Re: Davis' solutions may be in trouble: New plants built in ,
 California is just figuring this out?  As any second-year law student could=
=20
tell you, the problem with conditioning fast-track permitting on selling=20
electricity to California is that it violates the holding in the 1994 U.S.=
=20
Supreme Court case Dolan v. City of Tigard (city could not require hardward=
=20
store to "donate" land for a bike-path as a condition to granting a permit =
to=20
expand the hardware's parking lot). =20

Steve





Alan Comnes
04/04/2001 10:52 AM
To: Rcarroll@bracepatt.com, Tim Belden/HOU/ECT@ECT, Steve C Hall/PDX/ECT@EC=
T,=20
Sean Crandall/PDX/ECT@ECT, Susan J Mara/NA/Enron@ENRON, Jeff=20
Dasovich/NA/Enron@Enron, Steve Walton/HOU/ECT@ECT, Christi L=20
Nicolay/HOU/ECT@ECT
cc: =20

Subject: Davis' solutions may be in trouble: New plants built in California=
=20
don't have to sell electricity here, state lawyers conclude

At least one state agency says you cannot cut exports.  We should probably=
=20
cite this in our Reliant complaints response.


Davis' solutions may be in trouble: New plants built in California don't ha=
ve=20
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=
=20
here, even as a trade-off for super-fast environmental review, lawyers at t=
he=20
state Energy Commission have concluded.

Their position, reached despite Gov. Gray Davis' vow that new megawatts "wi=
ll=20
stay in California," emerged as part of a fast-track approval for expanding=
 a=20
south state power plant.

It comes as the agency that oversees plant licensing is whittling away at t=
he=20
presumption that emergency "peaking" plants installed this summer will be=
=20
temporary. Some of the peaking plants - to be used only at times of highest=
=20
energy demand - are now proposed to stay in place 30 to 40 years.

Both issues have bubbled up quietly during California Energy Commission=20
reviews, sometimes addressed only indirectly in staff reports.

"This is a major public policy issue for all of California. If we're buildi=
ng=20
these plants on an expedited basis and we're not getting any electricity ou=
t=20
of it, why are we doing it?" asked William Workman, Huntington Beach=20
assistant city administrator.

The answer, according to the Governor's Office and the Energy Commission, i=
s=20
twofold. First, the plants are needed no matter what, because the entire We=
st=20
is power poor. And second, it looks like a California sales clause would=20
violate federal interstate commerce law.

"We're not supposed to take protectionist action against our fellow states,=
"=20
said Bill Chamberlain, chief counsel to the Energy Commission. He said=20
numerous Supreme Court decisions have held that a state can't use its=20
regulatory powers - such as permitting processes - to give its residents an=
=20
economic advantage.

Although there is no guarantee, the Governor's Office, power plant builders=
=20
and the state Environmental Protection Agency say most of the plants being=
=20
rushed to life will probably end up selling to the state Department of Wate=
r=20
Resources.

"The people who are building these power plants know very well that we expe=
ct=20
it to be used in California, and we're confident that it will be," Davis=20
spokesman Roger Salazar said.

Cal-EPA Secretary Winston Hickox said the "preponderance" of new peaking=20
plants will devote their electricity to California.

"We will do everything that we can to encourage that the energy produced as=
 a=20
result of our bending over backward to be accommodating is sold to=20
California. We're not there yet, but I believe we'll get there," Hickox sai=
d.

He also said the three-week reviews of peaking plants have cut no corners i=
n=20
terms of fundamental environmental standards.

Two of those plants scheduled for Energy Commission votes today were praise=
d=20
by environmentalists as having relatively low emissions of smog-forming=20
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=
=20
for more than the summer," said Gail Ruderman Feuer of the Natural Resource=
s=20
Defense Counsel.

The first peaking plant approved by the commission, the United Golden Gate=
=20
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=
=20
indefinite approval, and their builder, InterGen North America, said it=20
intends to keep them running for 30 to 40 years.

"There's no way affected communities can know what's going on with the=20
processes that are so short," said Sandra Spelliscy, general counsel of the=
=20
Planning and Conservation League. "I don't want to say negative things abou=
t=20
that particular peaker (but) =01( I think we're going to wake up in six to =
12=20
months and realize we did a lot of stuff that we regret."

In Huntington Beach, city officials say they are largely pleased with the=
=20
fast-track process that protected most of their major concerns over a=20
proposal by AES to quickly revive two mothballed steam turbines at its=20
seaside plant.

But a slower review process would have offered even more, Workman said. It=
=20
would have delayed the plant for results of studies on sea life injured or=
=20
killed by cooling water intakes and potential increases in ocean pollution.

He worries that his city's residents gave up those protections without any=
=20
certainty that California will benefit from the extra 450 megawatts AES wil=
l=20
be able to crank out.

Huntington Beach sought a California buyer clause in the AES permit, which =
is=20
scheduled for an Energy Commission vote next week, but it was rejected in a=
=20
cryptic report that only notes the commission staff has taken no stand on t=
he=20
issue.

AES would have opposed such a provision, because it believes the Energy=20
Commission has no authority to tell it where to sell, said Aaron Thomas, a=
=20
manager at AES Pacific.

"In our case, there is no need to have a shotgun to our head," he said. AES=
=20
is negotiating to sell all 450 megawatts to the state.

Meanwhile, the governor acknowledged what an Energy Commission report=20
outlined last week - that his goal of 5,000 more megawatts online by July=
=20
will not be met.

"We have a real challenge in the early part of the summer," Davis said=20
Tuesday. "We do have more than 4,000 megawatts coming online by late summer=
.=20
Usually, the challenge is in August and September. This year, the challenge=
=20
may well be in May and June."

The Bee's Carrie Peyton can be reached at (916) 321-1086, cpeyton@sacbee.co=
m.=20
Emily Bazar of The Bee Capitol Bureau contributed to this report.=20




=20
=20
  =20

NEWS SEARCH
Search local and national political news.
=20
 anyall of the search words.=20
=20
=20
Problems? Suggestions? Let us hear from you.     |     Copyright , The=20
Sacramento Bee =20
=20
alan.comnes@enron.com