309 1 SAN FRANCISCO, CALIFORNIA, JUNE 3, 2003 - 10:05 A.M. 2 * * * * * 3 COMMISSIONER WOOD: With that, let's call to order the 4 meeting of the California Electricity Generation Facilities 5 Standards Committee. 6 And I would note that present today here in 7 San Francisco are, of course, myself and Member Kahn. And 8 participating by telephone at a publicly noticed location in 9 Palm Springs is Member Glenn Bjorklund. And there's also one 10 member of the public present there as well. We have with us 11 ALJ Mattson and ALJ Thorson. 12 And we'll now take opening remarks from Committee 13 members, if any of them have any. I have no opening remarks 14 today. 15 Mr. Kahn? 16 MR. KAHN: Neither do I. Thank you. 17 COMMISSIONER WOOD: Mr. Bjorklund? 18 MR. BJORKLUND: Yes. 19 COMMISSIONER WOOD: Do you have any opening remarks? 20 MR. BJORKLUND: No, I don't. I send you greetings 21 from Palm Springs, at 110-degree weather, so -- 22 COMMISSIONER WOOD: Good. Well, better you than us, I 23 think. 24 MR. KAHN: Don't use all our power. 25 COMMISSIONER WOOD: Having no opening comments from 26 Committee members, I'll open the microphone to members of the 27 public that wish to address the Committee. Are there any 28 members of the public that want to speak? 310 1 Yes. Would you please identify yourself, and -- 2 MS. LODUCA: Sure. Good morning. Janet Loduca, on 3 behalf of Pacific Gas and Electric Company. 4 First of all -- 5 COMMISSIONER WOOD: Let me just make sure that 6 Mr. Bjorklund can hear you. 7 Glenn, can you hear Ms. Loduca? 8 MR. BJORKLUND: She's cutting in and out. 9 MS. LODUCA: I'll try and speak right into it. 10 COMMISSIONER WOOD: Thank you. 11 MS. LODUCA: First of all, I'd like to thank the 12 Committee for providing some written responses to the 13 comments that the parties provided on the General Duty 14 Standards. I think that probably took a lot more time on 15 your part, but it was very helpful, from our perspective, to 16 get a sense of what the Committee was thinking, and what 17 direction it was going. 18 I'd like to address very briefly the FERC-licensed 19 hydroelectric powerhouses. The Committee's written response 20 cited Section 19 of the Federal Power Act for the proposition 21 that FERC has authority to approve O&M procedures only when 22 the State hasn't already done so. And, with all due respect, 23 I think that statement overstates the effect of Section 19. 24 I think it's pretty clear from the cases that have actually 25 addressed Sections 19 and 20 of the Federal Power Act that 26 those Sections really deal with electricity rates; and even 27 those cases have made clear that the FERC's jurisdiction 28 under Part 2 of the Federal Power Act dealing with wholesale 311 1 rates trumps the State's jurisdiction that's granted under 2 Sections 19 and 20 of the Federal Power Act. So I don't 3 believe Section 19 extends to O&M standards. 4 And I think that the cases that have addressed 5 operation of FERC-licensed hydroelectric plants have made 6 clear that under Part 1 of the Federal Power Act, FERC really 7 has occupied the field in that area, reserving only a limited 8 area for State rights or State jurisdiction involving water 9 rights. We cited those cases in earlier comments: the 10 First Iowa case as well as the Sayles hydro case. So I just 11 note for the record that I don't believe Section 19 has the 12 broad interpretation that the Committee is giving it. 13 COMMISSIONER WOOD: Ms. Loduca, are you referring to 14 jurisdiction over hydro plants specifically? 15 MS. LODUCA: Correct; FERC-licensed hydro plants in 16 particular. 17 COMMISSIONER WOOD: Okay. 18 MS. LODUCA: One other comment dealing with General 19 Duty Standard 4. We noted in our comments -- and I'd like to 20 emphasize here again today that FERC's jurisdiction under 21 Part 2 of the Federal Power Act extends not only to wholesale 22 rates, but also to practices that affect those rates. And I 23 think that General Duty Standard 4 is imposing on -- into 24 that area, which is reserved for FERC's exclusive 25 jurisdiction. So once again, I'd ask the Committee to 26 reconsider General Duty Standard 4. 