California Electricity Generation 
 Facility Standards Committee
 California Public Utilities Commission
 San Francisco, California
 Wednesday, October 27, 2004
 2:00 p.m.
 
      COMMISSIONER WOOD:  Good afternoon.  I'd like to call to order the meeting of the California Electricity Generation Facility Standards Committee.
      The agenda today deals primarily with the adoption of the operation standards.  And we're going to start with opening remarks by the committee members.  
      And also, before we open the agenda to public comment, I'm going to ask for some statements by representatives of the staffs of the Public Utilities Commission and the California Independent System Operator to explain the proposals that are before us, at least briefly.  And that may help to focus some of the public comment, because I know there have been a lot of iterations of proposed rules that have gone out there, and people need to understand what's before us today.
      I think I'll exploit the opportunity of being chair to make the first comments here.
      First of all, this is hopefully the last meeting of this committee before we complete our work and the committee's existence itself sunsets.  And this has been really quite an experience going through this entire process.  I was involved in the development and, in fact, lobbying the legislation itself.  The legislature passed the S.B. 392X, and the governor, then-Governor Davis, signed it, and we were presented with the obligation to implement this legislation.
      In many respects, it is unprecedented.  It's something that was, I think, properly considered to be quite unnecessary under the old regulated regime.  But in the new hybrid, semi-regulated regime that we have and in the wake of the crisis that we went through in 2000 and 2001, the legislature and the governor found that it was necessary to take steps to ensure the security of the supply of electricity in California.
      So far, I'd like to review a little bit about what has been accomplished in this committee process.
      First of all, the legislature found and declared in this legislation that electric generating facilities and power plants in California are essential facilities to maintaining -- for maintaining and protecting public health and safety of California residents and businesses.  And that statement, that legislative finding, underlies the gravity and significance of this process that we're involved in.  This today is the ninth meeting of this committee.  We had one in 2002, five in 2003, and three so far this year.  This is the third one in 2004.
      By the conclusion of this meeting, the committee will have adopted operations and maintenance standards that will ensure that power plants in California are effectively and efficiently operated and maintained to provide a critical and essential good to Californians.  Implementation and enforcement of these standards will be the ongoing responsibility of the California Public Utilities Commission.
      If the proposed resolution is adopted, then through the adoption of five resolutions and other motions and actions, the committee, after providing notice and opportunity for public comment, will have adopted the following O & M standards:  The maintenance standards, logbook standards for thermal, general duty standards 1 through 3, revised general duty standards 1 through 6, logbook standards for hydro, and now, today, operation standards.
      I think that's quite an achievement to have worked through all of that, and this is something that while I think we as committee members would like to take a lot of credit for, really, the bulk of the credit for this accomplishment rests with the staff that has not only backed this up, but has actually done the development of these standards.
      In the first place, the work that was done even before the creation of this committee by the ISO and the ISO staff and their consultants on the maintenance standards, and since then, the Public Utilities Commission staff, working in collaboration with the ISO staff, developing the other standards, it's worth mentioning, I think, that this process has led to an unprecedented and I think very salutary and hopeful collaboration between the ISO and the PUC at the staff level and at the commissioner and director level.
      There has been a history of some tension and friction between the two agencies, in part because of the different nature of them, in part because of external factors that were going on.  Simply, the PUC, of course, is a creation of regulation; the ISO was a creation of a move to largely deregulate the electrical industry.  
      But, in the end, even though the ISO is not officially a public body, it's a nonprofit corporation that's a utility jurisdiction over the Federal Energy Regulatory Commission, both the ISO and the PUC have as an essential part of their charters and their purpose of existence the service of the public good.  And I think that our collaboration on this matter, the implementation of this law, is something that has been -- that represents the fulfillment of that obligation and that charter by both agencies and holds a lot of promise for us working together effectively to protect the interests of the California public going forward.
      The -- I would like to be able to get up here and make a personal tribute to every single staff person who has been involved in this.  But I'm not going to do that, primarily because I can't do it from memory.  I wasn't the person that interacted with each staff member, although I did have the privilege of interacting with a number of staff people.  
      I think they have a right to be very proud of what they have achieved and what they have developed, and we as committee members have, I think, a right to be proud of what they have presented to us for our consideration and, ultimately, our adoption.
      I think that Mark Ziering, who has been the primary interface, at least for me, in this process, deserves a great deal of credit for directing this effort.  And I think Mark, perhaps later in the meeting's agenda, will acknowledge the work of some of his staff.
      I would also like to acknowledge the tremendous role that's been played by Phil Pettingill and the people that work with him.  It's just been an absolute pleasure to work with Phil.  He brings a great deal of technical knowledge to this process.  And in a lot of respects, technical knowledge is much of what it's all about.  This is an intersection of regulation that has to live with and be appropriate for the specific technology that we are regulating.  It's something that we left in the past to the utilities to do.
      Because of our unfortunate experiences over the last couple of years, the legislature found it necessary for us to intrude on what is normally a function that occurs simply within companies.  And it's very, very important to -- for us to understand what the implications of what we're doing happen to be.
      I'd also like to acknowledge the role that has been played by the two administrative law judges who have been assigned to work with us on this case, Burt Mattson and John Thorson.  And, actually, I have to salute their management for assigning them to us, because the -- while all of our administrative law judges at the Commission are quite competent, these two bring particular qualities to this process that have facilitated the completion of our work here.
      They have exhibited a great deal of both personal dedication, but also clarity of purpose and ability on the part of both of them to write clearly and to express clearly what we're doing and to maintain a procedural consistency throughout this process that's enabled us to get to this point and complete our work within the time that's been assigned to us by the legislature.
