BILL ANALYSIS Ó 1 SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE ALEX PADILLA, CHAIR AB 1073 - Fuentes Hearing Date: March 12, 2012 A As Amended: February 23, 2012 FISCAL/Urgency B 1 0 7 3 DESCRIPTION Current law vests the California Energy Commission (CEC) with exclusive certification jurisdiction over thermal powerplants with a generating capacity of 50 megawatts (MW) or more, and any appurtenant facilities. Current law excludes from the definition of a thermal powerplant any wind, hydroelectric, or solar photovoltaic (PV) electrical generating facility. Current law allows a thermal powerplant with a generating capacity of less than 50 MW to voluntarily submit to the CEC's exclusive certification jurisdiction. Current law authorizes the CEC to retain jurisdiction over specified solar thermal powerplants where the owner seeks an amendment to the certification to convert the electric generating facility to PV thus avoiding the necessity of filing a new application with a local jurisdiction. This bill clarifies that the CEC's jurisdiction over specified solar thermal powerplants which seek conversion to PV also applies to a PV powerplant that was challenged in court but for which the challenge was later dismissed. BACKGROUND CEC Siting Process - The CEC performs the siting review function for all large thermal powerplants, including concentrated solar thermal, natural gas combined cycle, and geothermal powerplants. It is a one-stop shop wherein all state, local, and regional environmental reviews are completed. The process begins with an Application for Certification (AFC) by the powerplant developer. Once complete the CEC staff reviews the project and issues a Preliminary Staff Assessment (PSA), which contains their analysis of the engineering, environmental, public health and safety aspects of the project. The PSA determines if the project conforms to all applicable laws, ordinances, regulations and standards. Upon identifying any potentially significant environmental impacts, the PSA recommends mitigation measures in the form of conditions of certification for construction, operation, and closure of the project. The PSA is issued for public comment and is revised, if warranted, and reissued as a Final Staff Assessment (FSA). This document is subject to formal public hearings before CEC Commissioners. The five member CEC may accept or revise the FSA, which is voted on in a public meeting. Changing Market Conditions - Solar thermal generation uses mirrors or lenses to concentrate a large area of sunlight, or solar thermal energy, onto a small area. Electrical power is produced when the concentrated light is converted to heat, which drives a heat engine (usually a steam turbine) connected to an electrical power generator. Since 2007 the CEC has received project applications from developers of 16 solar thermal plants collectively totaling over 5,700 MW of generation primarily located in the Mojave and Colorado desert regions of Southern California. However as the siting process neared completion for some of these projects, and in some instances after an application had been certified by the CEC, market prices for solar PV dropped so precipitously that some solar thermal project developers desired to change technologies seeking a lower cost of power generated from the plant. Had the developers began the siting process with PV they would have been required to gain siting approvals from the city or county in which the project was located. But because the CEC had already done much, if not all of the work required for siting the solar thermal projects, a question was raised as to whether the project applicant should be required to begin the siting process all over again at the local level or whether the CEC had the authority to accept an amended application from the developer to convert the plant to PV. In response the Legislature adopted SB 226 (Simitian) in 2011 which provided the CEC with limited jurisdiction over PV projects which were filed after August 15, 2007 and approved by the CEC and for projects on federal land where a decision had been issued by the Bureau of Land Management before September 1, 2011. The one caveat was that a project would not qualify for the exception if the project had been challenged in court. The author of the bill submitted a letter to the Senate Daily Journal expressing his intent that this limitation did not apply to a project which was challenged in court but subsequently dismissed. K Road Calico Solar - This project originated with the CEC in 2008 as a solar thermal project and was approved as such in December 2010. The 663.5-megawatt project was to be constructed on a 4,613-acre site located in San Bernardino County approximately 37 miles east of Barstow. In December 2010 the project was challenged in the California Supreme Court alleging that the CEC's environmental review was deficient. The challenge was dismissed in April 2011. In March of 2011 the project developers filed an amendment to their project with the CEC to convert the electrical generation to PV from solar thermal. The amendment did not propose to change the size, boundary, or generating capacity of the previously approved project but additional environmental review by the CEC would be necessary. COMMENTS 1. Author's Statement . AB 1073 is a "clean up" measure that clarifies one minor issue contained in SB 226 (Simitian) from last year. The bill authorized a small group of solar projects that were certified by the CEC to petition the CEC for an amendment to the certificate if they switch their technology from solar thermal to solar PV. Any project that was challenged in court was barred from seeking such an amendment. In a letter to the Senate Journal, Senator Simitian clarified his intent relative to SB 226 language - stating that it was not his intent to bar projects "?whose certificate was challenged and subsequently dismissed by the California Supreme Court." AB 1073 simply clarifies that point in statute - using the same language from the letter itself - to ensure there is no ambiguity. Further, AB 1073 clarifies that nothing in the new law abrogates a party's right to challenge projects going forward - a point also contained in the letter to the Senate Journal. 2. Conversion . On its face it seems logical and efficient to allow one siting agency, which had already invested a great deal of time and expertise in the siting of a project, to continue the work even if a project applicant later modifies the electrical generation technology. That was the purpose behind SB 226. On its face, this bill is technical and clarifying. Its provisions, in effect, will only apply to one project - K Road Calico Solar. There is however opposition to this measure from several environmental advocacy groups which reportedly supported or remained neutral on SB 226 last fall. Their concern isn't necessarily related to the authority of the CEC but the way that authority has been used for the Calico project. They remain concerned that the CEC's environmental review of K Road Calico's original application was deficient and that local agency review would be more effective. They also opine that this project location was a bad choice from the start and its siting cannot strike the balance between the necessity for clean energy while maintaining a healthy environment. 3. CEC Taking License ? A proposed decision (PD) of the CEC on a siting application referred to as Ridgecrest has drawn fire. It is germane to this bill because the PD asserted that the CEC has the authority to allow any project developer of any non-thermal electric generation facilities in the state to voluntarily utilize the CEC's siting process. At issue in Ridgecrest is the conversion of a solar thermal plant to PV and the CEC's siting jurisdiction. The law prior to SB 226 and still in effect does provide for an exception for a project developer to "voluntarily" file an application with the CEC for any facility excluded from the CEC's specific statutory authority which the PD argues includes PV. If the law provided for that option, then this bill and its predecessor SB 226 would not be necessary. Current law defines a "facility" as a thermal powerplant and a "thermal powerplant" is defined as a plant of 50 MW or more. The committee sees the CEC's jurisdictional exception as one for plants under 50 MW in size, not for any non-thermal plant. Legislative history approving SB 226 is consistent with this interpretation. Moreover, the CEC's siting division is not funded to accommodate the additional responsibility of siting non-thermal powerplants. Although thermal developers do pay licensing fees, those fees are not sufficient to cover the full agency costs of siting the projects. Consequently, siting is subsidized by electric ratepayers through the surcharges that all gas and electric customers pay to the agency through fees on their utility bills and the CEC would face adverse budget impacts if it routinely accepted applications for non-thermal plants. ASSEMBLY VOTES Not relevant POSITIONS Sponsor: Author Support: K Road Calico Solar Oppose: Audobon California Center for Biological Diversity Defenders of Wildlife Natural Resources Defense Council The Nature Conservancy Sierra Club California The Wilderness Society Kellie Smith AB 1073 Analysis Hearing Date: March 12, 2012