Existing law authorizes a person proposing an eligible facility, including an electrical transmission line carrying electricity from certain other facilities that are located in the state to a point of junction with any interconnected electrical transmission system, to file an application, on or before June 30, 2029, with the State Energy Resources Conservation and Development Commission (Energy Commission) to certify a site and related facility for purposes of specified environmental review procedures. Existing law deems a certified site and related facility an environmental leadership development project, as specified, and makes the site and related facility subject to streamlined procedures under CEQA with no further action by the applicant or the Governor. Under existing law, the Energy Commissions certification of sites and related facilities is in lieu of any permit, certificate, or similar document required by any state, local, or regional agency, or federal agency to the extent permitted by federal law, for the use of the sites and related facilities, and supersedes any applicable statute, ordinance, or regulation of any state, local, or regional agency, or federal agency to the extent permitted by federal law, except as specified.

Existing law vests the Public Utilities Commission (PUC) with regulatory authority over public utilities, including electrical corporations. Existing law prohibits an electrical corporation from beginning the construction of a line, plant, or system, or any extension of a line, plant, or system, without having first obtained from the PUC a certificate that the present or future public convenience and necessity require its construction. Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.

The bill would authorize an electrical corporation that files an application with the PUC to authorize the new construction of any electrical transmission facility or electrical transmission project to simultaneously submit to the Energy Commission an application for certification of the facility, as specified. The bill would authorize the Energy Commission to recover the reasonable administrative costs incurred from evaluating an application, as specified. The bill would provide that the Energy Commissions certification of a facility proposed by an electrical corporation satisfies and replaces the PUCs obligations under CEQA the California Environmental Quality Act with respect to that facility. The bill would prohibit the PUC from approving an application until after the Energy Commission has issued a decision on certification of the proposed facility. Because these provisions would be part of the Public Utilities Act and a violation of these requirements or a PUC action implementing these requirements would therefore be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)The California Environmental Quality Act (CEQA) requires preparation of specified documentation before a public agency approves or carries out certain projects. Existing law makes an environmental leadership development project, as defined, that meets specified requirements and is certified by the Governor eligible for streamlined procedures under CEQA. In particular, existing law requires the adoption of rules of court that expedite certain CEQA actions and proceedings related to an environmental leadership development project to resolve those actions and proceedings, to the extent feasible, within 270 days.

Existing law authorizes a person proposing an eligible facility, including an electrical transmission line carrying electricity from certain other facilities that are located in the state to a point of junction with any interconnected electrical transmission system, to file an application, on or before June 30, 2029, with the State Energy Resources Conservation and Development Commission (Energy Commission) to certify a site and related facility for purposes of specified environmental review procedures. Existing law deems a certified site and related facility an environmental leadership development project, as specified, and makes the site and related facility subject to streamlined procedures under CEQA with no further action by the applicant or the Governor. Under existing law, the Energy Commissions certification of sites and related facilities is in lieu of any permit, certificate, or similar document required by any state, local, or regional agency, or federal agency to the extent permitted by federal law, for the use of the sites and related facilities, and supersedes any applicable statute, ordinance, or regulation of any state, local, or regional agency, or federal agency to the extent permitted by federal law, except as specified.

This bill would expand the facilities eligible to be certified pursuant to the provisions described above by the Energy Commission and deemed environmental leadership development projects to include electrical transmission projects. The bill would require an applicant applying for certification of an electrical transmission project to take certain actions, including, among other actions, to avoid or minimize significant environmental impacts in any disadvantaged community.

(2)Existing law vests the Public Utilities Commission (PUC) with regulatory authority over public utilities, including electrical corporations. Existing law prohibits an electrical corporation from beginning the construction of a line, plant, or system, or any extension of a line, plant, or system, without having first obtained from the PUC a certificate that the present or future public convenience and necessity require its construction. Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.

The bill would authorize an electrical corporation that files an application with the PUC to authorize the new construction of any electrical transmission facility to simultaneously submit to the Energy Commission an application for certification of the facility, as specified. The bill would authorize the Energy Commission to recover the reasonable administrative costs incurred from evaluating an application, as specified. The bill would provide that the Energy Commissions certification of a facility proposed by an electrical corporation satisfies and replaces the PUCs obligations under CEQA with respect to that facility. The bill would prohibit the PUC from approving an application until after the Energy Commission has issued a decision on certification of the proposed facility. Because these provisions would be part of the Public Utilities Act and a violation of these requirements or a PUC action implementing these requirements would therefore be a crime, the bill would impose a state-mandated local program.

(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1165 (Padilla) - State Energy Resources Conservation and Development Commission: certification of facilities: electrical transmission facilities or projects

Bill Summary:

This bill would authorize an electrical corporation that applies to the California Public Utilities Commission (CPUC) to authorize construction of any electrical transmission facility or electrical transmission project to apply to the California Energy Commission (CEC) for certification of the facility pursuant to the California Environmental Quality Act (CEQA), instead of having the CPUC conduct the CEQA review. It would indirectly designate the CEC to be the lead agency for CEQA compliance for transmission permitting and would require the CPUC to adopt the CEC’s CEQA analysis to support its decision.

Fiscal Impact:

• The CEC estimates ongoing costs of about $9.2 million annually (Energy Resources Program Account [ERPA]) for 21 positions and contracts to implement the provisions of this bill. Staff note that ERPA, the CEC’s main funding source, has a significant structural deficit.
• The CPUC estimates ongoing costs of about $758,000 annually (ratepayer funds) to increase coordination with CEC and manage the increased complexity in the transmission project permitting process, among other things.

Background:

The A, B, C’s of CEQA. CEQA is designed to (a) make government agencies and the public aware of the environmental impacts of a proposed project, (b) ensure the public can take part in the review process, and (c) identify and implement measures to mitigate or eliminate any negative impact the project may have on the environment. CEQA is enforced by civil lawsuits that can challenge any project’s environmental review. Nonprofits, private individuals, public agencies, advocacy groups, and other organizations can all file lawsuits under CEQA.

