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DWR seeks clarification to allow sale or transfer of three strategic reliability generators bought during 2022 emergency
Summary
The Department of Water Resources asked the committee to amend water code language so the agency can sell or otherwise transfer three ultra‑low‑emission gas generators it procured to address reliability during heat waves; the agency said capital costs were roughly $130 million for the three units.
The Department of Water Resources told the Assembly Budget Subcommittee No. 4 it needs a technical change in statute so the agency can pursue a pathway to sell or transfer three gas‑fired generators procured under an emergency strategic reserve effort.
Delphine Ho, deputy director for statewide energy at DWR, said the units were procured quickly under AB 205 after extreme heat and rolling outages and were sited with partners at the Modesto Irrigation District, Turlock Irrigation District and the City of Lodi. Ho said the projects were selected because interconnection and site suitability were available quickly and that counterparties expected a potential pathway to eventual ownership.
Ho said California law, as currently written, could be read to limit sale or transfer of the assets because the statute ties the operating limitations of reserve resources to construction by the department. DWR presented proposed language to clarify that the statutory restrictions apply to resources procured for the reserve regardless of subsequent ownership, enabling conversations with site owners about future transfers.
Ho told the committee the capital cost for the three resources was roughly $130,000,000. She said the earliest a sale might occur would be 2028 and that the department would prefer to direct any proceeds toward clean energy reuse but must avoid competing with load‑serving entities in the market.
Committee members asked what it would cost to decommission or remove the units if a sale or pathway to ownership was not in place; Ho said an estimate to decommission and store or relocate the units could be about $20,000,000, and that finding a new interconnection point would also be challenging given current system constraints.
Why it matters: DWR’s request affects the state’s strategic‑reserve approach to near‑term reliability. Clarifying ownership and transfer rules would allow DWR either to retain the units, transition them into other reliability uses, or reallocate proceeds toward future resilience efforts without unintentionally forcing work‑arounds such as costly decommissioning.
