California is just figuring this out?  As any second-year law student could 
tell you, the problem with conditioning fast-track permitting on selling 
electricity to California is that it violates the holding in the 1994 U.S. 
Supreme Court case Dolan v. City of Tigard (city could not require hardward 
store to "donate" land for a bike-path as a condition to granting a permit to 
expand the hardware's parking lot).  

Steve





Alan Comnes
04/04/2001 10:52 AM
To: Rcarroll@bracepatt.com, Tim Belden/HOU/ECT@ECT, Steve C Hall/PDX/ECT@ECT, 
Sean Crandall/PDX/ECT@ECT, Susan J Mara/NA/Enron@ENRON, Jeff 
Dasovich/NA/Enron@Enron, Steve Walton/HOU/ECT@ECT, Christi L 
Nicolay/HOU/ECT@ECT
cc:  

Subject: Davis' solutions may be in trouble: New plants built in California 
don't have to sell electricity here, state lawyers conclude

At least one state agency says you cannot cut exports.  We should probably 
cite this in our Reliant complaints response.


Davis' solutions may be in trouble: New plants built in California don't have 
to sell electricity here, state lawyers conclude
By Carrie Peyton
Bee Staff Writer
(Published April 4, 2001)
California can't require builders of new power plants to sell electricity 
here, even as a trade-off for super-fast environmental review, lawyers at the 
state Energy Commission have concluded.

Their position, reached despite Gov. Gray Davis' vow that new megawatts "will 
stay in California," emerged as part of a fast-track approval for expanding a 
south state power plant.

It comes as the agency that oversees plant licensing is whittling away at the 
presumption that emergency "peaking" plants installed this summer will be 
temporary. Some of the peaking plants - to be used only at times of highest 
energy demand - are now proposed to stay in place 30 to 40 years.

Both issues have bubbled up quietly during California Energy Commission 
reviews, sometimes addressed only indirectly in staff reports.

"This is a major public policy issue for all of California. If we're building 
these plants on an expedited basis and we're not getting any electricity out 
of it, why are we doing it?" asked William Workman, Huntington Beach 
assistant city administrator.

The answer, according to the Governor's Office and the Energy Commission, is 
twofold. First, the plants are needed no matter what, because the entire West 
is power poor. And second, it looks like a California sales clause would 
violate federal interstate commerce law.

"We're not supposed to take protectionist action against our fellow states," 
said Bill Chamberlain, chief counsel to the Energy Commission. He said 
numerous Supreme Court decisions have held that a state can't use its 
regulatory powers - such as permitting processes - to give its residents an 
economic advantage.

Although there is no guarantee, the Governor's Office, power plant builders 
and the state Environmental Protection Agency say most of the plants being 
rushed to life will probably end up selling to the state Department of Water 
Resources.

"The people who are building these power plants know very well that we expect 
it to be used in California, and we're confident that it will be," Davis 
spokesman Roger Salazar said.

Cal-EPA Secretary Winston Hickox said the "preponderance" of new peaking 
plants will devote their electricity to California.

"We will do everything that we can to encourage that the energy produced as a 
result of our bending over backward to be accommodating is sold to 
California. We're not there yet, but I believe we'll get there," Hickox said.

He also said the three-week reviews of peaking plants have cut no corners in 
terms of fundamental environmental standards.

Two of those plants scheduled for Energy Commission votes today were praised 
by environmentalists as having relatively low emissions of smog-forming 
compounds, but they still were concerned by the 21-day review.

"If you're having a quick review, a plant shouldn't be allowed to continue 
for more than the summer," said Gail Ruderman Feuer of the Natural Resources 
Defense Counsel.

The first peaking plant approved by the commission, the United Golden Gate 
Project in San Mateo County, was given permission to run for three years.

But the next two, in San Diego and Palm Springs, are being recommended for 
indefinite approval, and their builder, InterGen North America, said it 
intends to keep them running for 30 to 40 years.

"There's no way affected communities can know what's going on with the 
processes that are so short," said Sandra Spelliscy, general counsel of the 
Planning and Conservation League. "I don't want to say negative things about 
that particular peaker (but) ( I think we're going to wake up in six to 12 
months and realize we did a lot of stuff that we regret."

In Huntington Beach, city officials say they are largely pleased with the 
fast-track process that protected most of their major concerns over a 
proposal by AES to quickly revive two mothballed steam turbines at its 
seaside plant.

But a slower review process would have offered even more, Workman said. It 
would have delayed the plant for results of studies on sea life injured or 
killed by cooling water intakes and potential increases in ocean pollution.

He worries that his city's residents gave up those protections without any 
certainty that California will benefit from the extra 450 megawatts AES will 
be able to crank out.

Huntington Beach sought a California buyer clause in the AES permit, which is 
scheduled for an Energy Commission vote next week, but it was rejected in a 
cryptic report that only notes the commission staff has taken no stand on the 
issue.

AES would have opposed such a provision, because it believes the Energy 
Commission has no authority to tell it where to sell, said Aaron Thomas, a 
manager at AES Pacific.

"In our case, there is no need to have a shotgun to our head," he said. AES 
is negotiating to sell all 450 megawatts to the state.

Meanwhile, the governor acknowledged what an Energy Commission report 
outlined last week - that his goal of 5,000 more megawatts online by July 
will not be met.

"We have a real challenge in the early part of the summer," Davis said 
Tuesday. "We do have more than 4,000 megawatts coming online by late summer. 
Usually, the challenge is in August and September. This year, the challenge 
may well be in May and June."

The Bee's Carrie Peyton can be reached at (916) 321-1086, cpeyton@sacbee.com. 
Emily Bazar of The Bee Capitol Bureau contributed to this report. 




 
 
   

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