Under CEQA, projects (unless they have a specific exemption) must undergo environmental analysis. This process starts with an initial study which determines what level of further environmental review is needed for a given project. If a project has no significant effects on the environment, or if those effects can be fully mitigated, the project can move forward with a negative declaration (ND) or mitigated negative declaration (MND). If the initial study finds that the project has potential significant effects on the environment, then a full EIR is conducted. An EIR provides thorough environmental review of a proposed project, analyzing the significant direct and indirect environmental impacts of a proposed project on water quality, transportation, air quality and greenhouse gas emissions among other factors. The EIR also includes proposed mitigation measures for any significant effects that it identifies and considers alternatives to the proposed project. EIRs must be completed and certified within a year, and NDs must be completed within 180 days.

Transmission projects and permitting. Electric transmission lines are generally high voltage lines that move electricity from power plants to distribution lines in neighborhoods. Companies, usually electric investor-owned utilities (IOUs), proposing the construction of new transmission, are required to obtain a permit from the CPUC for construction of transmission projects. The CPUC reviews permit applications under two concurrent processes: (1) an environmental review pursuant to CEQA, and (2) the review of project need and costs pursuant to Public Utilities Code Section 1001 and General Order (GO) 131-D (CPCN).

As the CPUC conducts the CEQA review, it also reviews the electric IOU’s application for either a CPCN or a Permit to the Construct (PTC). Which application the CPUC pursues depends on the size of the project:

• 1. Projects below 50 kV are considered distribution projects, rather than transmission projects, and in general do not require CPUC approval.
  2. Projects between 50 kV and 200 kV require a PTC from the CPUC, which consists primarily of an environmental review pursuant to CEQA. The CPUC process generally does not require a detailed analysis of the need for or economics of these projects.
  3. Projects over 200 kV require a CPCN from the CPUC. The CPCN process analyzes the need for the project and the economics of the project, as well as, the environmental impacts of the project

The CPUC’s decision on the CPCN or PTC cannot be issued until the environmental review is complete.

According to the Senate Committee on Energy, Utilities, and Communications, of the hundreds of major capital electric transmission projects completed in California each year, on average one or two per year may trigger a permit, and thus require CEQA. Most projects are reviewed through the CPUC’s advice letter approval process, which tends to be more simplified and expedient than a full application for a CPCN.

CEQA streamlining. The Legislature has developed streamlining measures to speed CEQA lawsuits brought against specified projects through the courts. In current law, CEQA streamlining entails both judicial and administrative streamlining. Judicial streamlining requires that a CEQA lawsuit be heard in 270 days, including all appeals, as feasible. Administrative streamlining requires projects to prepare the administrative record, the comprehensive document at the heart of a CEQA case, at the same time as the environmental review documents are prepared. Preparing these documents concurrently, instead of sequentially, saves time if there is a lawsuit. These streamlining measures shorten what is potentially the lengthiest portion of the CEQA process—litigation—while retaining the full environmental review and public engagement offered under CEQA.

In 2011, the Legislature passed the first CEQA streamlining certification program with the Jobs and Economic Improvement Through Environmental Leadership Act (Leadership Act), which created CEQA streamlining for residential, retail, commercial, sports, and recreational use projects that were certified as Environmental Leadership Development Projects (ELDP) by the Governor (AB 900, Buchanan, Chapter 354, Statutes of 2011). The ELDP program was further extended and modified in 2021 with (SB 7, Atkins, Chapter 19, Statutes of 2021). In 2023, The Legislature expanded these same streamlining provisions for certain energy, transportation, and water infrastructure projects (SB 149, Caballero, Chapter 60, Statutes of 2023).

Speeding up environmental review of transmission deployment. Environmental review is critical to ensure that new transmission lines are not inadvertently harming the environment or communities. Environmental review necessarily takes time. According to a Clean Air Task Force review of 13 projects approved in CAISO’s Transmission Plans between 2012 and 2019, environmental reviews lasted between 16 months and four years. While this dataset is very limited, it does provide some insight into the time—and the variability in time—required for those few projects that trigger CEQA review. The CPUC estimates that CEQA and CPCN review add around 3-4 years for a project, with lawsuits potentially extending this timing further.

In recognition of the urgent need to deploy transmission and energy infrastructure to meet California’s energy demand and clean energy goals, the Legislature has enacted several measures in recent years to streamline environmental review and permitting for transmission projects.

In 2022, the Legislature passed AB 205 (Committee on Budget, Chapter 21, Statutes of 2022), which, among many other elements, authorized certain energy projects, including electric transmission lines between certain non-fossil fuel energy generation facilities, to become certified leadership projects under the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 through a certification process through the CEC. With this certification, actions or proceedings related to the certification of an environmental impact report need to be resolves within 270 days to the extent feasible. AB 205 also authorized the CEC to implement a new optional program (opt-in) that authorizes the CEC to accept applications seeking certification of certain of non-fossil-fueled energy generating facilities, energy storage facilities, transmission facilities connected to these generation facilities, and other related facilities. The emergency regulations set forth the process for submitting opt-in applications, reviewing applications, performing outreach, and considering whether to issue or deny a certification

The Legislature also passed SB 529 in 2022 (Hertzberg, Chapter 357, Statutes of 2022), to exempts extensions, expansions, upgrades, or other modifications of transmission projects from the lengthy CPCN process, and instead authorizes these projects to go through the streamlined PCT. The CPUC is currently in the rulemaking process to implement these changes.

Proposed Law:

This bill would indirectly designate the CEC to be the lead agency for CEQA compliance for transmission permitting and would require the CPUC to adopt the CEC’s CEQA analysis to support its decision. Specifically, this bill would:

1. Authorize an electrical corporation to apply to the CEC for a certificate or a permit to construct authorizing the new construction of any electrical transmission facility or electrical transmission project, including high voltage electrical transmission lines and substations rated at 138 kV or greater, as specified, at the same time they apply to the to the CPUC pursuant to CEQA.
   1. Provide that the CEC’s certification of a facility or transmission project satisfies and replaces the CPUC’s obligations under CEQA with respect to that facility and prohibits CPUC from approving an application for a Certificate of Public Convenience and Necessity (CPCN) until after the CEC has issued a decision on environmental review certification of the proposed facility.
   2. Requires an applicant applying for certification of an electrical transmission project to take certain actions, including to avoid or minimize significant environmental impacts in any disadvantaged community.
   3. Authorizes the CEC to recover from the electrical corporation the reasonable administrative costs incurred from evaluating an application.
   4. Provides that an electrical corporation may file an application by no later than January 1, 2032.
   5. Specify that it does not expand the projects eligible to be certified pursuant to Section 25545.13 of the Public Resources Code or Chapter 7 (commencing with Section 21189.80) of Division 13 of the Public Resources Code.
2. Expand the facilities eligible to be certified as ELDPs as part of the AB 205 “Opt-in” permitting by the CEC to include electrical transmission projects.
   1. Authorizes an electrical corporation that files an application with the CPUC to authorize the new construction of any electrical transmission facility rated at 138 kV or greater to simultaneously submit to the CEC an application for certification of the facility as an ELDP and AB 205 “Opt-in” permitting.
   2. Prohibits the CEC from considering the necessity of the electrical transmission facility, thereby retaining that review at the CPUC for those projects.