      So, Burt and John, thank you very much for what you've done here.
      And with those comments, I'd like to turn it over to my colleague, Glenn Bjorklund, if he'd like to make any comments.
      COMMITTEE MEMBER BJORKLUND:  First, I've got to echo every comment that Commissioner Wood made in complimenting the hard work that's gone on by the staffs of the PUC and the ISO.
      And I would like just to mention one other area.
      In having an opportunity to read the comments by the various generating asset owners in commenting on this set of operating standards, as well as the maintenance and logbook standards, but I was particularly impressed with the operating standards and the fact that it appeared that we did have a collaborative effort between the staff and the asset owners, and with the joint committee work of the asset owners and their so-called red-line approach, it appears that we have come up with a -- an approach that's going to be as good as we could have ever hoped for in establishing these operating standards.
      We look way back at when we first started, and we knew the task that was ahead of us to come up to the point that we are today.  And just by everyone's effort -- the staff's, the asset owners -- I think we're going to have a document that the state will be very proud of.
      So with that, I sure again want to echo the comments that Commissioner Wood made complimenting all the work that's been done.
      COMMISSIONER WOOD:  Thank you, Glenn.
      I also want to observe that committee member Michael Kahn is necessarily absent today.  And his absence wasn't -- we were not aware of it in sufficient time to make arrangements for him to participate remotely under the open meeting law requirements of California.  So he's not able to be with us here today.
      He has been in contact and communication with -- through his office and through the ISO staff.  And I understand that he has been kept aware of the staff developments on developing these -- these -- the outcome of these processes that we're going through.
      The -- However, this meeting, obviously, consists just of two of the three committee members, which is, in fact, a quorum, and provided we can reach agreement between the two of us on adopting these standards, then that will be sufficient to adopt them and forward them to the Public Utilities Commission.
      With that, I would like to recognize Mark Ziering to make some comments.
       MR. ZIERING:  Thank you very much, and thanks to both committee members for their kind comments.  
      I'm here representing Richard Clark who is executive director of the staff of the committee, and, unfortunately, he wears another hat, or I should say fortunately he wears another hat as director of the Consumer Safety Protection Division.  Unfortunately he is on the site of a major railroad accident today in Southern California and couldn't be here with us.  But he asked me to express his appreciation to the members of the committee for their hard work on this and say what a pleasure it has been for him to work with you both.
      With that, let me talk about the standards that you have before you today.
      We began work on the standards about a year ago.  Last December, we circulated to the committee a set of concept papers for the various standards.
      We worked on several internal drafts of the full standards and released them for comments publicly on August 23rd, this year.  Parties submitted comments and reply comments on September 10th and 15th, respectively.
      On September 20th and 21st, we held two days of public workshops discussing the standards with the help of a professional facilitator.  We invited another round of written comments/replies on October 1st and 6th, respectively.  A number of generators submitted a set of joint red-line comments to the draft proposal as part of their comments.
      We on the staff reviewed the comments and the joint proposal thoroughly and have since held additional discussions with individual committee members and the authors of the joint draft.  We very much appreciate the time and effort that the generators took to review and discuss the standards with us.
      Our staff met and went through the generators' red-line proposal line by line, edit by edit.  We have accepted many of their suggested edits outright.  In other cases, generators raised issues that we believed had merit, and we modified their language somewhat.  In other cases, after serious thought, we retained the original language.
      Again, I can assure you that we all discussed these issues extensively internally.  We here at the PUC, of course, have worked closely with the members of the ISO staff who were very generous with their time and expertise.
      We posted our near final draft of the standards on the Internet on Friday.  Finally, last night, we posted another version with a substantive change in one sentence which clarifies the committee's intention that the guidelines in the proposed document not be enforceable.  We also made minor, nonsubstantive edits to make the document's various references to personnel more consistent.
      We present to you last night's version with two further changes.  On page 7, under "Use of Terms Related to GAO Personnel," please omit the first sentence as well as the word "individuals" in the second sentence.  The omitted language is unnecessary due to the housekeeping edits we made to the draft posted yesterday.
      Second, we have added a sentence to the third paragraph under "Guidelines" in the introduction.  It is inserted before the last sentence of that paragraph.  It reads, quote, "Failure to meet a guideline," comma, "in combination with other evidence," comma, "may indicate a violation of the standards," unquote.
      The standards and guidelines together are lengthy and detailed, and it would take many hours to discuss all the issues staff has considered over the past few months.  However, I'd like to take a few minutes to discuss a number of the issues that were raised in comments, explain our views on those issues, and describe the resulting changes in the draft you all see before you.
      Before I do that, I think it would be helpful to review briefly the differing roles of this committee and the California Public Utilities Commission.
      As we all know by now, the legislature took a very unusual approach to these standards.  To encourage a collaborative effort between the ISO and the Commission, the legislature created this committee to adopt standards, while it gave the task of implementing and enforcing the standards to the Commission.
      That said, the committee has provided recommendations to the Commission on the implementation of maintenance standards, and if the committee approves today's draft standards, will do so again with the operation standards.  We all recognize that the implementation of the standards rests, finally, in the hands of the Commission.
      Now let me turn to some of the issues that have been raised regarding these standards.
      First, as we remember, the committee adopted a set of General Duty Standards, including Number 4, which essentially banned withholding of power.  The Commission expressed concern about the intersection of this standard with ISO rules under federal jurisdiction and asked the committee to look further at that standard.  The committee considered but did not adopt a redraft of General Duty Standard Number 4.  We have now incorporated some of the ideas contained in that standard into the operations standards that are before the committee today.
