BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 435 - De La Torre Hearing Date:
July 7, 2009 A
As Amended: June 25, 2009 FISCAL B
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DESCRIPTION
Current law requires the California Public Utilities Commission
(CPUC) to certify the public convenience and necessity of a
transmission line before an investor-owned utility (IOU) may
begin construction (Certificate of Public Convenience and
Necessity, or CPCN). The CPCN process includes environmental
review of the proposed project under the California
Environmental Quality Act (CEQA). The CPCN confers eminent
domain authority for construction of the project.
This bill directs the CPUC to study the efficacy of conducting
concurrent federal and state environmental reviews of proposed
transmission lines.
This bill requires the CPUC to approve transmission projects
which it determines are reasonable and necessary for grid
reliability or efficiency or to facilitate the requirements of
the Renewable Portfolio Standard (RPS).
This bill requires the CPUC to report annually to the
Legislature on the status of all pending transmission
applications and actions taken to streamline siting and
permitting.
This bill requires the CPUC streamline its transmission
permitting and siting process and expedite review of all lines.
Current law requires the CPUC to provide backstop cost recovery
in rates for the costs of transmission facilities that are not
approved for rate recovery by the Federal Energy Regulatory
Commission (FERC) but the CPUC finds were prudently incurred.
This bill requires the CPUC to provide backstop cost recovery in
rates for the costs of transmission facilities that are not
approved for rate recovery by FERC but the CPUC finds were
prudently incurred.
Current law requires the Independent System Operator (ISO) to
ensure efficient use and reliable operation of the transmission
grid and to adopt inspection, maintenance, repair, and
replacement standards for transmission facilities under its
control.
This bill requires the ISO to plan and provide for transmission
capacity sufficient to provide reliable service to its control
area and achieve its procurement requirements under the
Renewable Portfolio Standard (RPS). The ISO would be required
to submit an annual plan to the CPUC and CEC on the transmission
needs in its control area for the subsequent ten years.
Current law requires the California Energy Commission (CEC) to
adopt a strategic plan for the state's electric transmission
grid recommending actions required to implement investments
needed to ensure reliability, relieve congestion and meet future
growth in load and generation.
This bill requires each investor-owned utility (IOU) to plan and
provide for transmission capacity sufficient to provide reliable
service to its customers and achieve its procurement
requirements under the RPS. Each IOU would also be required to
submit an annual plan to the CPUC, in consultation with the ISO,
on its transmission needs for the subsequent ten years.
This bill requires all local publicly owned electric utilities
(POUs) to plan and provide reliable transmission service to its
customers.
This bill requires IOUs and POUs to investigate and evaluate the
cost and feasibility of using high-technology conductors on its
current and future transmission facilities and to report the
result to the CEC by July 1, 2011.
BACKGROUND
California Independent System Operator - About 75% of the
state's transmission grid is owned by the IOUs. The ISO, a
not-for-profit public benefit corporation, is charged with
operating the IOU's transmission grid and managing the flow of
electricity. (The ISO also operates municipal utility's
transmission lines that have requested that service.) The ISO
plans for and recommends transmission projects within its
control area by soliciting information from the transmission
owners. The ISO works with a variety of stakeholders and
performs engineering and economic studies on proposed projects
to determine the potential benefits. An annual transmission
plan is produced which forecasts the projects necessary to
maintain the grid for ten years and beyond.
The responsibility for actually building the transmission lines
generally lies with the transmission-owning utilities. Most of
these utilities need to obtain approval from the CPUC before
they can construct new transmission lines. The CPUC conducts a
public hearing process and issues a CPCN if it deems the project
is warranted. The utilities must then initiate a filing at the
FERC to request cost-recovery for both inter- and intra-state
transmission lines.
A significant share of the state's transmission grid is owned by
municipal utilities and outside the jurisdiction of the ISO or
the CPUC. Similar to IOUs, municipal utilities possess eminent
domain authority to acquire rights-of-way for transmission lines
but need no approvals from any state agencies to build new
transmission.
The RETI - A critical element of increasing the electricity
deliveries from renewable resources is the development of new
transmission to remote areas of the state rich with wind, sun
and geothermal renewable fuels. In response to this need the
Renewable Energy Transmission Initiative (RETI) was launched
which is a statewide initiative to help identify the
transmission projects needed to accommodate these renewable
energy goals, support future energy policy, and facilitate
transmission corridor designation and transmission and
generation siting and permitting. RETI is intended to be an open
and transparent collaborative process in which all interested
parties are encouraged to participate.
RETI has assessed all competitive renewable energy zones in
California and some in neighboring states that can provide
significant electricity to California consumers by the year
2020. RETI has also identified those zones that can be developed
in the most cost effective and environmentally benign manner and
will prepare detailed transmission plans for those zones
identified for development.
The RETI effort is supervised by a coordinating committee
comprised of California entities responsible for ensuring the
implementation of the state's renewable energy policies and
development of electric infrastructure, namely:
California Public Utilities Commission
California Energy Commission
California Independent System Operator
Publicly-Owned Utilities (SCPPA, SMUD, and NCPA)
Transmission Progress - The CPUC's October 2008 RPS status
report indicates that two new transmission lines are necessary
to meet the 20 percent goal. Three new transmission lines have
been approved for California or are nearing approval -
Tehachapi, Sunrise, Devers-Palo Verde 2. An additional five
lines would be needed to achieve 33 percent by 2020.