Related Legislation:

SB 619 (Padilla, 2023) would have authorized an electrical corporation that applies to the CPUC to authorize construction of a high voltage electrical transmission line, rated at 138 kV or greater, to apply to the CEC for certification of the facility pursuant to the CEQA, instead of the CPUC conducting the CEQA review. This bill would have provided that the CEC certification authorizes the project to be eligible for the CEQA judicial streamlining afforded to ELDPs and the CEC’s “Opt-in” permitting process. The bill was vetoed.

SB 420 (Becker, 2023) would have exempted construction of certain low-voltage electrical lines and associated equipment from the need to receive a discretionary permit from the CPUC. The bill was vetoed.

SB 319 (McGuire, Chapter 390, Statutes of 2023) requires the CEC and the CPUC, in coordination with the CAISO, to better and regularly coordinate planning and permitting of energy transmission infrastructure to ensure the state meets its clean energy goals and to evaluate and report on that planning and related infrastructure development.

SB 529 (Hertzberg, Chapter 357, Statutes of 2022) exempts an extension, expansion, upgrade, or other modification of an existing transmission line or substations from the requirement of a CPCN and directed the CPUC to revise its GO, by January 1, 2024, to instead use its permit to construct process for these approvals.

AB 205 (Committee on Budget, Chapter 21, Statutes of 2022) allows certain energy projects, including electric transmission lines between certain non-fossil fuel energy generation facilities to become certified leadership projects under the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 through a certification process through the CEC. With this certification, actions or proceedings related to the certification of an environmental impact report need to be resolves within 270 days to the extent feasible.

Staff Comments:

The main funding source supporting CEC is ERPA, which was established to provide funds for ongoing energy programs and energy as established to provide funds for ongoing energy programs and energy projects, including the operations of the CEC. ERPA is supported by a statutory surcharge on electricity consumption. According to the CEC, as building and appliance energy efficiency and the increase of behind-the-meter solar produce customer savings and flatten statewide electricity consumption, ERPA revenues have decreased, and the costs have been borne by fewer and fewer customers. Even as revenues drop, ERPA is repeatedly tapped to support new programs and must cover increases in employee compensation and benefit contributions.

The surcharge generated approximately $69.1 million in 2020-21 and currently costs the average household about $2.13 annually (larger customers pay the same rate but pay more based on volume). Despite CEC efforts to reduce ERPA spending by more than $37 million over four years, a structural deficit remains and ERPA’s fund balance is projected to be in the red in 2024-25.

As part of the 2022-23 budget, the Legislature passed trailer bill language that raised the statutory cap on the ERPA surcharge, tied the statutory cap to the Consumer Price Index, and extended the surcharge to behind-the-meter electricity consumption. Using ERPA to fund implementation of this bill would increase ERPA expenditures thereby exacerbating the structural deficit.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2023 - 2024 Regular

Bill No: SB 1165

SUBJECT: State Energy Resources Conservation and Development Commission: certification of facilities: electrical transmission projects

DIGEST: This bill authorizes an electrical corporation that applies to the California Public Utilities Commission (CPUC) to authorize construction of a high voltage electrical transmission line, rated at 138 kilovolts (kV) or greater, to apply to the California Energy Commission (CEC) for certification of the facility pursuant to the California Environmental Quality Act (CEQA), instead of having the CPUC conduct the CEQA review. Projects with this CEC certification shall be eligible for CEQA judicial and administrative streamlining afforded to Environmental Leadership Development Projects and the CEC’s “Opt-in” permitting process.

ANALYSIS:

Existing law:

1. CEQA requires lead agencies with the principal responsibility for carrying out or approving a project to prepare a negative declaration (ND), mitigated negative declaration (MND), or environmental impact report (EIR) for the project, unless the project is exempt from CEQA. (Public Resources Code (PRC) §21000 et seq.)
2. Establishes the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 which authorizes the Governor, until January 1, 2032, to certify Environmental Leadership Development Projects (ELDPs) that meet specified requirements for certain streamlining benefits related to the CEQA. Repeals the Act on January 1, 2032. (Public Resources Code §21178 et seq.)
3. Provides that the CPUC may supervise and regulate every public utility in the state and may do all things, whether specifically designated or in addition, which are necessary and convenient in the exercise of such power and jurisdiction. (Public Utilities Code §701)
4. Prohibits an electrical corporation from beginning construction of a line, plant, or system, or of any extension thereof, without having first obtained from the CPUC a certificate that the present or future public convenience and necessity requires, or will require, its construction. (Public Utilities Code §1001)
5. Establishes the AB 205 (Committee on Budget, Chapter 61, Statutes of 2022) “Opt-in” permitting which authorized persons proposing eligible facilities, including electrical transmission lines carrying electricity from certain other facilities that are located in the state to a point of junction with any interconnected electrical transmission system, to file applications for certification, on or before June 30, 2029, with the CEC to certify sites and related facilities. Provided that the CEC’s certification of sites and related facilities is in lieu of any permit, certificate, or similar document required by any state, local, or regional agency, except as specified, including the CPUC permit requirements. (Public Resources Code §25545 et seq.)
   1. Deems the sites and related facilities certified by the CEC as ELDPs eligible for the judicial streamlining of such projects. (Public Resources Code §25545.13)
6. Declares, pursuant to SB 100 (De León), Chapter 312, Statutes of 2018, the policy of the state that eligible renewable energy resources and zero-carbon resources supply 90 percent of all retail sales of electricity to California end-use customers by December 31, 2035, 95 percent of all retail sales of electricity to California end-use customers by December 31, 2040, 100 percent of all retail sales of electricity to California end-use customers by December 31, 2045, and 100 percent of electricity procured to serve all state agencies by December 31, 2035. (PU Code 454.53)
7. Establishes the California Independent System Operator (CAISO) as a nonprofit, public benefit corporation to ensure efficient use and reliable operation of the transmission grid and to manage the transmission grid and related energy markets. (PUC § 345 et seq)