      For example, withholding has been addressed in a number of standards, including the readiness standard which requires generators to be prepared to provide service on reasonable notice, and the grid emergency standard, which requires generators to make operational decisions that support grid operations.  We have worked closely with the ISO to assure that these standards are consistent with ISO tariffs.
      Standard 24 would require commission approval of changes in long-term plant status, but would also require that a mechanism be in place to compensate generators for their services under this standard.
      The second issue of great concern to generation asset owners is the enforceability of the guidelines associated with the various operation standards.  Today's draft states that the committee does not intend the guidelines to be enforceable; that is, no GAO should ever be cited or fined merely for failure to follow a guideline or a number of guidelines.  As we note above, failure to meet a guideline, in combination with other evidence, may indicate a violation of the standards..
      The GAOs have argued that the guidelines should be no more than a suggested list of topics for their consideration.  We believe the guidelines to have more significance than that and have supplied, therefore, language requiring the GAOs to consider the guidelines and confirm that their operations indeed address concerns raised by the guidelines.
      Third, some GAOs have argued that the committee should not adopt the guidelines at all but merely recommend to the Commission.  The introduction of the GAO red-line draft is a bit stronger, and we have -- and it's suggested that the committee "adopt recommended guidelines," quote, unquote.
      As you can see, we have incorporated the GAOs' red-line language while stating clearly that the committee does not intend the guidelines to be enforceable.
      Fourth, the GAO draft removed a recommendation from the committee to the Commission that GAOs be required to file operations plans demonstrating compliance with the standards.
      We have retained the recommendation in the original draft.  We think it's an important part of the strategy here, which is to let GAOs tell the Commission how they plan to meet the standards, which we believe gives the GAOs considerable flexibility while maintaining accountability.
      Generators recommended, however, that the committee remove the requirement that operating plans include a detailed listing of the operating limits in force at each plant.  That is, the standards require generators to identify various parameters to measure at each plant, for example, steam pressure at various points in plants.  The standards also require that generators establish action levels to protect systems when those parameters reach certain limits.
      The standards still retain that requirement; however, on reflection, we agree with the GAOs that there is no purpose in requiring them to file a detailed listing of these parameters and the action limits.
      Finally, we've added a requirement that the operations plan contain a unit plan detailing the GAO's view of the future and function of each generation unit.
      We proposed this approach in response to the generators' concerns about the costs involved in meeting the operations standards.  We recognize that different plants may require very different approaches.  Therefore, we have redrafted standards and guidelines that will allow GAOs to operate each plant consistent with their stated plan for the unit.
      The fifth issue I want to cover is the relationship between these operations standards and the maintenance standards already adopted by the committee.  Eleven of the maintenance standards address general areas of plant administration such as leadership, training, and safety.  GAOs argue that these maintenance standards are also applicable to operations.  On their face, however, we don't see how maintenance standards can apply to operations.  Therefore, we proposed 11 operations standards adapted from the corresponding maintenance standards and recommend that the committee adopt them.
      While the GAOs recommended against the adopting of the first 11 operations standards, they did offer edits of those standards in case the committee did decide to adopt them.  We find many of these edits to be very sensible.  For example, we agree that it is not possible for a GAO to prepare for all possible emergency states at a power plant.  We have incorporated GAO edits that would require planning, quote, "reasonably foreseeable," unquote, emergencies, planning for those emergencies.  
      We have adopted those and many other suggested edits by GAOs and made some of our own.  Most of these edits are to guidelines rather than standards.  We don't think that these edits will cause problems with regard to the maintenance standards already adopted; that is, we think that they're reasonably consistent.  Therefore, we don't recommend any edits to the maintenance standards at this time.
      The sixth issue concerns standards which cover areas already covered by other regulatory agencies, such as safety, which is regulated by the Occupational Safety and Health Administration, also known as OSHA.  GAOs recommend that the committee delete such operation standards.  Staff has not accepted this recommendation.  We believe that the standards should be comprehensive.  We believe that standards which ignore safety or environmental protection are fundamentally unbalanced.
      The seventh issue is the cost implications of the readiness standard.  We have made great changes to the readiness standard, emphasizing planning for various contingencies rather than requiring ability to operate under all circumstances.
      We've also rewritten the guidelines for that standard to allow GAOs a longer lead time if justified by their plans for the unit; that is, to re-open units on request.  For example, a plant that operates seasonally would not be required to staff that plant within a matter of hours.  Rather, such plants would have to plan to be able to operate on two weeks' notice.
      Eighth, the GAOs asked that we rewrite Standards 22 through 26, which deal with changes in plant ownership and long-term status.  The GAO draft, however, would have significantly weakened those standards.  For example, the GAO draft removed the requirement that GAOs file storage plans for plants to be taken out of service for a limited amount of time.
      We continue to think that removing the standard would unduly weaken this program.  We found it difficult to merge the very different concerns of these five different standards into one.  Accordingly, we've left them as separate standards.  However, we have simplified them and eliminated potentially confusing cross-references wherever possible.
      We've also adopted a uniform requirement for notices and filings of 90 days consistent with similar requirements at the ISO.
      Ninth, GAOs expressed concern that the standards required them to take excessive responsibility for the actions of contractors.  Our concern is that the GAOs not delegate or contract away their obligation to comply with these standards.  Thus, we have adopted language requiring GAOs to take reasonable and prudent steps to assure contract employees are held to equally stringent performance standards as GAO employees and that contract employees receive comparable training and safety precautions and protection.
