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Updated June 30, 7 PM

The governor signed an energy budget bill approved by the Senate and Assembly July 29—which was revised behind closed doors Sunday night--that changes the electricity generation landscape. It is reminiscent of how it was altered in response to the 2000-01 energy crisis.

The Department of Water Resources’ authority again is significantly expanded. However, not to the extent it was during the energy crisis when it signed more than $40 billion in long- and short-term contracts in secret to secure electricity supplies at costs that were manipulated during the deregulation mess.

Instead, AB 205/SB 122 allows the water agency to buy, build, and operate fossil, diesel and renewable generation without complying with the California Environmental Quality Act. That includes diesel projects 5 MW and larger, natural gas, solar and wind projects 50 MW and larger, and energy storage systems at least 20 MW. The stated aim is to ensure that power keeps flowing to homes, businesses, and industries during extreme heat spells over the next few summers.

California Environmental Voters, which is part of a conservation coalition that opposed the budget bill, welcomed Gov. Gavin Newsom’s commitment on Thursday to resolve concerns about the measure’s increased reliability on aging fossil plants, and its cutting out of environmental review and public input. CEO Mary Creasman said that “voters deserve transparency and clarity on timing and details of this climate funding: what’s being counted, when the funding will be allocated, and what programs are being funded.” She added it was even more important given the U.S. Supreme Court’s new ruling restricting the federal government’s authority to fight climate change.

The newly approved budget legislation was proposed by Newsom. It directs $5.2 billion of the state’s Strategic Reserve to provide 5 GW of generating capacity, including by keeping plants slated for retirement operating. These include gas plants along the Southern California coast that use large quantities of seawater for cooling. It also includes up to $75 million to keep the Diablo Nuclear Power plant onlne beyond 2025. Again, the governor waves air and environmental protections when the gas and diesel units run during grid emergencies as he has in previous summers.

Newsom stressed that the new Strategic Reserve “is an insurance policy that will only be used when we face potential shortfalls during extreme climate-change driven events.”

The approved energy legislation also authorizes the California Energy Commission to accelerate the approvals of DWR electricity projects over the objections of conservation groups and local agencies. CEC’s expedited siting authority also was in place during the crisis.

This revised legislation directs DWR “to pick winners and losers in the energy marketplace, exposing the state to market manipulation,” a coalition of environmental groups complained in a June 28 letter. They also objected to funding an extension of the Diablo Nuclear Power Plant .

According to the June 28 Assembly Floor analysis, the CEC’s accelerated permitting process, which has a 9-month approval deadline, is to “replace all local, state, and federal permits, except for leases issued by the State Lands Commission and permits issued by the Coastal Commission, San Francisco Bay Conservation & Development Commission, and the State Water Resources Control Board, or regional water control boards.” An earlier version of the bill would have removed those state agencies’ authority over generation development.

The League of California Cities and individual city representatives argued in a July 27 letter that the expedited permitting for renewable energy “usurps local control, excludes local governments from meaningful involvement in major development projects within their jurisdictions, and could result in even more litigation.”

During a June 1 Assembly Budget Subcommittee hearing on Newsom’s proposed $5 billion Strategic Reserve, lawmakers, a state analyst, and environmentalists raised objections. Ross Brown from the Legislative Analyst’s Office said there was insufficient information on the size of the reliability problem and pointed out that expanded and new fossil generation won’t be online for several more summers. He also said the cost effectiveness of the DWR procurement proposal is unknown, as is how much it will reduce outages on the system.