27 Thank you. 28 COMMISSIONER WOOD: Are there any other public 312 1 comments? 2 Yes. 3 MR. KATZ: Good morning. My name's Brian Katz, from 4 Southern California Edison. 5 I'd like just to make some comments on Section 4, 6 which was facilities located out of the state, with multiple 7 owners. It's just very difficult to have a plant that is 8 co-owned. It's not municipality-owned. It has a 9 municipality. It has other corporations that are a part of 10 the facilities. And I just would like to read just one 11 sentence out of the operating agreement of this co-owned 12 facility. 13 Participants shall have no right or 14 power to bind any other participant 15 without its or their express written 16 consent. 17 So it's just a problem of control of the plant. 18 You take -- Four Corners, for example, has several 19 owners. It's located outside the Cal ISO. And for any 20 change in our maintenance or operating practices, we would 21 bring it to the participants, but they would have to 22 unanimously agree. 23 And so the concern is control; not that these 24 standards that we're talking about -- operating or 25 maintenance -- are bad standards. We believe we comply with 26 the intent, or have equivalent standards in place to operate 27 these plants reliably. It's just a matter of control. 28 And when you have several owners -- some 313 1 municipalities, some other corporations -- it will be a very 2 difficult process to get unanimous consent on some of these 3 issues. So the issue is: this is associated with both 4 Mohave and Four Corners plant. 5 COMMISSIONER WOOD: Okay. Thank you. 6 Are there any questions from Committee members? 7 Staff? 8 MR. BJORKLUND: If that wording was put in, Brian, 9 then would Edison not have a problem with the General Duty 10 Standards as it affects the out-of-state generating 11 facilities? 12 MR. KATZ: What wording, Carl? I mean Glenn. 13 COMMISSIONER WOOD: Glenn, did you hear that question? 14 Brian wanted to know: what words specifically are you 15 referring to? 16 MR. BJORKLUND: He was talking about wording that 17 would not bind other participants. 18 MR. KATZ: Well, they're not bound in the case of Four 19 Corners. We're not even the operating agent. 20 I think if we went with new requirements, if the 21 other co-owners decided not to implement, we would have no 22 power, no control to implement those requirements at that 23 facility. So it's just -- it's an effective life of the 24 existing agreements. I'm sure when 39 XX was put together, 25 they didn't consider the fact that there would be plants with 26 multiple owners, both in and out of state. 27 MR. BJORKLUND: Yeah, I understand that, but Brian, 28 did you suggest wording that would exclude the other 314 1 participants from these operating practices? 2 MR. KATZ: No, I did not. I just was reading an 3 excerpt out of the Mohave operating agreement that makes it 4 clear that one of the co-owners cannot impose requirements on 5 the other co-owners without their written consent. I'm just 6 making a point from the existing contract that we have. 7 COMMISSIONER WOOD: I would suggest that I think the 8 effect of these rules is not to direct Southern California 9 Edison or any other entity to exert control over the 10 co-owners; it's, rather, that the reach of the rules that we 11 adopt would themselves extend to all of the owners of the 12 facilities, if the facility exists to serve the California 13 utility market. 14 MR. KATZ: Yeah. In the case of Mohave, they have 15 LADWP, which is specifically excluded from having to meet 16 these requirements. So that's just -- it's just a very 17 complex issue, a matter of control to deal with. 18 They can look at it and say, "Well, these 19 requirements don't apply to us, and we don't need to 20 implement them." 21 Now, of course, any improvements in the way we 22 could operate the facilities will be brought to the co-owners 23 for their vote and their consent, but right now I just can't 24 tell you that in all cases they would agree. 