3. Jurisdiction: Hydro, Nuclear, EWGs, Other

As a threshold matter, some parties assert that the Committee has no jurisdiction to adopt standards for many types of powerplants, and the Commission has no jurisdiction to implement and enforce such standards. In particular, several parties say that hydroelectric and nuclear powerplants are exempt from these standards. Other parties contend that exempt wholesale generators (EWGs) subject to federal jurisdiction cannot be made subject to state jurisdiction by § 761.3.

3.1. Hydroelectric

The adopted Logbook Standards under consideration here apply only to thermal powerplants. The issue of their application to hydroelectric powerplants is moot with respect to this decision, and we will not address it at this time.7

3.2. Nuclear and Other Plants Specifically Excluded by § 761.3

We implement Committee-adopted thermal Logbook Standards for each facility used to generate electric energy by the use of thermal energy owned by an electrical corporation or located in California, with the following exceptions:

1. Nuclear-powered generating facilities that are federally regulated and subject to standards developed by the Nuclear Regulatory Commission, and that participate as members of the Institute of Nuclear Power Operations.

2. Qualifying small power production facilities or qualifying cogeneration facilities (both called qualifying facilities, or QFs) within the meaning of §§ 201 and 210 of Title 11 of the federal Public Utility Regulatory Policies Act of 1978 (16 U.S.C. §§ 796(17), 796(18), and 824a-3), and the regulations adopted pursuant to those sections by the Federal Energy Regulatory Commission (FERC; 18 C.F.R. §§ 292.101 to 292.602, inclusive).

3. Generation units installed, operated, and maintained at a customer site, exclusively to serve that customer's load.

4. Facilities owned by a local publicly owned electric utility as defined in § 9604(d).

5. Facilities at a public agency that are used to generate electricity incidental to the provision of water or wastewater treatment.

6. Facilities owned by a city and county operating as a public utility, furnishing electric service as provided in § 10001.

These exceptions are set forth in §§ 761.3(d) and (h). The Committee recognized these exceptions in Resolution No. 1.8 The Committee's list of exemptions is consistent with § 761.3, and we adopt the same exemptions for our implementation and enforcement of Logbook Standards for thermal powerplants.

3.3. EWGs

Several parties assert that Commission implementation and enforcement of Committee standards cannot govern operation and maintenance practices of EWGs.9 Rather, they claim that EWGs are regulated under federal law and exempt from state regulation. We are not persuaded.

3.3.1. State Law

The Commission is charged with implementing and enforcing standards adopted by the Committee:

    "for the maintenance and operation of facilities for the generation of electric energy owned by an electrical corporation or located in the state to ensure their reliable operation." (§ 761.3(a), emphasis added.)

An electrical corporation "includes every corporation or person owning, controlling, operating, or managing any electric plant for compensation within this state..." with limited exceptions.10 (§ 218(a).) As a result, the Commission must apply Committee-adopted operation and maintenance standards to electricity generation facilities of every corporation or person who owns, controls, operates or manages any electric plant for compensation within California or located in California, with limited exceptions. The statute does not exclude EWGs.11

The Legislature specifically named plant types and categories that are excluded (e.g., nuclear, QFs, self-generation, publicly owned, incidental to water provision or wastewater treatment, owned by a city and county public utility). The Legislature could have, but did not, exclude EWGs.

The California Constitution identifies entities that produce power as public utilities subject to the control of the Legislature. (Cal. Const. Article XII, Section 3.) Respondents in this proceeding, including EWGs, are public utilities within the meaning of the California Constitution because they are private corporations or persons that produce power for California.12

Additionally, Section 5 of the Constitution gives the Legislature "plenary authority, unlimited by the other provisions of this constitution...to confer additional authority and jurisdiction upon the commission..."13 Pursuant to Section 5, the Legislature has specifically extended the applicability of Commission implementation and enforcement of operation and maintenance standards to EWGs, and conferred additional authority and jurisdiction upon the Commission through the following provision:

    "Notwithstanding subdivision (g) of Section 216 and subdivisions (c) and (d) of Section 228.5, the commission shall implement and enforce standards adopted [by the Committee] for the maintenance and operation of facilities for the generation of electric energy owned by an electrical corporation or located in the state to ensure their reliable operation." (§ 761.3(a).)