This bill:

1. This bill authorizes an electrical corporation to apply to the CEC for certification of a high voltage electrical transmission line, rated at 138 kV or greater, at the same time they apply to the CPUC pursuant to CEQA.
   1. Provides that the CEC’s certification of a facility satisfies and replaces the CPUC’s obligations under CEQA with respect to that facility and prohibits CPUC from approving an application for a Certificate of Public Convenience and Necessity (CPCN) until after the CEC has issued a decision on environmental review certification of the proposed facility.
   2. Requires an applicant applying for certification of an electrical transmission project to take certain actions, including to avoid or minimize significant environmental impacts in any disadvantaged community.
   3. Authorizes the CEC to recover from the electrical corporation the reasonable administrative costs incurred from evaluating an application.
   4. Provides that an electrical corporation may file an application by no later than January 1, 2032.
2. Expands the facilities eligible to be certified as ELDPs as part of the AB 205 “Opt-in” permitting by the CEC to include electrical transmission projects.
   1. Authorizes an electrical corporation that files an application with the CPUC to authorize the new construction of any electrical transmission facility rated at 138 kV or greater to simultaneously submit to the CEC an application for certification of the facility as an ELDP and AB 205 “Opt-in” permitting.
   2. Prohibits the CEC from considering the necessity of the electrical transmission facility, thereby retaining that review at the CPUC for those projects.

Background

1. The A, B, C’s of CEQA. CEQA is designed to (a) make government agencies and the public aware of the environmental impacts of a proposed project, (b) ensure the public can take part in the review process, and (c) identify and implement measures to mitigate or eliminate any negative impact the project may have on the environment. CEQA is enforced by civil lawsuits that can challenge any project’s environmental review. Nonprofits, private individuals, public agencies, advocacy groups, and other organizations can all file lawsuits under CEQA.

Under CEQA, projects (unless they have a specific exemption) must undergo environmental analysis. This process starts with an initial study which determines what level of further environmental review is needed for a given project. If a project has no significant effects on the environment, or if those effects can be fully mitigated, the project can move forward with a negative declaration (ND) or mitigated negative declaration (MND). If the initial study finds that the project has potential significant effects on the environment, then a full EIR is conducted. An EIR provides thorough environmental review of a proposed project, analyzing the significant direct and indirect environmental impacts of a proposed project on water quality, transportation, air quality and greenhouse gas emissions among other factors. The EIR also includes proposed mitigation measures for any significant effects that it identifies and considers alternatives to the proposed project. EIRs must be completed and certified within a year, and NDs must be completed within 180 days.

1. Transmission projects and permitting. Electric transmission lines are generally high voltage lines that move electricity from power plants to distribution lines in neighborhoods. Companies, usually electric investor-owned utilities (IOUs), proposing the construction of new transmission, are required to obtain a permit from the CPUC for construction of transmission projects. The CPUC reviews permit applications under two concurrent processes: (1) an environmental review pursuant to CEQA, and (2) the review of project need and costs pursuant to Public Utilities Code Section 1001 and General Order (GO) 131-D (CPCN).

As the CPUC conducts the CEQA review, it also reviews the electric IOU’s application for either a CPCN or a Permit to the Construct (PTC). Which application the CPUC pursues depends on the size of the project:

• 1. Projects below 50 kV are considered distribution projects, rather than transmission projects, and in general do not require CPUC approval.
  2. Projects between 50 kV and 200 kV require a PTC from the CPUC, which consists primarily of an environmental review pursuant to CEQA. The CPUC process generally does not require a detailed analysis of the need for or economics of these projects.
  3. Projects over 200 kV require a CPCN from the CPUC. The CPCN process analyzes the need for the project and the economics of the project, as well as, the environmental impacts of the project

The CPUC’s decision on the CPCN or PTC cannot be issued until the environmental review is complete.

According to the Senate Energy, Utilities, and Communications, of the hundreds of major capital electric transmission projects completed in California each year, on average one or two per year may trigger a permit, and thus require CEQA. Most projects are reviewed through the CPUC’s advice letter approval process, which tends to be more simplified and expedient than a full application for a CPCN.

1. CEQA streamlining. The Legislature has developed streamlining measures to speed CEQA lawsuits brought against specified projects through the courts. In current law, CEQA streamlining entails both judicial and administrative streamlining. Judicial streamlining requires that a CEQA lawsuit be heard in 270 days, including all appeals, as feasible. Administrative streamlining requires projects to prepare the administrative record, the comprehensive document at the heart of a CEQA case, at the same time as the environmental review documents are prepared. Preparing these documents concurrently, instead of sequentially, saves time if there is a lawsuit. These streamlining measures shorten what is potentially the lengthiest portion of the CEQA process—litigation—while retaining the full environmental review and public engagement offered under CEQA.

In 2011, the Legislature passed the first CEQA streamlining certification program with the Jobs and Economic Improvement Through Environmental Leadership Act (Leadership Act), which created CEQA streamlining for residential, retail, commercial, sports, and recreational use projects that were certified as Environmental Leadership Development Projects (ELDP) by the Governor (AB 900, Buchanan, Chapter 354, Statutes of 2011). The ELDP program was further extended and modified in 2021 with (SB 7, Atkins, Chapter 19, Statutes of 2021). In 2023, The Legislature expanded these same streamlining provisions for certain energy, transportation, and water infrastructure projects (SB 149, Caballero, Chapter 60, Statutes of 2023).