      Tenth, we agree with the GAOs that some of the terminology used in the standards appears to assume that the plants are run in the traditional way; for example, with separate operation and maintenance departments.  We don't intend to lock the GAOs into any particular organizational structure.  We have, therefore, added language clarifying that the standards address functions, such as management of training, rather than positions; for example, requiring that there be a position titled 'training manager.'  However, the guidelines do make clear that there need to be clear lines of authority, whatever the organizational structure.
      Eleventh, the GAOs have recommended that the committee eliminate the Technical Standard Number 28 because it largely incorporates the requirements of other standards.  We, however, see value in this standard and its associated system-by-system guidelines.  Organizationally, we think having the standard makes the requirements clearer.  We have redrafted the standard, however, to eliminate potential conflicts between it and other standards.
      Twelfth, and finally, the GAOs raised a number of issues that we think are implementation issues with no direct connection to adopting these standards.  For example, GAOs asked for assurances that the data that they supply will be held confidential.  We believe that this is an implementation issue that's addressed in the Commission's General Order 167.  
      Similarly, the GAOs have asked for a statement that they will be -- that they will not be charged for simultaneous violations of the first 11 operations standards and the corresponding maintenance standards.  We believe that such issues will depend very much on the facts at issue in each case and are best considered in the enforcement process itself.
      Generators also asked that the standards be enforced only insofar as they don't force changes in existing contracts.  We don't see that this is an appropriate area for the committee, whose role is, of course, exclusively to adopt standards for power plant maintenance and operation.
      GAOs will, of course, be able to approach the Commission with any arguments they have on these issues in any enforcement actions that do arise under the standards.
      I'd be happy to take any questions you have.
       COMMITTEE MEMBER BJORKLUND:  I don't have any.
       COMMISSIONER WOOD:  No, we don't have any.
       COMMITTEE MEMBER BJORKLUND:  Maybe later.
       MR. ZIERING:  Okay.  I'd like to introduce Phil Pettingill, our colleague from the ISO.
       MR. PETTINGILL:  Thank you, Mark.  Thank you Commissioner Wood and Committee Member Bjorklund.  I have a very brief statement.
      As we're all aware, ISO chairman Mike Kahn has been an active participant in the work in this committee, and he has given his strong support for the work on this committee so far.  Ununfortunately, as Commissioner Wood announced, he received late notice for an out-of-state meeting and wasn't able to attend today for the committee's activities.
      What I'd like to convey to you is a message he conveyed to me, and that is his support for ISO management's position as you go forward and address the issues today regarding operation standards.
      So, with that, what I'd like to do is briefly share with you, from our perspective, the California legislature passed S.B. 39 double X with the notion that it was appropriate, an appropriate state policy to have maintenance and operating standards regarding generation facilities, and that these standards were needed to ensure the availability of California generators, certainly in light of the record outages that we all experienced in late 2000 and early 2001.
      The legislature was concerned with the physical withholding and not having an effective manner in which to verify that the plants were being effectively maintained and then efficiently operated.
      So the result of this was to implement this committee and the collaborative effort, as Commissioner Wood has described, between the Commission, the committee, and the ISO in producing operation and maintenance standards that could protect the electrical reliability and adequacy of the system, yet still be practically workable in considering the structure of the current state's electrical system.
      So with that, I believe that the operation standards you have before you achieve that.  And that to support this effort and pursuant to S.B. 39XX, both the ISO and the Commission have provided staff resources to this committee.  
      The ISO staff took the lead in developing the maintenance standards, as Commissioner Wood has described.  And those, of course, were passed by this committee earlier in this process.
      On the other hand, the committee staff took the lead in developing the operation standards.  And what the ISO has worked diligently to do is to make sure that they are consistent with our role to operate a reliable electric system.  And we believe that we have achieved that.
      We would note that the standards have benefited from many changes, not only ISO changes, but recommendations and changes from the committee staff as well as the generator owners.  And I believe that the standards before you have benefited from that iteration, issuing drafts, receiving comments, and, ultimately, in the product that you have before you today.
      So, thus, at the same time, they do address the need for generators' flexibility, as we've talked during the nine meetings that Commissioner Wood referred to, what we realized is, there is a wide diversity of power plants in the existing California point of view.  And any set of maintenance and now operating standards need to consider that diversity and recognize the generator owners need to have some flexibility in how they can comply with those standards.  
      So, therefore, just in summary, I want to share with you our regret that Chairman Kahn was not able to be here today for an important activity before the committee.  However, the ISO does support the adoption of these standards, and we urge you, the two remaining committee members, to adopt the standards and the recommended guidelines that you have before you today.
      And I'd be willing to take any questions you have as well.
      COMMISSIONER WOOD:  Thank you.  
      Glenn, do you have any questions?
      COMMITTEE MEMBER BJORKLUND:  No.
      COMMISSIONER WOOD:  Okay.  Mark, did you want to do any -- any staff acknowledgments at this point?
      MR. ZIERING:  I'd be happy to do that.  
      At the risk of extending the meeting beyond the usual length of, say, the Academy Awards, I do want to mention the people who worked so hard on these standards.  The members of the team have really worked tirelessly to get the standards right.  
      Ron Lok, Chris Lee, Chris Parkes, Alan Shinkman, and Rich Tse worked through innumerable drafts.  Colette Kersten, who may be the most organized person on this planet, made a major contribution as project manager.  Chuck Magee, our senior supervising engineer in Northern California, and Catherine Johnson are -- from our legal division, gave fresh eyes to the draft and made huge improvements to the product.  Charlyn Hook and Chloe Lukins were immensely helpful throughout.  I also want to mention the help of Diane Flynn, our support person, who has been carrying piles of paper around for us throughout this process.
