BILL ANALYSIS Ó
AB 687
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Date of Hearing: April 30, 2013
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Luis Alejo, Chair
AB 687 (Roger Hernandez) - As Amended: April 10, 2013
SUBJECT : Electricity; remediating contaminated groundwater.
SUMMARY : Permits the California Public Utilities Commission
(PUC) to give priority direct electrical power purchase rights
to public entities cleaning up polluted Superfund groundwater.
Specifically, this bill :
1)Gives priority direct power purchase rights to public entities
currently remediating groundwater that local, state and
federal agencies have identified as contaminated and that the
United States Environmental Protection Agency (US EPA) has
placed on its Superfund list.
2)Requires the public entity receiving the direct power purchase
to use moneys saved for activities related to treating or
remediating contaminated groundwater at the site and report
the amount of savings to the Energy Division of the PUC.
EXISTING LAW :
1)Pursuant to both federal and state law, establishes an
extensive and complex series of programs authorizing public
agencies to order owners of contaminated property to conduct
cleanups of these properties, including the following:
a) The Federal Comprehensive Environmental Cleanup,
Response and Liability Act (CERCLA 42 U.S.C. 9601 et seq.),
commonly referred to as the federal Superfund law; and
b) The California Carpenter-Presley-Tanner Hazardous
Substance Account Act (commencing with Section 25300 of the
Health and Safety Code), commonly referred to as the State
Superfund Program.
2)Requires the PUC, pursuant to electrical restructuring, to
authorize and facilitate direct transactions between
electricity suppliers and retail end-use customers.
3)Requires the PUC to allow individual retail nonresidential
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end-use customers to acquire electric service from other
providers in each electrical corporation's distribution
service territory up to a specified maximum allowable total
kilowatt hours annual limit.
FISCAL EFFECT : Unknown.
COMMENTS :
1)Need for this bill . According to the author," This bill will
ensure that entities cleaning up environmental pollution can
purchase power at a significant cost savings to operate the
large pump and treat systems in use in these major
contaminated groundwater cleanup projects. Treatment plans
operate around the clock 365 days a year with especially high
costs incurred during the peak periods of power demand during
the summer. Qualifying projects will be able to use the
savings they accrue with the purchase of direct access power
to defray capital and annual operating costs of cleanup for
future site cleanup, to the benefit of project funding
entities and to water service ratepayers. In the case of a
single operating unit in the San Gabriel Superfund project
alone, it is estimated that direct access will provide the
facility operator a 7-10% savings on its annual power budget
of over $2 million."
2)Direct access power purchases . Through direct access,
eligible retail customers have the choice to purchase electric
power directly from an independent electric service provider
(ESP) rather than only through an investor-owned utility.
Direct access was first instituted as an option for retail
electric service in 1998, as part of an industry restructuring
program to bring retail competition to California electric
power markets.
Pursuant to SB 695 (Kehoe, Chapter 337, Statutes of 2009), the
direct access market opened to individual retail
nonresidential customers up to an annually capped level of
service to be phased in over a period of 3-5 years. In March
2010, the PUC adopted a plan to increase available direct
access power to allow expansion of direct access service to
this new group of authorized customers within the service
territories of California's three largest regulated utilities.
The authorization for direct access is being implemented by
the PUC through a 4-year annually capped phase-in schedule.
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After the 4-year phase-in period, which ends in 2013, there
will be approximately 12.87% of total retail sales being
served by entities other than the regulated utilities. The
current direct access users are largely represented by
commercial and industrial customers.
3)Federal Superfund sites in California . Superfund is the name
given to the environmental program established to address
abandoned hazardous waste sites. It is also the name of the
fund established by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (CERCLA).
It allows the US EPA to clean up such sites and to compel
responsible parties to perform cleanups or reimburse the
government for US EPA-lead cleanups. California currently has
94 federal Superfund sites.
4)San Gabriel Valley groundwater contamination . This bill is
sponsored by the San Gabriel Basin Water Quality Authority
which is involved in the cleanup of the superfund sites in the
San Gabriel Valley. These sites include multiple areas of
contaminated groundwater in the 170-square mile San Gabriel
Valley. The contaminated areas underlie significant portions
of the cities of Alhambra, Arcadia, Azusa, Baldwin Park,
Industry, Irwindale, El Monte, La Puente, Monrovia, Rosemead,
South El Monte, and West Covina.
According to the US EPA, the groundwater contamination in the
San Gabriel Valley was first detected in 1979. Following this
discovery, the California Department of Health Services
initiated a well sampling program to assess the extent of
contamination. By 1984, when US EPA added four areas of
contamination to the Superfund National Priorities List, 59
wells were known to be contaminated with high levels of
volatile organic compounds. US EPA's Superfund projects are
assisting in restoring water supplies that have been affected
by the contamination.
5)Cleaning up contaminated drinking water . While there are
currently 94 federal superfund sites eligible for direct
access under this bill, additional sites of groundwater
contamination face many of the same high energy uses for water
treatments. According to the State Water Resources Control
Board, 265 community public water systems that rely on
contaminated groundwater serve a little over two million
people. Most of the community public water systems with
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violations of drinking water standards are located in the
Southern California Inland Empire, the east side of San
Joaquin Valley, the Salinas Valley and the Santa Maria Valley.
Suggested committee amendments : The author may wish to
consider amending AB 687 to allow public water systems that
are relying on water treatment to remove contaminants to be
eligible for direct access power purchase.
6)Arguments in support . According to the sponsors of the bill,
San Gabriel Basin Water Quality Authority, "This bill saves
ratepayer funds and accelerates the remediation of
contaminated groundwater at USEPA Superfund sites. Another
benefit, as required by California public policy, is
replenishing local groundwater supplies. Ability to purchase
direct access power has been on a first come first served
basis. Given the limited supply of direct access power, the
proposed legislation directs the CPUC to give priority
purchase rights to public entities operating qualified
environmental cleanup projects to ensure that they can
purchase this less expensive direct access power. The measure
will provide significant cost savings for cleanup operators
that can be used to pay for future cleanup costs, to the
benefit of the entities that contribute funding to these
cleanups and to the affected water service ratepayers."
7)Argument in opposition . According to the California
Manufactures and Technology Association; CMTA opposes AB 687
to provide certain customers preferential treatment for the
limited amount of direct access available on the utility
system. Many manufacturers use direct access contracts to
manage their electric bills and remain competitive in
California's high cost operating environment. This bill would
put manufacturers and other customers behind public entities
performing environmental clean-up work.
Double referral : This bill was previously heard in the Assembly
Utilities and Commerce Committee on April 8, 2013, and approved
with a 9 to 5 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
San Gabriel Basin Water Quality Authority (Sponsor)
AB 687
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Three Valleys Municipal Water District
Opposition
California Manufactures and Technology Association
Analysis Prepared by : Bob Fredenburg / E.S. & T.M. / (916)
319-3965