1. Speeding up environmental review of transmission deployment. Environmental review is critical to ensure that new transmission lines are not inadvertently harming the environment or communities. Environmental review necessarily takes time. According to a Clean Air Task Force review of 13 projects approved in CAISO’s Transmission Plans between 2012 and 2019, environmental reviews lasted between 16 months and four years. While this dataset is very limited, it does provide some insight into the time—and the variability in time—required for those few projects that trigger CEQA review. The CPUC estimates that CEQA and CPCN review add around 3-4 years for a project, with lawsuits potentially extending this timing further.

In recognition of the urgent need to deploy transmission and energy infrastructure to meet California’s energy demand and clean energy goals, the Legislature has enacted several measures in recent years to streamline environmental review and permitting for transmission projects.

In 2022, the Legislature passed AB 205 (Committee on Budget, Chapter 21, Statutes of 2022), which, among many other elements, authorized certain energy projects, including electric transmission lines between certain non-fossil fuel energy generation facilities, to become certified leadership projects under the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 through a certification process through the CEC. With this certification, actions or proceedings related to the certification of an environmental impact report need to be resolves within 270 days to the extent feasible. AB 205 also authorized the CEC to implement a new optional program (opt-in) that authorizes the CEC to accept applications seeking certification of certain of non-fossil-fueled energy generating facilities, energy storage facilities, transmission facilities connected to these generation facilities, and other related facilities. The emergency regulations set forth the process for submitting opt-in applications, reviewing applications, performing outreach, and considering whether to issue or deny a certification

The Legislature also passed SB 529 in 2022 (Hertzberg, Chapter 357, Statutes of 2022), to exempts extensions, expansions, upgrades, or other modifications of transmission projects from the lengthy CPCN process, and instead authorizes these projects to go through the streamlined PCT. The CPUC is currently in the rulemaking process to implement these changes.

Comments

1. Purpose of Bill. According to the author, “California has enacted some of the world’s most aggressive climate goals, but its transition away from fossil fuels is being threatened by slow siting and SB 1165 (Padilla) Page 8 of 8 permitting processes that delay critical transmission projects necessary to deliver clean energy to consumers. These long delays undermine reliability and lead to increased costs to ratepayers. If California hopes to meet its ambitious climate goals, transition transportation to clean vehicles, and end our addiction to fossil fuels, we must undertake unprecedented efforts to modernize and expand our electrical grid. New high-voltage cables, modernized existing cable networks, and new infrastructure connecting a grid with a far larger capacity to carry clean electrons to power our homes and economy is critical to keeping the lights on in California. CAISO estimates we need 7,000 megawatts of new power capacity every year for the next decade, but we’re only adding a fraction of that, raising the threat of summer black-outs. Delays in project approval are also resulting in significantly higher costs to ratepayers for those critical projects. Finally, long permitting delays may also make it impossible for California to access substantial federal assistance currently available to modernize our grid and reduce ratepayer costs. SB 1165 would expand the CEC’s alternative opt-in certification process to ensure faster review of key projects without sacrificing critical economic and environmental analyses of those projects.”
   
2. Are (most) transmission projects already CEQA exempt? Only larger, high-voltage projects over 200 kV, which also require a CPCN, are consistently subject to complete CEQA review. According to CPUC data (collected by the Assembly Committee on Utilities & Energy in 2023), between 2012 to 2023, of a total 664 projects that required CPUC review, 608 projects were exempt from CEQA, 29 projects were approved via negative declaration or mitigated negative declaration, and 27 required an EIR. Over 90 percent of electric IOU transmission projects over the last decade were exempt from CEQA, not counting the thousands of projects < 50 kV that do not require any review from the CPUC.

SB 1165 seeks to reduce the time it takes for transmission projects to be approved, and specifically seeks to streamline environmental review. Given that only a fraction of transmission projects require the full environmental review of an EIR, it is worth considering whether those few projects that are most likely to have significant impacts would benefit from full environmental review that requires public agencies to consider mitigation measures for the project and includes public engagement.

1. Expanding transmission streamlining. SB 1165 would make all transmission projects, including those that go through CEC approval process developed in the bill eligible for CEQA streamlining under SB 149. SB 149 already allows streamlining for electrical transmission projects that prioritize transmission from renewable energy resources or zero-carbon resources or energy storage projects that meet the high environmental criteria for streamlining in SB 149. Making all transmission projects eligible for CEQA streamlining would de-prioritize transmission projects from renewable energy sources by making the streamlining eligible to a projects regardless of their energy source.

Unless specific funding is given to courts to cope with more CEQA cases, streamlining is a zero sum game: the more projects that qualify for “CEQA streamlining,” the harder it will be for courts to meet the 270 day time frame. Adding a potentially large number of additional transmission projects to this fast track could reduce the impact of the benefit for all streamlined CEQA projects.

The author and committee may wish to consider removing CEQA streamlining for all transmission projects

1. CEC vs. CPUC procedural tradeoffs? SB 1165 bill provides electrical corporations the option to select between the CPUC or CEC as the lead agency for CEQA for these higher voltage transmission projects. In moving the environmental review process for transmission facilities from the PUC to the CEC, this bill seeks to reduce the amount of time it takes to deploy a transmission projects. However, while the concurrent CPCN/CEQA review process at the CPUC is time consuming, its thoroughness and the limited procedures for challenging CPUC decisions discourages would-be petitioners from bringing lawsuits. To date, the litigation rate against CPUC decisions is extremely low, and the odds of a petitioner prevailing against the CPUC is even lower. The CEC does not have an established track record yet to determine how likely their process is to be challenged by lawsuits, meaning that moving the review process to CEC to make it more nimble on the front-end (environmental review) may result in longer delays on the back end (litigation).
2. Take II. The bill is nearly identical to SB 619 (Padilla, 2022) which was vetoed by the Governor. In the veto message, Governor Newsome stated:

“While I share the author's goal to improve electric transmission permitting to expedite needed project development, decentralizing permitting between two agencies creates new coordination challenges, requires duplicative staffing, disrupts the sequencing of permitting workstreams and impedes the ability of either agency to consider the full scope of an electric transmission project. Ensuring that a single agency can account for and mitigate both significant costs to electric ratepayers and environmental impacts can lead to better results for Californians.”