25 COMMISSIONER WOOD: Okay. Any additional questions or 26 comments? 27 Thank you, Mr. Katz. 28 MR. KATZ: Thank you. 315 1 COMMISSIONER WOOD: Any additional public comments? 2 Okay. Seeing none, we will move to the next item 3 on our agenda, which, if I can find my agenda -- we will now 4 bring up the General Duty Standards for operation and 5 maintenance, and discuss and present for possible adoption 6 revised General Duty Standards. And I'll recognize 7 Mr. Ziering to present this from Staff. 8 MR. ZIERING: Sure. Thank you, Commissioner. 9 On April 30th, 2003, ALJ Mattson distributed to 10 the Committee service list six proposed General Duty 11 Standards, the first three of which had been the subject of 12 comment by interested parties, and the second three of which 13 were new. 14 The Committee adopted the first three standards on 15 May 2nd, 2003, and requested comments from interested parties 16 on all six standards. 17 Parties submitted comments on May 19th, and reply 18 comments on May 23rd. 19 After reviewing the comments of the parties on 20 May 30, ALJ Mattson distributed to the Committee service list 21 a memorandum outlining the positions of the parties, and a 22 recommended response from the Committee to those comments. 23 In the light of those comments, ALJ Mattson 24 proposed amendments to the three adopted standards, and 25 revisions to the three proposed remaining standards. 26 MR. BJORKLUND: Excuse me, Commissioner Wood. 27 COMMISSIONER WOOD: Yes, Glenn. 28 MR. BJORKLUND: Could I ask them to speak right into 316 1 the microphone? 2 COMMISSIONER WOOD: Okay. 3 MR. ZIERING: My apologies. If it's all right, I'll 4 just pick up where I left off there. 5 In the light of these comments, ALJ Mattson 6 proposed amendments to the three adopted standards, and 7 revisions to the three remaining proposed standards. These 8 revisions provide increased internal consistency among the 9 six standards, and also specify that a facilities owner and 10 its operator, if different, are both subject to these 11 standards. 12 Staff is recommending adoption of the proposed 13 resolution, amending the General Duties Standards 1 through 14 3, and adopting the revised General Duties Standards 4 15 through 6. 16 COMMISSIONER WOOD: Thank you. 17 Any questions from Committee members? 18 With that, I will accept a motion to adopt the 19 recommendation of Staff. 20 MR. KAHN: I would so move. 21 MR. BJORKLUND: Commissioner Wood, I had a chance to 22 review all of the comments. 23 COMMISSIONER WOOD: Yes. 24 MR. BJORKLUND: I've got to say that I feel that 25 notwithstanding the comments, that we should approve the 26 General Duty Standards for operation and maintenance as 27 written, and I would so move. 28 COMMISSIONER WOOD: Okay. 317 1 MR. KAHN: Okay. I'll second it, then. 2 COMMISSIONER WOOD: Okay. Moved by Glenn Bjorklund; 3 seconded by Michael Kahn. 4 Any further comments from Committee members? 5 Okay. Hearing none, we will take a vote. And 6 I'll have to do that by roll call. 7 Mr. Kahn. 8 MR. KAHN: Yes. 9 COMMISSIONER WOOD: Mr. Bjorklund. Glenn, how do you 10 vote? Glenn, are you still on? 11 MR. BJORKLUND: Yes. Can you hear me? 12 COMMISSIONER WOOD: Yeah, but I can't hear your vote. 13 MR. BJORKLUND: The vote is "Yes." 14 COMMISSIONER WOOD: Okay. "Yes" for Mr. Bjorklund. 15 And I vote "Yes," so the motion is carried unanimously. 16 Next item on the agenda is logbook standards. 17 Mr. Ziering. 18 MR. ZIERING: Sure. 19 At the Committee's meeting on May 2nd, you 20 released a draft of logbook standards for hydroelectric 21 plants for comment by parties. 22 PG&E and Edison, who operate the bulk of the 23 hydroelectric facilities subject to SB X2 39, each submitted 24 comments on the proposed standards, arguing generally that 25 the standards were not appropriate to the active operations 26 of their hydroelectric facilities. In particular, they 27 argued that the proposed standard does not adequately address 28 the fact that some stations are manned, and some unmanned. 