      Finally, I'd like to thank Source California Energy Services, our consultant on the project, and, in particular, Joe Sutton, for their valuable technological assistance.
      COMMISSIONER WOOD:  Thank you.  
      And on behalf of the Public Utilities Commission, I'd like to thank all of those employees who worked so hard on this project.
      At this point, we'll open the floor to public comment.  We're going to follow a three-minute per-person limitation on comments.
      So if anyone would like to speak, please come forward to the microphone at the podium to your right.  And when you step up to the microphone, please identify yourself by your name and what organization you represent.
      JOE MINKSTEIN:  Joe Minkstein, representing Pacific Gas & Electric.  
      First of all, we'd like to comment that we believe that FERC-licensed hydroelectric facilities should be exempted from the operating standards, such as they were exempted under General Order 167 for the maintenance standards, for the same particular reasons.  And I will not repeat those here.
      Second of all, we'd like to really acknowledge the work that the staff did in drafting these standards.  As a person who drafts standards and guidelines, I understand the amount of work and effort that goes into doing these.  And they did a very good job.  We'd like to acknowledge the collaborative effort that they put forth in including and listening to the comments of many of the generators.
      The only problem that we particularly have with it, and we've been reassured by staff that the guidelines aren't enforceable, there's seemingly pretty strict language in there that, again, acknowledges that the guidelines aren't enforceable, but, on the other hand, it goes through and says that the staff would probably or it's proposed that they would use these guidelines to conduct audits.
      In as much as the standards -- or the suggestion is that the generator owners produce an operating plan that's approved by the staff, we would suggest that that operating plan be used as the basis for audits.
      Thank you.
      COMMISSIONER WOOD:  Thank you.  
      Further public comment?
      BRIAN CRAGG:  Good afternoon.  I'm Brian Cragg, representing West Coast Power.  
      You've heard some discussion this afternoon from Mr. Ziering and Mr. Minkstein about the enforceability of the guidelines.
      Excuse me.
      I'd like to mention just in connection with that that if you adopt the operation standards that have been recommended by the staff, you have a clear distinction between the enforceability of the standards and guidelines.  However, the maintenance standards that you adopted earlier still contain an inconsistency.
      You may recall that in the meeting we had like this, a committee meeting on May 2nd, 2003, there was a discussion in connection with the maintenance standards about the enforceability of the standards versus the guidelines.  During the discussion, it was made pretty clear that -- as you may recall, Appendix A consisted of a group of guidelines -- that those were not part of the standards.  But there was also a group of assessment guidelines that were part of Part 1 of the maintenance standards.
      During the course of the discussion, I think Mr. Ziering made it clear that the -- only the 18 performance standards, I believe they were called, were to be enforceable, the assessment guidelines were not to be enforceable.  And Commissioner Wood also endorsed that view.
      I have copies of the transcript available, by the way, if you want to see that.
      However, in Resolution Number 2, which conveyed the maintenance standards to the Commission, that distinction was not made clear.  So right now, the Commission, acting on the language of resolution number 2, has enforced both the performance -- the 18 performance guidelines and the innumerable assessment guidelines as well.  
      I think I said "performance guidelines."  I meant performance standards.
      We are probably about to file a petition to modify decision 04-05-018 that the Commission used to adopt the General Order 12067 to try to adopt the order and get a consistency between the proposed operating standards and the maintenance standards.  But it occurs to me it would be very helpful for the Commission and for all concerned if the committee would also clarify its intent with regard to the maintenance standards.  And that is that the -- only the 18 performance standards are to be enforceable; the assessment guidelines are advisory and perform a function that Mr. Ziering described for the guidelines, comparable guidelines, for the operation standards.
      I notice that you have item number 4 on your agenda that refers to reconsideration of the maintenance standards, so there is actually an opportunity -- a noticed opportunity at this meeting to make that change.
      I also want to mention another broader concern, which has to do with the unfortunate role that we are -- unfortunate concern we all have to take into account now, which is that of security.
      An overarching comment, I think, is that some of the information that staff may seek from generators has now been determined to be critical energy infrastructure information by FERC.  FERC issued Order 630 last year and essentially provided for another procedure other than the federal Freedom of Information Act to obtain access to certain information.  
      I think if you look at that order and look at that information and look at the types of information that might be required as part of the staff's function, some of that information may fall within this critical energy infrastructure information.
      I think we need to recognize somewhere in this process that there may be information that is so sensitive that the staff cannot just have it -- the generators, essentially, are not free to turn it over to the staff without going through the process that's prescribed in the FERC order.  And I think there may also be provisions of the Homeland Security Act and the U.S. Patriot Act and they also may affect access to this information.  For better or worse, power plants are sensitive structures, and they are, at least in theory -- and we hope it stays in theory -- susceptible to acts of terrorism.
      Finally, I'd like to mention we have talked about jurisdiction throughout this proceeding, and I think we probably started our comments talking about jurisdiction.  And I don't want to drag it out too much longer, but I think Standard 24 will present additional problems.  That's a standard that allows the Commission, essentially, to veto a generation asset owner's decision to close a plant.  And there is a provision that this can only be exercised if the owner is to be compensated.
      But I think I can predict that if the Commission ever exercises that power, there will be a -- definitely, a jurisdictional showdown that we've been pretty successful in avoiding so far.
      So I just alert you to the fact of the language of Standard 24 of the operation standards still presents problems that we've been struggling with all along.
      Thank you very much.
      COMMISSIONER WOOD:  Thank you.
      Further public comment.
