BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 2561 - Villines/Fuentes Hearing Date: June
29, 2010 A
As Amended: June 27, 2010 FISCAL B
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DESCRIPTION
Current law establishes the State Energy Resources Conservation
and Development Commission (CEC) within the Resources Agency
with duties as the state's primary policy and planning agency
for energy, including licensing large thermal power plants,
adopting energy efficiency standards, adopting the Integrated
Energy Policy Report, and approving funding for energy-related
programs.
This bill abolishes the CEC and establishes a new Department of
Energy (DOE) headed by a Secretary of Energy appointed by the
Governor and transfers functions of the CEC to the DOE.
Current law provides for the CEC to be comprised of five members
appointed by the Governor and confirmed by the Senate, with a
chair chosen by the Governor, and the Secretary of the Resources
Agency and the President of the California Public Utilities
Commission (CPUC) to serve as ex officio nonvoting members.
This bill establishes the California Energy Board within the DOE
to be comprised of four members appointed by the Governor and
confirmed by the Senate, plus the DOE Secretary as chair, and.
and the Secretary of the Resources Agency and the President of
the CPUC as ex officio nonvoting members, with duties similar to
the CEC.
Current law establishes the currently defunct Electricity
Oversight Board (EOB) to ensure a reliable supply of
electricity, focus on transmission and minimizing service
outages, and oversee the California independent System Operator
(CAISO) and the currently defunct Power Exchange.
This bill abolishes the EOB and transfers its energy market
monitoring responsibilities to a new Office of Energy Marketing
Oversight established within CEC.
This bill requires DOE to create a legal subcommittee comprised
of specified members to develop a single statewide position on
litigation concerning energy matters.
Current law provides for the Office of Planning and Research to
administer a low-interest loan program for small businesses to
maximize energy efficiencies, and for the Department of General
Services and Office of the State Architect to administer energy
efficiency programs for state buildings.
This bill transfers to the new DOE the energy functions of the
Office of Planning and Research, Department of General Services
and Office of the State Architect.
This bill repeals provisions establishing the currently defunct
California Consumer Power and Conservation Financing Authority.
The California Constitution establishes the CPUC to fix rates
and establish rules for all public utilities under its
jurisdiction and provides the Legislature with plenary power to
confer additional authority and jurisdiction upon the CPUC.
Current law provides the CPUC with authority over siting and
licensing of electric transmission lines.
This bill requires the DOE, in consultation with the CPUC and
CAISO to submit to the Governor and the Legislature by January
1, 2012, a report that identifies administrative and statutory
measures for improving the siting and licensing process for
electric transmission lines.
BACKGROUND
This bill, sponsored by the Administration, is likely Governor
Schwarzenegger's last attempt to achieve reorganization of the
state's energy functions, which began with his 2004 "blow up the
boxes" plan for overhauling state government. While the
Governor succeeded in reorganizing many state entities to
increase efficiency and improve performance, repeated attempts
to reorganize what the Administration views as duplicative and
fragmented energy functions have failed.
At least since a 1984 Little Hoover Commission report found that
the CEC lacks effective mechanisms to implement policy and
duplicates CPUC functions, problems with the current structure
have been considered by the Legislature, Legislative Analyst's
Office and Public Policy Institute of California, among others.
The common themes have been proposals to eliminate duplication,
consolidate functions in a single department or agency, and
create greater accountability, responsibility and authority for
the development, implementation, and coordination of the state's
energy policies. Recommendations for change followed the
deregulation of electricity in 1996 and the energy crisis of
2001.