Some parties point to § 228.5(d) and conclude that the Commission lacks jurisdiction over EWGs. Section 228.5(d) states:

      "Notwithstanding any other provision of law, an exempt wholesale generator is not a public utility subject to the general jurisdiction of the commission solely due to the ownership or operation of the facility."

We are not persuaded. EWGs may not be "subject to the general jurisdiction of the commission solely due to the ownership or operation of the facility." (Section 228.5(d).) Nonetheless, they are subject to the additional, special, specific jurisdiction vested in the Commission to enforce operations and maintenance standards pursuant to § 761.3.

In fact, § 761.3 specifically directs that the Commission implement and enforce Committee-adopted standards to be followed by an electrical corporation notwithstanding specific provisions of the Public Utilities Code that would otherwise exclude EWGs from Commission jurisdiction (i.e., §§ 216(g), 228.5(c), 228.5(d)). As a result, the law provides the Commission with the specific and necessary jurisdictional basis to apply adopted standards to EWGs.

Moreover, the Legislature made specific findings and declarations in adopting § 761.3 that further support this conclusion. (Section 1, Chapter 19, SB X2 39.) In particular, the Legislature found and declared that:

Many powerplants are now owned by EWGs. Excluding EWGs from the provisions of SB X2 39 would eliminate an important number of powerplants the Legislature has found and declared to be essential facilities providing a critical and essential good. Excluding EWGs would frustrate the legislative goals of protecting public health and safety; ensuring that electric generating facilities and powerplants are effectively and appropriately maintained and efficiently operated; and ensuring electrical service reliability and adequacy. In fact, excluding EWGs would limit Commission implementation and enforcement to the few remaining powerplants of PG&E and SCE.14 The Commission already has this jurisdiction. (§ 451, 701, 761, 768) We decline to interpret § 761.3 in a manner that would make its passage meaningless.

Thus, the Legislature specifically identified the exact plant categories and types that are excluded (e.g., nuclear, QFs, publicly owned), and did not name EWGs. Moreover, the Legislature expressly extended the Commission's authority into an area germane to the regulation of utilities by providing additional authority and jurisdiction vested in the Commission to implement and enforce operations and maintenance standards. This is clearly consistent with the Legislature's goals to protect public health and safety, while ensuring effective maintenance, efficient operation, service reliability and adequacy for facilities that are essential for maintaining and protecting public health and safety and provide a critical and essential good.

3.3.2. Federal Law

EWGs assert that they are regulated under federal law and federal law preempts state law. For example, WCP says "some of the generators (the nonutility EWGs) are, under applicable precedents, beyond the jurisdictional reach of the Commission for the relevant purposes." (WCP Comments, April 8, 2003, page 6.) In support, WCP cites a Commission statement that "regulation of EWGs would directly conflict with Federal jurisdiction over wholesale power rates." (WCP Comments, April 8, 2003, page 6, footnote 10, citing D.95-12-006, 62 CPUC2d 517, 537, Conclusion of Law 17.)

To the contrary, WCP's citation is to a conclusion that addresses rate regulation. We are not engaging in rate regulation here. Rather, we are implementing and enforcing a limited and specific component of operation and maintenance standards. In any case, no such pronouncement by the Commission could control the action of the Legislature in otherwise extending Commission jurisdiction. (Southern California Gas v. PUC, (1979), 24 Cal. 3d 653, 658-59.)

The Legislature specifically noted the distinction between (a) rate regulation and (b) implementation and enforcement of operations and maintenance standards by saying: "Nothing in this section authorizes the commission to establish rates for wholesale sales in interstate commerce from those facilities..." (§ 761.3(c).) At the same time the Legislature directly required Commission implementation and enforcement of operation and maintenance standards with regard to electrical corporations, notwithstanding the specific provisions that might otherwise exclude EWGs. (§ 761.3(a).)15

FERC's jurisdiction, on the other hand, does not extend to (among other things) operation and maintenance standards of "facilities used for the generation of electric energy."16 These are precisely the standards and generating assets subject to this rulemaking proceeding.