7) Committee amendments. Staff recommends the committee adopt the bolded amendments contained in comment 5 above.

DOUBLE REFERRAL:

This measure was heard in Senate Energy, Utilities, and Communication Committee on April 2, 2024, and passed out of committee with a vote of 15-1.

Related/Prior Legislation

SB 619 (Padilla, 2022) would have authorized an electrical corporation that applies to the CPUC to authorize construction of a high voltage electrical transmission line, rated at 138 kV or greater, to apply to the CEC for certification of the facility pursuant to the CEQA, instead of the CPUC conducting the CEQA review. This bill would have provided that the CEC certification authorizes the project to be eligible for the CEQA judicial streamlining afforded to ELDPs and the CEC’s “Opt-in” permitting process. The bill was vetoed.

SB 420 (Becker, 2023) would have exempted construction of certain low-voltage electrical lines and associated equipment from the need to receive a discretionary permit from the CPUC. The bill was vetoed.

SB 319 (McGuire, Chapter 390, Statutes of 2023) requires the CEC and the CPUC, in coordination with the CAISO, to better and regularly coordinate planning and permitting of energy transmission infrastructure to ensure the state meets its clean energy goals and to evaluate and report on that planning and related infrastructure development.

SB 529 (Hertzberg, Chapter 357, Statutes of 2022) exempts an extension, expansion, upgrade, or other modification of an existing transmission line or substations from the requirement of a CPCN and directed the CPUC to revise its GO, by January 1, 2024, to instead use its permit to construct process for these approvals.

AB 205 (Committee on Budget, Chapter 21, Statutes of 2022) allows certain energy projects, including electric transmission lines between certain non-fossil fuel energy generation facilities to become certified leadership projects under the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 through a certification process through the CEC. With this certification, actions or proceedings related to the certification of an environmental impact report need to be resolves within 270 days to the extent feasible.

SOURCE:

Author

SUPPORT:

California State Association of Electrical Workers
Coalition of California Utility Employees
Large Scale Solar Association

Natural Resources Defense Council (NRDC)
San Diego Community Power
Sonoma Clean Power

OPPOSITION:

California Farm Bureau

ARGUMENTS IN SUPPORT:

According to the Large Scale Solar Association: “California faces unprecedented need for new renewable energy and storage resources to meet reliability and climate targets, and expedited transmission infrastructure is critical to bringing those resources online. LSA supports SB 1165 which would create an opt-in process for utilities to bifurcate the permitting process for transmission projects above 138kV, leaving the Certificate of Public Convenience and Necessity permitting at the CPUC, and selecting the California Energy Commission to issue the necessary environmental permits through their expedited process as established by AB 205 (Chapters 61, 2022). We believe this approach could help create workload efficiencies and streamline and expedite processes.”

ARGUMENTS IN OPPOSITION:

The California Farm Bureau writes in opposition “Although recognizing the need for improved transmission connections, Farm Bureau is cognizant of and concerned about the impact that could be imposed on agricultural landowners without an opportunity to understand the implications of expanding transmission lines on their properties. Our members already face the consequences of scaled back productive areas due to statewide requirements for utility management around the lines. Fam Bureau will happily champion other methods for speeding up transmission that does not unduly burden landowners and their ability to adequately participate in those proceedings such as SB 1006 from Senator Padilla.

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SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Steven Bradford, Chair

2023 - 2024 Regular

Bill No: SB 1165 Hearing Date: 4/2/2024

SUBJECT: State Energy Resources Conservation and Development Commission: certification of facilities: electrical transmission projects

DIGEST: This bill authorizes an electrical corporation that applies to the California Public Utilities Commission (CPUC) to authorize construction of a high voltage electrical transmission line, rated at 138 kilovolts (kV) or greater, to apply to the California Energy Commission (CEC) for certification of the facility pursuant to the California Environmental Quality Act (CEQA), instead of the CPUC conducting the CEQA review. This bill provides that the CEC certification authorizes the project to be eligible for the CEQA judicial streamlining afforded to Environmental Leadership Development Projects and the CEC’s “Opt-in” permitting process.

ANALYSIS:

Existing law:

1. Provides that the CPUC may supervise and regulate every public utility in the state and may do all things, whether specifically designated or in addition, which are necessary and convenient in the exercise of such power and jurisdiction. (Public Utilities Code §701)
2. Prohibits an electrical corporation from beginning construction of a line, plant, or system, or of any extension thereof, without having first obtained from the CPUC a certificate that the present or future public convenience and necessity requires, or will require, its construction. (Public Utilities Code §1001)
3. Establishes the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 which authorizes the Governor, until January 1, 2032, to certify Environmental Leadership Development Projects (ELDPs) that meet specified requirements for certain streamlining benefits related to the CEQA. Repeals the Act on January 1, 2032. (Public Resources Code §21178 et seq.)
4. Establishes the AB 205 (Committee on Budget, Chapter 61, Statutes of 2022) “Opt-in” permitting which authorized persons proposing eligible facilities, including electrical transmission lines carrying electricity from certain other facilities that are located in the state to a point of junction with any interconnected electrical transmission system, to file applications for certification, on or before June 30, 2029, with the CEC to certify sites and related facilities. Provided that the CEC’s certification of sites and related facilities is in lieu of any permit, certificate, or similar document required by any state, local, or regional agency, except as specified, including the CPUC permit requirements. (Public Resources Code §25545 et seq.)
5. Deems the sites and related facilities certified by the CEC as ELDPs eligible for the judicial streamlining of such projects. (Public Resources Code §25545.13)

This bill:

1. Expands the facilities eligible to be certified as ELDPs as part of the AB 205 “Opt-in” permitting by the CEC to include electrical transmission projects.
2. Requires an applicant applying for certification of an electrical transmission project to take certain actions, including to avoid or minimize significant environmental impacts in any disadvantaged community.
3. Authorizes an electrical corporation that files an application with the CPUC to authorize the new construction of any electrical transmission facility rated at 138 kV or greater to simultaneously submit to the CEC an application for certification of the facility as an ELDP and AB 205 “Opt-in” permitting. Prohibits the CEC from considering the necessity of the electrical transmission facility, thereby retaining that review at the CPUC. Authorizes the CEC to consider alternative substation locations or routing of transmission lines.
4. Authorizes the CEC to recover from the electrical corporation the reasonable administrative costs incurred from evaluating an application and requires any of those fees to be deposited into the Energy Facility License and Compliance Fund.
5. Provides that an electrical corporation may file an application by no later than January 1, 2032.
6. Provides that the CEC’s certification of a facility proposed by an electrical corporation satisfies and replaces the CPUC’s obligations under CEQA with respect to that facility.
7. Prohibits the CPUC from approving an application for a Certificate of Public Convenience and Necessity (CPCN) until after the CEC has issued a decision on environmental review certification of the proposed facility.