318 1 We welcome this proposal from the utilities as a 2 constructive step in adopting workable and effective 3 standards. We do have some concerns about the language and 4 form of the proposed standards; for example, they are 5 relatively brief, and may present some problems in 6 interpretation in the future. 7 We believe the best course is to meet with the two 8 utilities and any other interested parties, discuss these 9 concerns, and if possible, to produce a consensus draft. 10 Therefore, we recommend that the Committee take no action on 11 the proposed standards at this time, until we can engage in 12 those discussions. We'll keep you informed of our activities 13 in that area. I think we will work with ALJ Mattson to hold 14 publicly a workshop on this issue. 15 COMMISSIONER WOOD: Okay. Questions or comments from 16 Committee members? 17 MR. BJORKLUND: I would just say that I was pleased 18 and impressed with the effort that PG&E and Edison made in 19 attempting to come back with a resolution or solution to the 20 logbook standards situation for hydro plants. And I commend 21 the Staff for setting up a workshop so that the utilities and 22 the Staff can get together with workable logbook 23 requirements. 24 COMMISSIONER WOOD: Thank you. 25 Mike. 26 MR. KAHN: I don't have any problem with the 27 suggestion. I just would hope that the workshop and the work 28 product of the workshop has a bias toward maintaining as many 319 1 of the logbook standards as we can, rather than determining 2 that we should not do so, for example, on the basis that the 3 facilities are unattended. And we're looking to have as much 4 information as we can for the State, and as much transparency 5 in the operations as we can. So although we want to be duly 6 deferential to operational issues, we also have to understand 7 the needs of this particular initiative. 8 COMMISSIONER WOOD: Okay. 9 MR. KAHN: Do we need a motion? 10 COMMISSIONER WOOD: I don't think so. I think the 11 recommendation is for no action, so we probably don't need a 12 motion for that. 13 MR. KAHN: Okay. 14 COMMISSIONER WOOD: Let's move on to the next item: 15 maintenance standards. Do you have any further report on 16 this, Mr. Ziering? 17 MR. ZIERING: Well, as you recall, Commissioner, on 18 May 2nd the Committee adopted Resolution 2, which designated 19 Section 16, the original maintenance-standards document, as 20 standards applicable to generators, and Sections 2 through 5 21 as a suggested enforcement program for the Commission's 22 consideration. Staff has accordingly revised the document, 23 which was filed in the Commission's ratemaking proceeding on 24 May 16th, and electronically served on the parties in that 25 proceeding. 26 The Resolution also instructed Staff to review 27 Appendix A to determine whether it could be rewritten as 28 additional standards. We are currently reviewing that 320 1 language in Appendix A, as well as considering the comments 2 of various parties in the Commission's rulemaking proceeding. 3 During the month of May, CPUC staff met informally 4 with four owners of generating assets: PG&E, Calpine, Duke 5 Energy, and Elk Hills Power, which is, I believe, a 6 subsidiary of Sempra. All these meetings were primarily 7 focused on discussing how those companies may demonstrate 8 compliance, and their concerns regarding enforcement of those 9 standards. 10 The discussions were also relevant to the Staff 11 review of Appendix A. Several parties noted specific 12 examples of language within Appendix A as illustrating their 13 general concerns. And Staff is considering those examples as 14 part of the review. 