “transparent”. Spot bill.

SB 159: California Energy Commission is required to report to legislators and the governor by March ’31, 2003 on real time pricing tariffs and other mechanisms to help reduce the peak energy needs. This bill would extend the deadline to June 30.

SB 168: The CEC, which now makes quarterly reports to the Legislature about the disposition of the Renewable Resources Trust Fund, would make such reports yearly instead.

SB 183: This bill would require the Energy Commission to provide regularly updated information on funds remaining in the Emerging Renewable Resources Account for rebates, buy downs, and other incentives.

SB 185: This bill would require retail electricity suppliers to report power source information to the CEC every year beginning April 1, 2004.

SB 888: Spot bill. Would repeal AB1890 –original deregulation plan.

SB 659: This bill would prevent electric companies from basing residential customer rates on anything other than volume of consumption. The provision would be in effect for an indefinite period of time. Under current law, the volume charge restriction

would be lifted on December 31, 2003.

SB 697: This bill would direct the CPUC to establish separate distribution rates and charges for renewable energy provided to customers via a community choice

aggregator. “To the extent permitted by federal law,” the rates would avoid charges for transmission services, according to the bill.

SB 703: For discounted rates for interruptible or off-peak demand service to agricultural customers, the bill would bar the inclusion of “any demand charge, connected load charge, facilities related charge or any similar fixed charge.”

SB 770: This bill, taking note that direct transactions between energy suppliers and end-use customers are suspended under current law, seeks to ensure that nonprofit cogeneration facilities can still directly serve their affiliates.

SB 839: Aimed at preventing the sort of abuses alleged to have been committed by Perot Systems, the measure would prohibit firms that win state consulting service contracts from “being financially interested” in services or products associated with the final work product provided by the company to the state.

SB 874: Another net-energy-metering measure in support of distributed generation, this bill would allow customers who had net-metering systems in-stalled before January 1, 2003, to be exempt from DWR charges.

SB 920: This bill would require Cal-ISO to receive legislative approval before joining a regional transmission organization. In addition, the grid operator would be responsible for revising its own bylaws rather than that duty being entrusted to the Electricity Oversight Board. The bill, like AB 808, would scrap the EOB.

SB 1015: Under current law, customers using distributed generation must be under the same rates and tariffs as customers in the same class who do not use DG. Eligible distributed-generation re-sources must begin operation between May 1, 2001, and June 1, 2003. This bill would remove this provision, as well as the stipulation that eligible gas-fired DG resources “that are not operated in a combined heat and power application” must have begun operation by September 1, 2002.

AB 425: would allow heavy industrial customers receiving interruptible service from utilities to continue to receive incentive based rates through 2008. Under current law interruptible services supposed to disappear by March 3.

AB 428: Electricity customers will be separated to core and noncore accounts, similar to the way gas customers are treated. Customers using 500 kW or more would be responsible for securing their all electricity supplies beginning in 2006. Utilities would not be obligated to serve these noncore customers.

AB 151: Generators importing power into the state would have to pay 0.1 cents per kilowatt hour to mitigate emissions associated with that electricity. Would apply to generating facilities by US companies located in Mexico within 100 km of the US border.

AB 404: similar AB 151, except the power plant need only affect US air basins to invoke the emissions mitigation fee.

AB 489. This declares the state’s interest in developing distributed generation from oil production operations that use flared gas as long as such efforts result in net air quality benefits.

AB 426: This bill would allow for solar panels to be installed over water-conveyance facilities operated by the Department of Water Resources.

AB 583: Current law prohibits public utilities under CPUC regulation from selling or disposing of power plants before 2006. This bill would exempt from those provisions the sale of or interest in generation located outside the state as long as that generation is owned exclusively by a public utility that serves 50,000 or fewer customers in California.

AB 816: This bill would make sure that newly formed municipal utilities do not shirk their DWR cost responsibilities. The bill would affect only those munis formed since the energy crisis and taking over a portion of another utility’s service territory.

AB 860: Under the Public Utilities Act, this bill would seek to exempt certain power producers from being classified as “electrical corporations.” Such generators would be those adjacent to and providing power to a seawater desalination plant.

AB 925: Under this bill, developers of thermal power plants seeking an expedited air-quality permit would have to satisfy fewer conditions. In addition, contrary to current law, such a plant would no longer be required to undergo modification or be shut down within three years. Owners would be required to obtain emission offsets or pay emission mitigation fees.

AB 1214: This bill would promote the development of fuel cells by requiring utilities to provide net-energy metering for customer generators. This rule would be in place until January 2009 rather than January 2006, as prescribed in present statute. The bill would also prohibit total statewide capacity for fuel cell generators under this program from exceeding 350 MW.

AB 1352: This measure would further “the most efficient operation” of municipal utilities by “re-structuring the functions and duties” of state agencies overseeing California’s electric markets.

AB 1684 and 1685: AB 1684 would exempt from Department of Water Resources surcharges those customers who leave the utility system in favor of using solar installations. AB 1685 would direct the CPUC to set up a self-generation incentive pro-gram for solar energy supplies. The commission already has such a pro-gram in place for customers using distributed-generation resources. The bill also would abolish the Electricity Oversight Board.