In fact, FERC's regulation of transmission and sale of electric energy at wholesale rates in interstate commerce extends "only to those matters which are not subject to regulation by the States."17 California regulates the "maintenance and operation of facilities for the generation of electric energy owned by an electrical corporation or located in the state to ensure their reliable operation," and the Commission must implement and enforce operation and maintenance standards. (§ 761.3(a).) Moreover, the Commission must "enforce the protocols for the scheduling of powerplant outages of the Independent System Operator."18 (§ 761.3(a).)

By applying operation and maintenance standards to the generating assets of EWGs, our regulatory role is within the authority reserved to the states by Congress with respect to electric generating facilities. At the same time, our implementation and enforcement of these standards does not disturb FERC's ratemaking regulation of wholesale market transactions in interstate commerce.

3.4. New Facilities

The Legislature did not limit the statute to existing facilities. As a new plant becomes operational and is maintained, it is similarly covered.

3.5. Out-of-State and Joint Ownership

SCE contends the Commission should make clear that implementation and enforcement neither extend to out-of-state facilities, nor to facilities that are owned by multiple owners. We do so as follows.

Commission jurisdiction may include out-of-state facilities and those that are owned by more than one entity. For example, Commission jurisdiction includes SCE's operation of the Mohave Generating Station. (See D.94-03-048, 53 CPUC2d 452, in Investigation 86-04-002.) Mohave is located outside of California, and is owned by several entities.19

SCE also argues that the legislation must be applied to facilities that are owned by a single entity because it is applicable only to facilities of "an electrical corporation..." (§ 761.3(a).) We are not persuaded. The Code provides that "the singular number includes the plural, and the plural, the singular." (§ 13.)

We generally limit implementation and enforcement to covered electric generation facilities within California and those out-of-state facilities owned or operated by PG&E, SCE and SDG&E, with several exceptions.20 We decline to categorically exempt all out-of-state facilities or those owned by more than one entity.

3.6. Conclusion on Covered Thermal
Facilities

Committee-adopted Logbook Standards for thermal powerplants apply to each facility used to generate electricity by the use of thermal energy that is owned by an electrical corporation or located in California, with limited exceptions. The standards apply to electric generation facilities of electrical corporations, including EWGs. The Standards apply to existing and new facilities. Logbook Standards for thermal powerplants do not apply to hydroelectric facilities. The Standards also do not apply to facilities specifically exempted by § 761.3 (e.g., nuclear, QFs, self-generation, publicly owned, incidental to water provision or wastewater treatment, owned by a city and county public utility).