15 For example, it uses terminology that is 16 appropriate to a traditional utilities organizational 17 structure that may be inapplicable to some nonutility 18 generators. There are also some issues about provisions of 19 Appendix A which require studies of various issues at power 20 plants. And there's also a question of: what's cost 21 effective to study, and what's not? 22 And there may need to be some careful thinking 23 about where Appendix A applies and where it doesn't. It may 24 need to apply mostly to the most important systems at a 25 plant. CPUC staff -- CPSD staff and the Committee staff has 26 concluded that any revision of the language of Appendix A and 27 enforceable standards would not be limited to minor, cosmetic 28 changes, but could require significant editing. 321 1 Therefore, we continue to review the specific 2 language of Appendix A to determine the appropriateness of 3 each provision to the wide range of California generation 4 facilities, to strike a balance between the burden on the 5 individual generators, and the benefit in improved 6 availability and reliability. We'll keep you informed of the 7 progress of our review. 8 COMMISSIONER WOOD: So you're not recommending any 9 action at this time? 10 MR. ZIERING: That's correct. 11 COMMISSIONER WOOD: Okay. Any questions from 12 Committee members? 13 MR. KAHN: What's your timetable? 14 MR. ZIERING: I think we are just beginning the 15 review. It's a fairly lengthy document. While we hope to 16 have more information, say, in a month or two, at least we'll 17 be able to get back to you with the general picture. 18 MR. BJORKLUND: I have no questions. 19 COMMISSIONER WOOD: Okay. Then we will move on to the 20 next item, which is a report on how we're dealing with 21 developing operations standards. 22 MR. ZIERING: Thank you. 23 ALJ MATTSON: Off the record. 24 (Off the record) 25 COMMISSIONER WOOD: Okay. Back on the record. 26 MR. ZIERING: Okay. At the Committee's meeting on 27 April 1st, Richard Clark described general principles and 28 specific objectives to guide the development of operations 322 1 standards under AB X2 39. We're continuing to work on the 2 development of those standards, and have assigned a Staff 3 team to work on them, to learn more about the operational 4 rules now in force in the utility industry. We're examining 5 past and present operating procedures used by major 6 utilities. And we're also holding informal discussions, as 7 we described, with some of the state's generators. 8 Looking forward, we plan to identify areas where 9 standards should be developed, to analyze alternative 10 approaches toward developing standards in these areas, and to 11 develop the standards themselves. 12 Through a competitive bidding process, we've 13 selected a contractor to help us in our further work. We're 14 now in the process of notifying the winning bidder. 15 Once we develop some initial proposals, we'll hold 16 workshops to exchange ideas with the generators, consumer 17 advocates, and other interested parties to ensure that the 18 standards are practical, enforceable, and workable. 19 COMMISSIONER WOOD: Okay. I gather that the timetable 20 for the operations standards is considerably further off than 21 dealing with the maintenance standards? 22 MR. ZIERING: Well, we have a contractor on board. 23 And we have our Staff team working. I think we may be able 24 to have workshops in perhaps a couple of months. And at that 25 point, I think work could move fairly speedily. 26 COMMISSIONER WOOD: Okay. 27 MR. ZIERING: So possibly by the fall. 28 MR. BJORKLUND: What you were saying is that you are 323 1 looking at the September time frame for operating standards? 2 MR. ZIERING: That's right. And, as I've just said, 3 probably sometime in the fall. 4 COMMISSIONER WOOD: Okay. I wish you luck trying to 5 meet that. I think that developing the operations standards 6 is going to be a very daunting task. 7 MR. ZIERING: I appreciate the understanding, 8 Commissioner. 9 COMMISSIONER WOOD: And that isn't to imply that I'm 10 offering you any slack; just -- 11 MR. BJORKLUND: That's why I wanted to keep that date 12 in front of everyone. 