BILL ANALYSIS Ó
AB 687
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Date of Hearing: May 24, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 687 (Roger Hernandez) - As Amended: April 10, 2013
Policy Committee: Utilities and
Commerce Vote: 9-5
Environmental Safety 5-1
Urgency: State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill authorizes the 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.
FISCAL EFFECT
Increased administrative costs to the PUC under $100,000 for
rulemaking.
COMMENTS
1)Purpose. 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 used in major contaminated groundwater
cleanup projects. Treatment projects operate around the clock
365 days a year, with especially high costs incurred during
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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.
After the 4-year phase-in period, which ends in 2013,
approximately 13% of total retail sales will be 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 U.S. EPA to clean up such sites and to compel
responsible parties to perform cleanups or reimburse the
government for U.S. EPA-lead cleanups. California currently
has 94 federal Superfund sites.
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4)Support . According to the sponsors of the bill, the 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.
5)Opposition . The California Manufactures and Technology
Association opposes providing 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.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081