Background

Transmission projects. Electric transmission lines are generally high voltage lines that move electricity from generation resources (power plants) to distribution lines in neighborhoods. Companies, usually electric investor-owned utilities (IOUs), proposing the construction of new transmission, are required to obtain a permit from the CPUC for construction of certain specified infrastructure listed under Public Utilities Code Section 1001, including transmission projects. The CPUC reviews permit applications under two concurrent processes: (1) an environmental review pursuant to CEQA, and (2) the review of project need and costs pursuant to Public Utilities Code Section 1001 and General Order (GO) 131-D (CPCN).

Environmental review. CEQA provides a process for evaluating the environmental effects of applicable projects undertaken or approved by public agencies. There are three general buckets of CEQA-eligible projects: exempted from CEQA, subject to a negative declaration or mitigated negative declaration, or subject to environmental impact review (EIR). If a project is not exempt from CEQA, an initial study is prepared to determine whether the project may have a significant effect on the environment. If the initial study shows that there would not be a significant effect on the environment, the lead agency must prepare a negative declaration or mitigated negative declaration. If the initial study shows that the project may have a significant effect on the environment, the lead agency must prepare an EIR. CEQA requires state and local lead agencies to establish time limits of one year for completing and certifying EIRs and 180 days for completing and adopting negative declarations. These limits are measured from the date on which an application is received and accepted as complete by the lead agency. Agencies may provide for a reasonable extension in the event that compelling circumstances justify additional time and the project applicant consents.

CPUC permitting and environmental review. Parallel to the CEQA review, the CPUC reviews the electric IOU’s application for a CPCN or a Permit to the Construct (PTC), depending on the size of the project. The CPUC’s decision on the CPCN or PTC cannot be issued until the environmental review is complete. Most of the CPCN/PTC process is outlined in CPUC GO 131-D.

CPUC’s GO 131-D. GO 131-D specifically addresses the procedures to be followed in applications for siting of electric transmission infrastructure. In essence, it implements the requirements of Public Utilities Code §1001. Under GO 131-D, the CPUC has established the criteria that would trigger the need for a permit to build or renovate electrical facilities, including transmission lines and substations. Of the hundreds of major capital electric transmission projects completed in California each year, on average one-two per year may trigger a permit, and thus CEQA.  Most projects are reviewed through the CPUC’s advice letter approval process, which tends to be more simplified and expedient than a full application for a CPCN.

The level of analysis performed by the CPUC varies with the size (measured in voltage) of the transmission project. Projects below 50 kV are considered distribution projects, rather than transmission projects, and in general do not require CPUC approval. Projects between 50 kV and 200 kV require a PTC from the CPUC, which consists primarily of an environmental review pursuant to CEQA. The CPUC process generally does not require a detailed analysis of the need for or economics of these projects. Projects over 200 kV require a CPCN from the CPUC. The CPCN process analyzes the need for the project and the economics of the project, as well as, the environmental impacts of the project.

SB 529 (Hertzberg, Chapter 357, Statutes of 2022). SB 529 exempts extensions, expansions, upgrades, or other modifications of transmission projects from the more involved CPCN review and approval process. Instead, SB 529 authorized these projects to undergo the more streamlined and expedient PTC review and approval process at the CPUC. The CPUC has an active rulemaking proceeding (R.23-05-018) to implement the changes adopted in SB 529 and has adopted the Phase I Decision in December of 2023 to modify GO-131 to conform with SB 529 requirements.

Transmission Outlook. In 2021, the California Independent System Operator (CAISO) issued a 20-Year Transmission Outlook for the electric grid, in collaboration with the CPUC and the CEC, with the goal of exploring the longer-term grid requirements and options for meeting the state’s SB 100 (De León, Chapter 312, Statutes of 2018) clean energy objectives reliably and cost-effectively. The CAISO identified the system needs by mapping resources to the appropriate regions, identifying the transmission additions necessary to add those resources to the grid, and then examining the need to deliver those resources over the bulk transmission system. The 20-Year Transmission Outlook estimates a significant amount, and expense, to construct and expand transmission facilities, including an estimated $10.74 billion in upgrades to existing facilities. Written in partnership with the CPUC and the CEC, the outlook estimates that more than $30 billion in new transmission capacity will be needed by 2040.

AB 205. Among its many provisions, AB 205 authorized the CEC to establish a new certification and permitting program for eligible non-fossil-fueled power plants and related facilities to optionally seek certification from the CEC, largely in lieu of local government permitting. The CEC adopted emergency regulations to implement a new optional program (opt-in) that authorizes the CEC to accept applications seeking certification of certain types of non-fossil-fueled energy generating facilities, energy storage facilities, transmission facilities connected to these generation facilities, and other related facilities. The emergency regulations set forth the process for submitting opt-in applications, reviewing applications, performing outreach, and considering whether to issue or deny a certification. As of April of this year, the CEC had officially received only one application to the AB 205 opt-in process for a wind project in Shasta County. The CEC has shared there are a few additional projects with applications in process. These projects are a mixture of battery energy storage, solar photovoltaic with battery energy storage, and geothermal projects, located in various parts of the state.

Comments

Need for this bill. This bill builds off the authority given to the CEC by AB 205 by additionally allowing an electrical corporation to apply to the CEC, not the CPUC as required by current law, for the environmental review of certain electrical transmission projects, subject to the 270-day decision timeframe found in AB 205. As such, this bill provides electrical corporations the option to select between the CPUC or CEC as their lead CEQA agency for these higher voltage transmission projects. The bill is similar to SB 619 (Padilla, 2022) which was vetoed by the Governor. In the veto message, Governor Newsome stated:

“While I share the author's goal to improve electric transmission permitting to expedite needed project development, decentralizing permitting between two agencies creates new coordination challenges, requires duplicative staffing, disrupts the sequencing of permitting workstreams and impedes the ability of either agency to consider the full scope of an electric transmission project. Ensuring that a single agency can account for and mitigate both significant costs to electric ratepayers and environmental impacts can lead to better results for Californians.”