In 2005, AB 1190 (Canciamilla) established an Energy Agency and
required the Governor to submit a Governor's Reorganization Plan
(GRP) to the Little Hoover Commission by May 1, 2006, and to the
Legislature by July 1, 2006. The bill also specifies the
structure and elements of the GRP, which consolidates existing
state energy-related functions into one DOE, which is
administered by the Secretary of Energy. Shortly thereafter,
the Governor introduced Governor's Reorganization Plan (GRP) #3,
which was rejected by the Legislature due to legal issues
concerning proposed changes involving the CPUC. The Governor
resubmitted the GRP proposal to the Legislature in bill form (AB
1165, Bogh) and included certain policy changes made in response
to issues raised during the hearings on GRP held by the Little
Hoover Commission. AB 1165 made the Secretary a member of the
commission. It also made the new DOE the lead state entity to
appear before the Federal Energy Regulatory Commission (FERC),
while allowing other state entities to also appear. Last year,
AB 1016 (Villines) and ABX3 33 (Villines) both attempted to
reorganize the energy agencies. Nether bill made it to
enrollment.
COMMENTS
1)Author's Purpose . According to the author and the
Administration, the sponsor, consolidating the various
fragmented state energy functions and authorities within the
DOE with a cabinet-level Secretary of Energy will establish
greater accountability, with clear lines of leadership,
responsibility and authority for the development,
implementation, and coordination of the state's energy
policies. In addition, vesting the Administration's authority
for energy policy with a Secretary of Energy will improve
communications with the Legislature, the public, and the
federal government.
2)Greater Leadership and Accountability . This bill will result
in one person - the Secretary of Energy - being directly
accountable to the Governor for energy regulation and policy.
Elevating the subject of energy to cabinet-level importance
may be beneficial as the state seeks to achieve ambitious
renewable energy goals. This streamlined leadership may also
enable the Legislature to exercise more effective oversight of
energy regulation and policy.
3)CPUC . Unlike prior energy reorganization proposals, this bill
does not transfer energy functions of the CPUC to the DOE,
thereby avoiding issues regarding the CPUC's constitutional
autonomy and independence. The CPUC will retain its authority
over energy utilities and its authority over siting and
licensing of electric transmission lines.
4)Transmission Lines . This bill requires the DOE, in
consultation with the CPUC and ISO, to submit to the Governor
and the Legislature by January 1, 2012, a report that
identifies administrative and statutory measures for improving
the siting and licensing process for electric transmission
lines and specifically requires an evaluation of whether
efficiencies could be achieved if transmission siting was
transferred to the DOE. PG&E and the Administration have
recommended amendments to require the report to include an
examination of both of the following:
"the inefficiencies and duplication in the existing
planning process and recommendations to address these
issues including the duplicative needs determinations by
the Public Utilities Commission and Independent System
Operator."
"recent actions by the Public Utilities Commission
to improve the transmission siting process as well as its
performance in siting electric transmission projects."
The many prior proposals to reorganize the state's energy
functions have involved extensive debate about transfer of
transmission line siting to a new DOE. Thus, it is
unlikely that another study will uncover significant new
information. Moreover, requiring a new department to
report on whether duties should be transferred to itself
may result in impartial recommendations. Thus, the author
and committee may wish to consider amending the bill to
delete this report requirement.
1)Technical Amendments . The following technical changes are
recommended:
a) On page 219, delete lines 1 to 12
b) On page 43, line 36, strike out "licensing" and insert
"permitting"
2)Re-Referral . Should this bill pass this committee it should
be referred to the Senate Rules Committee.
ASSEMBLY VOTES
Assembly Utilities & Commerce 14-0
Assembly Natural Resources 9-0
Assembly Appropriations 17-0
Assembly Floor 73-1
POSITIONS
Sponsor:
Governor Arnold Schwarzenegger
Support:
Building Owners and Managers Association of California
California Apartment Association
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Forestry Association
California Taxpayers Association
International Council of Shopping Centers
National Association of Industrial and Office Properties,
California Council
Pacific Gas and Electric Company (PG&E)
San Diego Gas and Electric
Sempra Energy Utilities
Southern California Edison Gas Company
Oppose:
None on file.
Jackie Kinney
AB 2561 Analysis
Hearing Date: June 29, 2010