13 COMMISSIONER WOOD: Yes. Any questions or comments 14 from Committee members? 15 MR. KAHN: No. 16 MR. BJORKLUND: No. 17 COMMISSIONER WOOD: Yes. Okay. 18 Other than addressing when we set the next 19 Committee meeting, that's all we actually have on the agenda. 20 I would suggest that probably the next item we're 21 going to have to take up in a Committee is to wrap up work on 22 the logbooks standards for hydro. And rather than attempt to 23 set a date today, I would suggest that we just ask Staff to 24 be in contact with Committee members, and set up a date when 25 we have something that will be ready for us to vote on. Is 26 that acceptable? 27 MR. KAHN: That's fine with me. 28 MR. BJORKLUND: I would agree with that. 324 1 COMMISSIONER WOOD: Okay. Good. 2 Do Committee members or Staff have any additional 3 items to raise? 4 Mr. Pettingill, do you have any comments? 5 MR. PETTINGILL: I think the one comment I would share 6 with you is in looking at -- 7 COMMISSIONER WOOD: Speak into the microphone, please. 8 MR. PETTINGILL: -- the proposal that PG&E and Edison 9 put together, I think, is a very positive development. 10 And the one thing that I would share that we need 11 to think about is similar to what Mr. Kahn said; that the 12 requirements for logging could be very similar to what we've 13 already developed for the thermal units. 14 The difficulty and the challenge that I see that 15 we're trying to work with is how to collect similar data when 16 a facility is unmanned, but is under the operational control 17 of a remote switching center or a remote facility. And to 18 the extent that we can work through that with the parties, 19 then I think we'll find that we can collect similar data. It 20 will just be done at a remote location rather than on site, 21 as we did with the thermal standards. That would be the 22 comment I would share with the Committee and the thing that I 23 would share with the State as we move to the workshop format. 24 COMMISSIONER WOOD: Okay. 25 Glenn, did you have a comment? 26 MR. BJORKLUND: No. Actually, Mr. Soczka, from West 27 Coast Power, has a comment. 28 COMMISSIONER WOOD: Okay. Go ahead. Mr. Soczka, we 325 1 can't hear you if you're speaking, so get closer to whatever 2 telephone you're listening to. 3 MR. SOCZKA: -- comment about the remote operated and 4 controlled plants also applies to -- 5 COMMISSIONER WOOD: Can you start -- we just picked 6 you up, so can you start your statement over again, please? 7 MR. SOCZKA: The comments about the remote-controlled 8 and -operated plants also applies to a number of peaking 9 turbines in the system; not only the ones that we operate, 10 but I'm sure there are others that are unmanned. And so the 11 provisions of that logging ought to be similar to what you're 12 thinking about for the unmanned hydro. 13 COMMISSIONER WOOD: Are those peaking plants typically 14 operated from a control room of one of the larger units? 15 MR. SOCZKA: That is correct. 16 COMMISSIONER WOOD: So I mean in principle, the only 17 real difference here is the proximity of the control room to 18 the unit? There's not really anything else that 19 differentiates those peaking units from one of the large 20 central power plants? 21 MR. SOCZKA: Well, the philosophy is similar. 22 However, the techniques and some of the other particulars are 23 a little bit different. 24 COMMISSIONER WOOD: Okay. Well, Staff can take note 25 of your comments. And I'm sure you can provide additional 26 input on that. Thank you. 27 Are there any additional public comments before we 28 adjourn? Okay. Going once. Going twice. Okay. I will 326 1 recognize a motion to adjourn. 2 MR. KAHN: So moved. 3 COMMISSIONER WOOD: Mr. Kahn moves adjournment. Take 4 a vote. Mr. Bjorklund? 5 MR. BJORKLUND: Yes. 6 COMMISSIONER WOOD: Okay. Mr. Kahn? 7 MR. KAHN: Yes. 8 COMMISSIONER WOOD: And I vote "Yes." We are 9 adjourned. 10 (Whereupon, at the hour of 10:31 a.m., the Workshop was concluded.) 11 12 * * * * * 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28