      ANDREW BROWN:  Good afternoon.  My name's Andrew Brown.  I'm here representing the High Desert Power Project, which is a new generating facility located in Southern California.  It is operating under contract with DWR, and that commercial contract includes performance requirements.
      The specific subject I'd like to speak to is Standard 18, which addresses performance testing.
      Right now, the -- pursuant to that contract, the High Desert plant has to undertake certain testing as part of that contract.  It also needs to undertake certain testing for ancillary service certification.
      The assurance that we're seeking from the committee today is that under Standard 18, the type of testing that would be done under those commercial arrangements or the ISO ancillary service certification would satisfy that standard, and that under that standard, the committee isn't looking to impose additional testing beyond that.
      I think this is important because it would avoid potential conflicts with the DWR contract and other implications, such as reducing the availability of a project for ISO dispatch due to additional testing requirements.
      So if it would be possible for the committee to address that ordinary testing that would occur in the context of commercial relationships would satisfy that standard, it would be appreciated.
      Thank you.
      COMMISSIONER WOOD:  Any further public comment?
      Okay.  I'm seeing none, so we will close the public comment period.
      Mr. Bjorklund, do you wish to address any of the public comments that have been made?
      COMMITTEE MEMBER BJORKLUND:  Yeah.  I don't really understand your -- your concern about the unit performance testing.  Maybe you can explain that a little bit more.
      ANDREW BROWN:  The standard in question is Standard 18.
      COMMITTEE MEMBER BJORKLUND:  Yeah.
      ANDREW BROWN:  And if we're focusing solely on the language of the standard itself, I don't think there necessarily would be a problem.  The question is, when you look at the guidelines associated with that, and particularly the illustrative table of suggested testing time lines, the question that comes up is whether or not testing that would ordinarily occur in the context of the commercial relationship from this generator, for example, under the terms of performance standards in a commercial contract, or in the context of certification for ancillary services by ISO -- so there's testing that ordinarily would be occurring in those paradigms.  The question that comes about is, are these guidelines, therefore, suggesting, to meet the standard, you have to do additional testing above and beyond that?
      Our expectation is that, for efficiency reasons, you wouldn't want to have to impose the additional costs and burdens for performance testing if it's happening in the course of the unit's operations anyway.
      Additionally, most modern plants, they are monitoring the metrics of the project when it operates.  And so they're looking out for the types of things, I think, that are at the heart of Standard 18.  But we're just trying to make sure that we're not being asked to do additional performance testing above and beyond those that would occur in the course of business.
      COMMITTEE MEMBER BJORKLUND:  Is it the schedule, that you're bothered by that on the guidelines?
      ANDREW BROWN:  Well, frankly, this goes to the heart of the ambiguity or concerns that occur in the distinction between the enforceability of standards and what the guidelines are going to be used for.
      Again, the concern is here that the guidelines may be suggesting that you need to do testing above and beyond what you ordinarily would do in the commercial relationship or to qualify to provide ISO ancillary services.
      And so the -- what, essentially, we're asking the committee is that if a project is undertaking those regular types of tests, that that would be satisfactory for meeting the standard.
      COMMISSIONER WOOD:  Let me, if I may, address some of this.
      I think, in the first place, in performing our functions here on this committee, we have to presume that at the time that the Public Utilities Commission adopts these guidelines as regulations, that those regulations will be enforced in a reasonable manner.  And it's possible to take any set of regulations or guidelines or anything and carry it to a point of reductio ad absurdum and come up with an outrageous result.
      But I don't think that is going to be the intention of this -- of the Public Utilities Commission as a public body.  It certainly isn't the spirit in which this committee has considered these proposed standards and guidelines.
      The --  With respect to your specific request, I have this concern about it.  It may well be that the Department of Water Resources, if that's your counter-party, operates purely in the public interest and takes into account the interests and the well-being of all of the people of the state of California and all utility customers as well.  I don't think we can automatically assume that of every potential counter-party that would be involved in some kind of contract for procurement of energy with a -- with a generation owner.
      And it's possible for me to imagine -- I don't know if it would ever happen in practice, but it's possible to imagine that a -- that, for example, an electric service provider, an ESP, might enter into a contract where the standards for performance that they set were below those that have been projected by this committee and presumably will be adopted by the Commission for enforcement.  And in that case, I would certainly not be willing to defer to the commercial negotiations that take place to supersede these guidelines, because these -- the performance of these power plants does not operate physically independently from the rest of the power grid.  It's all interconnected and it's all necessary for the maintenance of service in California.
      So I -- I have to say directly that I personally would reject that proposition.  
      The assurance that I think I can provide to you is, again, that the Public Utilities Commission in implementing these standards will do so in a reasonable manner and one that looks at provisions that have been enacted and developed by the generation asset owners.  And if they reasonably seem to meet the requirements of these regulations, then that would be sufficient.
      This is not a "gotcha" exercise.  And I recognize that because of what we've all been through together, there's a lot of mutual suspicion between regulators and asset owners and perhaps a certain level of concern that that's where it's going to end up.  I don't believe that is going to happen.  And I certainly don't think that this committee should promulgate proposed regulations, standards, based on an assumption that Commission staff and commissioners themselves will be playing gotcha with the generators.
      And I also want to address, perhaps more briefly, Mr. Cragg's concerns about possible conflicts about federal security regulations or practices and what we may be doing here.
      The security concerns coexist with regulatory oversight in a lot of different contexts.  It isn't just this industry.  It's telecommunications, for example.  But certainly, I, as well as maybe other people in this room, have a lot of personal experience with the nuclear power industry where there are explicit security issues that predate 9/11.  And those coexist with state regulatory oversight of the operation of these power plants.
