From: mary.schoen@enron.com
To: steven.kean@enron.com, james.steffes@enron.com, richard.shapiro@enron.com, leslie.lawner@enron.com, robert.frank@enron.com, sandra.mccubbin@enron.com, jeffrey.keeler@enron.com, michael.terraso@enron.com, stacey.bolton@enron.com, heather.mitchell@enron.com, robert.frank@enron.com, harry.kingerski@enron.com, jeff.dasovich@enron.com, susan.mara@enron.com
Date: 2001-02-09 15:58:00+00:00
Subject: Summary and Very Brief Analysis of Governor Davis's 2/9/01
 Executive Orders

Below is a brief summary of the five Executive Orders issued by Governor 
Davis on 2/9/01.  

For those of you that want the Cliff Notes Version:

These Orders appear to be an attempt to accomplish three things:

1.  Expedite Siting for New Powerplants and Expansions or Modifications of 
Existing Powerplants
2.  Maximize Output and Minimize Outages at Existing Facilities
3.  Centralize Authority and/or Mitigate Issues Impacting Powerplant Siting 
and Construction

The tone is both one of we feel your pain in the complexity of permitting 
powerplants; and that we will tolerate no excuses for not running at full 
capacity.  (ie; the carrot and the stick)

They also includes some targeted incentives to encourage powerplant operators 
to sell their power under contract to the State Dept. of Water.

Some of the critical issues impacting the effectiveness of these orders will 
be:

- How much capacity is truly "idling" and will be able to be brought back on 
line or increase its output?
- Will the state be able to better manage air quality issues and create 
flexibility within the framework allowed by the Clean Air Act in order to 
positively change the air quality issues impacting power plant construction 
and operation?
- How quickly can the accelerated permitting procedures be implemented and 
how soon will we see movements in the market to increase new generation given 
the other issues in CA?

We will continue to analyze the impacts of these orders, but wanted to get 
information to you in a timely manner.

D-22-01  Increased Output/Expedited Siting Mandates 
  
CEC exemption from siting requirements for increased output by existing power 
generators. 
- limited to less than 50MWs using existing installed capacity b/w 
06/01-10/01/01 

Expedited processing of applications for certification of existing thermal 
powerplants that require retooling and a current license to operate.

Accelerated review from all agencies involved in the licensing of proposed 
thermal powerplants.

Action by the State Water Resources Control Board  to insure wastewater 
issues do not preclude thermal powerplants from operating.

Requirements for the State Dept. of Water Resources to purchase power from 
powerplants using renewables and other resources that may currently have not 
other market for their power.

Expires  12/31/01 unless extended

Analysis:

This Order is intended to take away the excuses for why some powerplants are 
currently not operating or not operating at full capacity.  It does not waive 
air quality requirements (they are addressed in a separate order).  

D-23-01  Appropriate Maintenance and Efficient Operation Requirements

ISO Requirements:
- Require generators to submit planned outage schedules to the ISO
- Prepare a coordinated outage plan to be updated quarterly
- Identify generation maintenance criteria to be met by generation facilities
- Maintain records of any unplanned generation facility outages and provide 
those records to Electricity Oversight Board
- Conduct independent audits of generation facilities that have fallen below 
performance benchmarks est. by the ISO
- Consider seeking the authority under state law of federal regulation to 
impose fines on those generation facility owners whose generation facilities 
have fallen     below performance benchmarks est. by the ISO

Requires that the Electricity Oversight Board review the ISO Tariffs and 
Protocols to identify any necessary revisions to increase the ISO's ability 
to ensure adequate power during peak demand.

Instructs the CPUC to ensure that generation facilities still owned by 
utilities are operated as required to maintain reliability.

Requires the Electricity Oversight Board to propose legislation to expand its 
authority to issue audits of generation facilities that do not meet est. 
benchmarks for availability and performance, and issue fines against those 
plants, after a hearing.

