In an ongoing attempt to encourage new electric generation and speed up the process, California appears poised to enact a bill requiring developers to start powerplant construction within a year after a project is permitted and appeals are resolved.
This month, Gov. Gray Davis (D) is expected to sign the legislation, which is intended "to make certain powerplants get built," says John Rozsa, an aide to state Sen. Steve Peace (D), the bill's author. Peace wants "to make the securing of a permit a little bit less of a speculative exercise," Rozsa says.
But the legislation is drawing mixed reviews from developers. "I don't believe it will promote the construction of new resources, and I believe it will make it more difficult," contends Jan Smutny-Jones, executive director of the Independent Energy Producers Association, a Sacramento-based industry group.
Specifically, the bill "creates a series of incentives for developers to get on with it," Rozsa says. If a developer doesn't start construction without showing good cause or applying for an extension, the California Energy Commission can revoke the certificate or impose other penalties. CEC also must inform the California Consumer Power and Conservation Financing Authority, recently established during the state's energy crisis to help finance power development. That agency must then decide whether to pursue the project independently or with a partner, which could be the original developer.
In a key provision, "if a developer believes it's going to run out of time after the first year, it can secure two additional years" by reimbursing the state's permitting costs, which typically range between $350,000 and $1.3 million, Rozsa says. An extension also is allowed for additional appeals, natural disasters, or other circumstances beyond the developer's control.
While developers say they can live with the legislation, they are skeptical of its value. The bill is based on what Smutny-Jones calls the false impression "that some developers are acquiring sites and sitting on them," waiting for electricity prices to go up.
"California still has to get beyond the punitive and start looking at the positive," says Patrick Dorinson, Sacramento-based spokesman for Mirant Corp.'s western regional office. "We're still in a situation where markets are unsure."
Developers say the bill's final version resolves their concerns about the impact on projects halted because of economic conditions or other circumstances. In January, faltering market and economic conditions led Mirant to stop construction on a $300-million, 600-Mw combined-cycle project in Contra Costa, says Dorinson. In such cases, developers did not want "to start the permitting process all over again" or face penalties, Dorinson says.