      I think that it's impossible to anticipate precisely how federal security concerns may affect the access that the state government has to information about the operation of these power plants.  And given that, I think we have to, again, assume that the implementation by the Commission is going to be a reasonable one; that if there are conflicts that arise, there are existing venues in which those conflicts can be addressed and resolved.  And it would just be -- it would be a very frustrating exercise on our part to try to anticipate what the Federal Government might come up with in terms of security measures that would interfere with our implementation of these regulations.
      Mark.
      MR. ZIERING:  Yes, Commissioner Wood.  I comment that General Order 167 does provide GAOs with the opportunity, when submitting information, to tell us that that information is privileged or confidential in some way.  And obviously that this information would fall under federal security regulations is a very strong argument.,  And we would definitely keep that information confidential.
       COMMISSIONER WOOD:  Thank you.  And with that we'll conclude the public comment and response to public comment section of the agenda, and we now come to the consideration of the operations standards themselves.
      I'll accept, at this point, a motion to adopt the operation standards.
       COMMITTEE MEMBER BJORKLUND:  Okay, Mr. Chairman.  I will move that the operations standards and recommended guidelines for the generating asset owners in Attachment A to this resolution be adopted.
       COMMISSIONER WOOD:  It's been moved and placed in front of us.
      Do you have any comments to make on the standards?
       COMMITTEE MEMBER BJORKLUND:  No.
       COMMISSIONER WOOD:  Okay.  Nor do I.
      So I'll take a vote.  I'll do a roll call.
      (Laughter.)
       COMMISSIONER WOOD:  Committee Member Bjorklund.
       COMMITTEE MEMBER BJORKLUND:  Aye.
       COMMISSIONER WOOD:  And I vote aye as well.  And our third member, Mr. Kahn, is not present.  So it carries by a two to nothing vote.  And those standards will be forwarded to the Commission for consideration and adoption.
      The fourth item on the agenda is to consider changes in maintenance standards based on the operations standards.  And we heard some discussion in public comment about this.
      Do you have any comments to make about that?
       COMMITTEE MEMBER BJORKLUND:  Well, let me ask Mark to comment about the viability of doing this.
      MR. ZIERING:  I think probably it's more a procedural question than anything else.  I would agree that the intention of the guidelines for the maintenance standards are the same as the intention for the?  operations standards here.  I probably disagree with Mr. Cragg's representation of the maintenance standards thus far, but that's not really the committee's concern.  
      I don't know whether you'd simply want to make a comment on the record that you see the guidelines in a similar light or perhaps we should take a brief break to discuss the possibility.
       COMMITTEE MEMBER BJORKLUND:  I was going to say, is this something that requires committee action?
       COMMISSIONER WOOD:  I think it would take committee action if we were to actually want to change the standards that have been adopted by the Commission.  And to the extent the guidelines implicate standards or affect their meaning and interpretation, that, I think, would take -- would take action by this committee.
      Mark?
      MR. ZIERING:  I guess I'd merely note that there is a petition for modification, apparently about to be filed with the Commission, and that might be an avenue for -- since this is really a question about how the guidelines will be implemented, one could leave that question to the Commission.
      Again, if you'd like to take a brief break....  
      MS. JOHNSON:  I was just observing that since Mr. Cragg has a transcript of the committing meeting which he probably will rely on in his petition to modify, unless the committee wants to revisit what it said at that time, I think maybe Mr. Cragg has everything he needs.
       COMMISSIONER WOOD:  I think Mr. Cragg wants to say something, and I'll recognize you to do that.
       BRIAN CRAGG:  Thank you.
       COMMISSIONER WOOD:  Why don't you come forward to the microphone, if the microphone works.
       BRIAN CRAGG:  I think the concern is more with the way that Resolution Number 2 was worded.  And if the committee wanted to take action today to clarify that, that might be something that could be done today, and I would probably -- I'll defer to Ms. Johnson's opinion, but would probably require committee action.
      But I think since there is a provision on the agenda for reconsideration of the maintenance standards, that would fall within that, and it would be within the noticed area of action -- potential action for the committee today.  But it's really the resolution rather than the transcript that is at issue.
       MR. ZIERING:  I would suggest that we take a brief break so we can all take a look at Resolution Number 2, see what kind of changes Mr. Cragg would propose, and come back to you with a recommendation.
       COMMISSIONER WOOD:  Mr. Cragg, can you state what changes you would propose in resolution 2?
       BRIAN CRAGG:  If you have a copy of that before you, on the second page there is some discussion of -- in the "whereas" phrases that -- I guess it's the fourth one on that page that says, "Whereas the document adopted by the committee on February 3rd, 2003, contains not only maintenance standards but also a suggested implementation and enforcement model for the Commission's consideration, as well as guidelines for generators."
      And it goes on to say, "The committee wishes to clarify the respective roles of the various sections of the document."
      What the resolution goes on to do, excuse me, is to clarify that.  It sort of renames the document and clarifies in paragraph four that Appendix A is -- well, I guess it doesn't say it there, but that Appendix A was guidelines that could potentially be resubmitted as standards later.  That never occurred, so that's moot at this point.  But I think it's probably somewhere in the vicinity of paragraph 2 where it says Section 1 of the document shall be titled, quote, "Maintenance Standards for Generators", close quote.
      In the discussion of the document on May -- on May 2nd, I think the determination was that the 18 performance standards would be the standards, the enforceable standards, and that the numerous assessment guidelines were to be advisory or to help illuminate the intent of the standards, but not be enforceable by themselves along the proposal that has been proposed for the operating guidelines.