COMMENTS
1. Concurrent Environmental Reviews - It is very difficult
to site a transmission line of any distance without
impacting federal lands. Consequently environmental
reviews under the California Environmental Quality Act
(CEQA) and National Environmental Policy Act (NEPA) must
occur. Under current practice the CPUC is the lead agency
for the environmental impact studies required under these
two laws. When a transmission developer files an
application for a CPCN, the CPUC, in consultation with the
appropriate federal agencies conducts a joint environmental
review which results in the release of one document which
satisfies both state and federal law. This bill requires
the CPUC to study the efficacy of doing a concurrent
environmental review which it already does. The author and
committee may wish to consider striking this provision.
2. Transmission Planning & Reporting - The bill requires
the ISO, CPUC, and IOUs to do specified reviews of the
transmission facilities necessary to provide reliable
service to California ratepayers and meet the state's RPS
requirements and then produce specified reports. This
planning is already done by the parties. The need for
additional studies and reports is not apparent and may be
duplicative.
The ISO is required under Order 890 of the FERC to conduct
and release an annual transmission plan. This process
involves all IOUs and some POUs which participate in the
ISO. The process was mandated by FERC due to concerns that
a lack of coordination, openness and transparency could
result in opportunities to exercise undue discrimination in
transmission planning. The order directed the ISO to
develop and propose a coordinated process that complied
with nine planning principles, which the ISO filed with the
commission in December 2007. The ISO submitted its
Transmission Planning Process Business Practice Manual and
associated tariff changes on October 31, 2008. The result
is an annual transmission plan the most recent of which is
more than 300 pages long. The plan is widely distributed
and available on the ISO's website<1> and covers a minimum
of ten years but can include a study horizon of as much as
25 years.
The author and committee may wish to consider striking
provisions which require the ISO, IOUs, and CPUC to plan
and report on transmission since these activities are
already accomplished and additional reporting requirements
appear to be duplicative of current activities.
3. Cost Recovery - This bill requires the CPUC to allow for
rate recovery for increased transmission costs which are
not approved by FERC but the CPUC finds were prudently
incurred. This provision is duplicative of existing law at
Public Utilities Code Section 319.2.5. The author and
committee may wish to consider striking this provision to
prevent redundancy and ensure clarity of current law.
4. Transmission Streamlining - CPUC Commissioner Dian
Grueneich recently testified before this committee and
reported that the CPUC has 11 transmission-related
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<1> See 2009 California ISO Transmission Plan at
http://www.caiso.com/2354/2354f34634870.pdf.
applications pending and anticipates the number to double
by the end of the year.
The Commissioner additionally reported that in 2006 the
CPUC completed a top to bottom review of its permitting
process which has resulted in a well-managed and staffed
branch that is prepared to handle a rapidly increasing
workload. The CPUC is a full participant in the RETI,
meets quarterly with IOU representatives to discuss further
streamlining and transmission progress, and earlier this
year established regular multi-agency meetings with federal
and state agencies involved in transmission line
permitting.
While much has been made of the complexity and length of
the process of planning, permitting, and constructing
transmission lines, there are few concrete ideas for
simplifying or abbreviating that process without
compromising environmental review and public participation
standards. Typically, transmission projects have extensive
land use, environmental, and economic implications which
necessarily take a long time to sort out. The author and
the committee may wish to consider what the CPUC may do in
response to this bill's direction to streamline the review
process and be cautious about directing the CPUC to
streamline its process without knowing what measures the
CPUC might take.
5. Transmission Conductors - This bill also requires the
IOUs and POUs to investigate and evaluate the cost and
feasibility of using high-technology conductors on its
current and future transmission facilities and to report
the result to the CEC by July 1, 2011. No background
information was provided and the specific term
"high-technology conductors" is not readily discernible.
Staff assumes that this term is meant to encompass new
technologies that can expand the capacity of existing
transmission lines and reduce line-losses. Legislation has
been adopted by this committee to ensure that policies are
studied and developed for the IOUs to develop a smarter
electric grid for the state. The CPUC has also initiated a
rulemaking to consider the elements of a smart grid, the
heart of which would encompass improved transmission
technologies. The proceeding will consider setting
policies, standards and protocols to guide the development
of a smart grid system and facilitate integration of new
technologies such as distributed generation, storage,
demand-side technologies, and electric vehicles. A
separate study of "high-technology conductors" may be
duplicative of the CPUC's rulemaking as well as research
being conducted by the CEC on the elements of a smart grid.
The author and committee may wish to consider striking
this provision to avoid duplication of studies by the
regulatory agencies.
6. Related Legislation . The following bills also affect
transmission siting:
a) SB 14 (Simitian) - Increases RPS goals to 33
percent and makes minor changes to the transmission
planning and approval process. Status: Set in
Assembly Utilities and Communications Committee July
6th.
b) SB 460 (Wolk) - Requires POUs to participate
in the ISO transmission planning process and gives the
CEC permitting authority over POU high-voltage
transmission lines. Status: Senate Appropriations
Suspense File.
c) AB 64 (Krekorian) - Increases RPS goals to 33
percent and creates the Energy Planning Investment
Committee charged with specified transmission
planning. Status: Set for hearing in this committee
July 7th.
d) Governor's Re-Organization (AB 33xxx,
Villines) - Transfers transmission siting authority
from the CPUC to the CEC. Status: Referred to
Assembly Utilities and Communications Committee.
ASSEMBLY VOTES
Assembly Floor (77-0)*
Assembly Appropriations Committee (17-0)*
Assembly Utilities and Commerce Committee
(15-0)*
*Votes on prior version of the bill
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None on file
Kellie Smith
AB 435 Analysis
Hearing Date: July 7, 2009