7 At its meeting on April 1, 2003, the Committee directed staff to develop Logbook Standards for hydroelectric facilities. Those proposed standards were circulated for comment on May 9, 2003, with comments served May 19, and reply comments served May 23. At its meeting on June 3, 2003, the Committee deferred action on hydroelectric Logbook Standards to a subsequent meeting pending additional staff work. The Committee adopted Logbook Standards for Hydroelectric Generating Facilities at its meeting on April 7, 2004. 8 The Committee adopted Resolution No. 1 on May 2, 2003, and filed it with the Commission on May 16, 2003. Resolution No. 1 identifies the facilities to which Committee-adopted General Duty Standards for Operation and Maintenance (GDS) apply. In error, Resolution No. 1 states "city or county" regarding the sixth excluded type facility. Here, we adopt "city and county" consistent with § 761.3(h)(3), and as correctly stated in Committee Resolution No. 3 adopted June 3, 2003. 9 The Public Utilities Code defines EWGs as: "The term `exempt wholesale generator' has the same meaning as found in Section 79z-5a of Title 15 of the United States Code, and regulations enacted pursuant thereto." (Section 228.5(c).) 10 Exceptions are where electricity is generated on or distributed by the producer through private property solely for the use of its tenants and not for sale or transmission to others. (§ 218(a).) Exceptions also include a corporation or person employing (a) cogeneration technology or producing power from other than a conventional power source for specific purposes, (b) landfill gas technology for the generation of electricity for specific purposes, (c) digester gas technology for the generation of electricity for specific purposes, or (d) cogeneration technology or power production from other than a conventional power source for the generation of electricity physically producing electricity prior to January 1, 1989 and furnishing that electricity to immediately adjacent real property for use thereon prior to January 1, 1989. (§ 218(b) - (e).) These exceptions are generally already within the exceptions covered by §§ 761.3(d) and (h). We separately state these exceptions in Attachment A, however, to identify specific plants that might be excluded in addition to those already listed. 11 WCP asserts that § 761.3 cannot include EWGs because EWGs are not public utilities. Rather, public utility status requires that the entity hold itself out as a public utility with dedication to serve the public, according to WCP. (WCP Comments April 8, 2003, page 12, footnote 16.) We disagree. Public utility status is not required to be subject to § 761.3. The Commission is obligated to implement and enforce standards for the operation and maintenance of facilities for electricity generation by "an electrical corporation." (§ 761.3(a).) Similarly, WCP and others claim that the Commission regulation is limited to public utilities. To the contrary, the PU Code provides the Commission with specific regulatory responsibility and authority over several entities. For example, energy service providers (ESPs) must comply with requirements implemented and enforced by the Commission. (Section 394 et seq.) This includes an ESP submitting to an investigation by the Commission (including access to accounts, books, papers and documents), and paying compensation, including reparations, upon the Commission granting such an award in a complaint proceeding. Similarly, load serving entities must comply with Commission orders. (See Decision (D.) 04-01-050.) 12 The Constitution's broad language is: "Private corporations and persons that own, operate, control or manage a line, plant or system...for the production, transmission, distribution or furnishing of heat, light...power...are public utilities subject to control by the Legislature. The Legislature may prescribe that additional classes of private corporations or other persons are public utilities." (Article XII, Section 3.)

13 Cal. Const. Article XII, Section 5; County of Inyo v. PUC (1980) 26 Cal. 3d 154, 164. The only limitations on the Legislature's power are that the legislation must expressly extend the Commission's authority (County of Inyo, supra, at 165-66) and the additional authority conferred by legislative enactment must be "cognate and germane to the regulation of utilities." (Morel v. Railroad Commission of California (1938) 11 Cal. 2d 488, 492; People v. Western Airlines (1954) 42 Cal. 2d 621, 634.)

14 SDG&E appears not to have any powerplants now subject to § 761.3 by reporting that it "currently does not operate any generation facilities, but SDG&E has a direct interest in the rules adopted in this proceeding as a utility regulated by the California Public Utilities Commission (`Commission') and if SDG&E acquires generation facilities in the future." (SDG&E Comments on Logbook Standards dated April 8, 2003, page 1.) 15 WCP similarly cites a U.S. District Court opinion (which dismissed a number of California Attorney General lawsuits against various EWGs for alleged violations of California's Unfair Business Practices Law) saying: "The Court held that state law was preempted by the filed rate doctrine, and stated, `it is clear that Congress intended the FPA [Federal Power Act] to preempt state law claims in the field of interstate wholesale electricity rate-setting, including practices affecting such rates.'" (WCP comments April 8, 2003, page 11 at footnote 15 citing People ex rel. Lockyer v. Mirant Corporation, No. C-01-1787-VRW (N.D.Cal. March 25, 2003), p.23.) We do not engage in rate-setting here, but in the implementation and enforcement of operation and maintenance standards. 16 16 U.S.C. § 824(b). 17 16 U.S.C. § 824(a). 18 Powerplant outages are often related to operations and maintenance. 19 Mohave is located in Laughlin, Nevada. According to SCE, it is owned by the Los Angeles Department of Water and Power, the Salt River Project Agricultural Improvement and Power District, the Nevada Power Company, SCE and others. 20 Exceptions include nuclear, QF, self-generation, local publicly owned, public agency used to generate electricity incidental to the provision of water or wastewater treatment, and city and county facilities operating as a public utility.

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