      So I think somewhere in paragraph 2 we might be able to clarify that the operating standards -- excuse me, the performance standards are the enforceable standards, and the assessment guidelines are -- however you want to word it.  Advisory or presented to illuminate the intent of the performance standards.
       COMMISSIONER WOOD:  Personally, I'm having a hard time finding any ambiguity here.  And it seems to me that the language of the resolution is quite clear.  The -- And to the extent there might have been, you know, any doubt about that, the -- my comment on the record I think clarified the understanding of the Chair and, frankly, the committee since I wasn't, as far as I recall, contradicted by any of the committee members at that time.
      I'm reluctant on the spur of the moment to go around rewriting resolutions here that haven't been prepared in advance and vetted with appropriate people.
      Glenn?
       COMMITTEE MEMBER BJORKLUND:  I'm just having a hard time with the significance of it.  You know, as far as significant enough for committee action?  It seems like, to me, as you said, it's clear enough here.
       COMMISSIONER WOOD:  I think my inclination, quite frankly, is to assume again that the Commission, as well as its staff, is -- understands what we have done here.  Certainly the staff who has been working on this understands what we have done.
      There is sufficient record to clarify this, and I think we have to assume that the Commission will behave in a reasonable manner in interpreting these -- these rules.
      
       MR. ZIERING:  I might note, and I'd like to check this with ALJ Mattson, I believe there is a set of supplementary comments that GAOs have been invited to file in a few days, and that might be an appropriate vehicle for pointing out -- for asking the Commission to clarify anything that needs clarification here.
      Is that correct?
       ALJ MATTSON:  Those supplemental comments largely deal with the implementation and enforcement of the operating standards and whether or not the standards adopted today would change or modify in any way the comments that the parties submitted earlier in -- in October regarding implementation on enforcement.
       MR. ZIERING:  That makes sense.  I will withdraw that comment.
       COMMISSIONER WOOD:  Okay.  With that, I don't hear a motion to take any action on this agenda item.  So absent such a motion, we'll consider that the discussion is recorded and there will be no action at this meeting.
       COMMITTEE MEMBER BJORKLUND:  I agree.
       COMMISSIONER WOOD:  Okay.  Without objection.
      Is -- Is there any further business that the staff wishes to raise at this time?
       MR. ZIERING:  No.
       COMMISSIONER WOOD:  Okay.  I would like to, as a matter of personal privilege, take a moment to add an item to the agenda.
      This is presumably our last meeting of this committee, and the committee goes out of existence at the end of the year.
      I would like to express, on my own behalf but also on behalf of the Public Utilities Commission, the commissioners, and I know our staff as well, our gratitude to Glenn Bjorklund for, in the first place, having accepted this assignment.  It's rather remarkable that we were able to fulfill the mandate of the -- of the legislature and get an industry expert of such distinction and such vast and comprehensive operations and maintenance background in this area.  I think that at the time that the legislation was being drafted, it would have been hard to anticipate that we could get somebody with these kind of credentials.
      But in addition to that, it's been a real delight to work with Glenn on this project.  I've been very frustrated personally because the open meeting laws have precluded me from having the kind of informal interaction that I would have liked to have had.  But I think it brings a lot of -- a lot of credibility to the process we've been involved in.  But even more than that, I believe that the staff itself has benefited tremendously.  And through the staff, I think the public as well as the industry has benefited from the very sober reality check that it's been possible to make through somebody who's actually overseen at every level the operation and maintenance of these same power plants that we're talking about regulating at the present time.
      So Glenn, I would like to present you from the Public Utilities Commission this certificate of recognition.  I'll read it.
      It's presented to Glenn Bjorklund for his dedicated public service to the people of California.  In recognition of his hard work, expertise, and wise counsel as a member of the California Electricity Generation Facilities Standards Committee.  I bet a year from now you won't be able to cite that name, which has adopted operation, maintenance standards for electric power plants.  His tireless efforts have helped assure safe, reliable supplies of electricity for California's homes, farms, and businesses.
      And so I'm presenting this as chairman of this committee, but I know that I speak on behalf of my fellow commissioners as well as the board of the independent system operator.
      Thank you, Glenn.
       COMMITTEE MEMBER BJORKLUND:  Thank you very much.
      (Applause.)
       COMMITTEE MEMBER BJORKLUND:  Well, thank you all very much.  And it has indeed been a labor of love to have worked with all of you, work with the asset owners and with the staffs of the ISO and the CPUC.  And it's probably good for the ego, too, to come out of retirement and do some things that you love to do so much and that you spent 40 years of your life doing.  So from that standpoint, it was a very rewarding experience for me.  And working with Carl and with Michael and with the staff, something I've enjoyed very much.  But I shall now go back into retirement.
       COMMISSIONER WOOD:  And since now actually Glenn and I don't live that far apart, maybe I'll be able to get together with him and find out what he really thinks, one on one, about all of this.
       COMMITTEE MEMBER BJORKLUND:  We can talk.
       COMMISSIONER WOOD:  Yeah.
      So with that, I, first of all, charge the staff with conveying the outcome of this meeting to the Public Utilities Commission for adoption of these standards.  And having no further business to come before us, I'll accept the meeting -- motion to adjourn.
       COMMITTEE MEMBER BJORKLUND:  I move that we adjourn.
       COMMISSIONER WOOD:  Okay.  All --
       COMMITTEE MEMBER BJORKLUND:  I just want to say we want to adjourn the committee for all these years.  There will probably be no further business, so California Electricity Generation Facilities Standards committee will be adjourned.
       COMMISSIONER WOOD:  Yes.  And so with that, we are adjourned.  Thank you.
      (3:10 p.m.)