CEQA and electric IOU transmission projects. Only larger, high-voltage projects over 200 kV, which also require a CPCN, are consistently subject to complete CEQA review. According to CPUC data (collected by the Assembly Committee on Utilities & Energy last year), from 2012 to 2023, of a total 664 projects that required CPUC review: 608 projects were exempt from CEQA, 29 projects were approved via negative declaration or mitigated negative declaration, and 27 required an EIR. As such, over 90 percent of electric IOU transmission projects over the last decade were exempt from CEQA, not counting the thousands of projects < 50 kV that do not require any review from the CPUC. Of the projects that had to go through a full EIR, over half were subject to federal environmental review; meaning, even if a specific project received a statutory exemption from CEQA, a federal environmental review would still be required. Therefore, efforts to offer CEQA streamlining impact only a small fraction of the needed transmission projects developed in California every year. However, given the potential transmission build-out expected per the CAISO 20-Year Transmission Outlook, it’s very possible there may be an increasing number of transmission projects that require CEQA review.

Expanding electric IOUs’ permitting options. If electric IOUs select the CEC CEQA review process, the projects are granted a 270 day administrative review timeline in exchange for lesser judicial streamlining, with legal challenges headed to the superior court, and with the additional project requirements in AB 205 related to workforce, greenhouse gas emissions reductions, and reduced impacts in disadvantaged communities. Such an option could increase exposure to litigation that may be more limited via the existing CPUC process which requires that legal appeals are taken directly to the Courts of Appeal or the California Supreme Court (Public Utilities Code §1756). According to the CPUC, the average transmission project that went through an EIR at the CPUC took approximately 29 months for a complete decision (CEQA and CPCN/PTC review) from the date the application was received; the average for all projects was 23 months. As such, the proposal in this bill may result in a few months of time savings. Nonetheless, the author contends a CEC CEQA review may be preferred over the CPUC’s review, even as the CPUC retains the CPCN review process.

Dual Referral. Should this bill be approved by this committee, it will be re-referred to the Senate Committee on Environmental Quality.

Prior/Related Legislation

SB 619 (Padilla, 2022) would have authorized an electrical corporation that applies to the CPUC to authorize construction of a high voltage electrical transmission line, rated at 138 kV or greater, to apply to the CEC for certification of the facility pursuant to the CEQA, instead of the CPUC conducting the CEQA review. This bill provides that the CEC certification authorizes the project to be eligible for the CEQA judicial streamlining afforded to ELDPs and the CEC’s “Opt-in” permitting process. The bill was vetoed.

SB 149 (Caballero, Chapter 60, Statutes of 2023) among its provisions, revised the procedures regarding CEQA administrative records and expedited administrative and judicial review procedures for ELDPs for specified projects, including transmission projects, that required the courts to resolve CEQA litigation within 270 days to the extent feasible and extends the ELDP sunset to January 1, 2034.

SB 319 (McGuire, Chapter 390, Statutes of 2023) required the CEC and the CPUC, in coordination with the CAISO, to better and regularly coordinate planning and permitting of energy transmission infrastructure to ensure the state meets its clean energy goals and to evaluate and report on that planning and related infrastructure development. The bill also required these state energy agencies to jointly develop an electrical transmission infrastructure development guidebook.

SB 420 (Becker, 2023) would have exempted construction of certain low-voltage electrical lines and associated equipment from the need to receive a discretionary permit from the CPUC. The bill was vetoed.

SB 529 (Hertzberg, Chapter 357, Statutes of 2022) exempted an extension, expansion, upgrade, or other modification of an existing transmission line or substations from the requirement of a CPCN and directed the CPUC to revise its GO, by January 1, 2024, to instead use its permit to construct process for these approvals.

AB 205 (Committee on Budget, Chapter 21, Statutes of 2022) allowed certain energy projects, including electric transmission lines between certain non-fossil fuel energy generation facilities to become certified leadership projects under the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 through a certification process through the CEC. With this certification, actions or proceedings related to the certification of an environmental impact report need to be resolves within 270 days to the extent feasible.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

SUPPORT:

None received

OPPOSITION:

California Farm Bureau

ARGUMENTS IN SUPPORT: According to the author:

California has enacted some of the world’s most aggressive climate goals, but its transition away from fossil fuels is being threatened by slow siting and permitting processes that delay critical transmission projects necessary to deliver clean energy to consumers. These long delays undermine reliability and lead to increased costs to ratepayers. If California hopes to meet its ambitious climate goals, transition transportation to clean vehicles, and end our addiction to fossil fuels, we must undertake unprecedented efforts to modernize and expand our electrical grid. New high-voltage cables, modernized existing cable networks, and new infrastructure connecting a grid with a far larger capacity to carry clean electrons to power our homes and economy is critical to keeping the lights on in California. CAISO estimates we need 7,000 megawatts of new power capacity every year for the next decade, but we’re only adding a fraction of that, raising the threat of summer black-outs. Delays in project approval are also resulting in significantly higher costs to ratepayers for those critical projects. Finally, long permitting delays may also make it impossible for California to access substantial federal assistance currently available to modernize our grid and reduce ratepayer costs. SB 1165 would expand the CEC’s alternative opt-in certification process to ensure faster review of key projects without sacrificing critical economic and environmental analyses of those projects.

ARGUMENTS IN OPPOSITION: The California Farm Bureau writes in opposition to the bill that, as the Governor’s veto letter stated on SB 619 last year, duplicating the effort to site transmission does not accomplish the goal of a functional transmission system that adapts to the changing nature of generation resources. The Farm Bureau expresses concerns that agricultural landowners may face from the impacts of expanding transmission lines on their properties. They state that they will happily champion other methods for speeding up transmission that does not unduly burden landowners and their ability to adequately participate in those proceedings.

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