Analysis:

Again, the tone of this order is that the state won't tolerate outages as an 
excuse for not generating.  It is also an attempt to better manage planned 
outages to prevent situations that happened last fall when too many plants 
where off-line for maintenance at the same time.

D-24-01  Air Pollution Flexibility and Mitigation Measures

Mandates that local air districts modify emissions limits that limit hours of 
operation in air quality permits to ensure that power generation facilities 
that provide power under contract to the Dept. of Water Resources are not 
restricted in their ability to operate.
- Requires air districts to require a mitigation fee for all applicable 
emissions in excess of the previous limits
- If air districts do not comply, the Board (CARB?) shall impose 
modifications on the permits in lieu of districts

The Board shall establish an emissions reduction credit bank using emissions 
reductions from all available sources:
- Credits will be made available to powerplant peaking sources that need 
emissions offsets in order to add new or expand peaking capacity for the 
Summer Peak Season in 2001
- In the case of powerplants that agree to sell their power under contract to 
the Dept. of Water Resources, CA will make available where necessary and 
available the required emissions credits at up to a 50 percent reduction,
- In order to maximize the amount of electrical generating capacity, 
emissions reduction credits for new generation capacity shall be provided to 
facilities where necessary and available.
- Proceeds from the sales of these emission reduction credits shall be made 
available to fund emissions reduction programs in the air district where the 
new or expanded facility is located.

Expires 12/31/2001 unless extended

Analysis:

This order requires the air districts to modify permit limits on run hours 
for air quality reasons by allowing those powerplants that sell to the Dept. 
of Water to pay a mitigation fee and creates an emission reduction credit 
bank available for use by other sources.  There are a lot of details that 
remain to be clarified, including how the state is going to locate emissions 
reduction credits where developers were unsuccessful.  However, it is a step 
in the right direction by creating flexibility and beginning to drive 
authority back to the state level.

D-25-01  Acceleration the Construction and Upgrading of Approved Powerplants

Expedites review and approval of post-certification amendments to increase 
output from thermal powerplants by the Energy Commission.

Authorizes the Energy Commission to suspends the requirements of the statutes 
and regulations that normally control post-certifications to the extent that 
they impact prompt mitigation of this emergency.

Requires the Energy Commission to establish milestones for both initiation of 
construction within one year of certification, and for the construction phase 
of the project.  Failure to meet milestones without prior approval by Energy 
Commission based on a showing of good cause shall constitute forfeiture of 
the certification.

Expires 12/31/01 unless extended

Analysis

Again, no excuses for not getting your powerplant modifications approved and 
completed in a timely manner.

D-26-01  Accelerating the Availability of New Generation Sources

Requires all relevant agencies shorten the review periods to 7 days for 
required environmental impact documents prepared under CEQA for all 
powerplants that are not subject to the Energy Commission (under 50MWs) and 
that are proposed to be on line by summer 2001.

 Energy Commission shall expedite its licensing process in the following ways:
- Expedite processing of applications for peaking or renewable powerplants 
for construction and operation by July 31, 2001.
-Peaking or renewable powerplants that have a current contract with the ISO 
and can be online by July 2001 may also apply to be permitted by the Energy 
Commission under the emergency siting process.
-Rules which provide a license for a simple cycle thermal powerplant within 
four months, shall apply to any proposed simple-cycle thermal powerplant that 
can be brought on line by August 31, 2002  and that have an application for 
certification complete by Dec. 31. 2001.
-Under regulations for the expedited licensing of powerplants, emission 
offset credits are not required at the time of filing an application for 
certification
-The Energy Commission shall conduct a study of potential peaking power sites 
in the state and prepare a report by 02/21/01  identifying those areas of the 
state that would benefit from the installation of peaking powerplants to 
augment supplies and ensure reliability through the summer of 2003.

IOUs must complete necessary interconnection studies within 7 days of receipt 
of completed application.

Expires 12/31/01 unless extended.

Analysis:

This is an attempt to accelerate the permitting of smaller sources and 
peaking units.