BILL NUMBER: ABX1 1	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JANUARY 16, 2001

INTRODUCED BY   Assembly  Member   Members
Keeley and  Migden

                        JANUARY 3, 2001

    An act relating to public utilities.   An
act to add Division 27 (commencing with Section 80000) to the Water
Code, relating to electric power, making an appropriation therefor,
and declaring the urgency thereof, to take effect immediately. 


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1, as amended,  Migden   Keeley  .
 Public utilities:  electricity: Independent System Operator
  Department of Water Resources:  electric power  .

   (1) Under existing law relating to the Central Valley Project, the
Department of Water Resources has the authority to fix and establish
the prices, rates, and charges at which the resources and facilities
made available by the project are sold and disposed of, and to enter
into contracts and agreements and do any and all things that the
department determines to be necessary, convenient, or expedient for
the accomplishment of the purposes and objectives of that existing
law.
   This bill would authorize the department to enter into contracts
and agreements for the purchase and sale of electric power and to fix
and establish the procedure and charges for the sale or other
disposal of power purchased by the department.  The bill would
prohibit state ownership of transmission or distribution facilities
of investor-owned utilities in this state.  The bill would prohibit
the department from entering into or engaging in a transmission or
distribution enterprise for purposes of the act, and would prohibit
the state from taking ownership of transmission or distribution
assets of an investor-owned utility in this state.  The bill would
also authorize the department to hire and appoint additional
employees and contract for the services of public and private
entities.
   The bill would establish in the State Treasury the Department of
Water Resources Electric Power Fund, to be continuously appropriated
to the department, and available for the purposes described above.
The bill would require all revenues payable to the department under
the bill to be deposited in the fund.  The bill would require that
payments from the fund be made only for certain purposes.  The bill
would transfer up to $400,000,000 from the General Fund to the fund
for the purposes described above and require repayment to the General
Fund at the earliest possible time.
   The bill would provide for a sunset review of the program
effective January 1, 2006.
   (2) This bill would declare that it is to take effect immediately
as an urgency statute.   
   Existing law requires the establishment and operation of an
Independent System Operator to ensure efficient use and reliable
operation of the state's electricity transmission grid.
   This bill would require the Independent System Operator to submit
a report to the Legislature not later than January 1, 2002, regarding
the operator's success in coordinating maintenance in advance to
maintain system reliability, minimize the quantity and effect of
congestion on the grid and connections controlled by the operator,
and preserve price stability for electricity. 
   Vote:   majority   2/3  .
Appropriation:   no   yes  .  Fiscal
committee: yes.  State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  
  SECTION 1.  The Independent System Operator shall submit 

  SECTION 1.  Division 27 (commencing with Section 80000) is added to
the Water Code, to read:

      DIVISION 27.  PURCHASE AND SALE OF ELECTRIC POWER
      CHAPTER 1.  GENERAL PROVISIONS AND DEFINITIONS

   80000.  The Legislature hereby finds and declares all of the
following:
   (a) The furnishing of reliable reasonably priced electric service
is essential for the safety, health, and well-being of the people of
California.
   (b) Private entities who furnish electric service to the people of
California are public utilities subject to the control of the
Legislature.
   (c) That the construction of insufficient generation capacity in
recent years, transmission constraints, increased demand for
electricity, and other factors have resulted in a rapid, unforeseen
shortage of electric power and energy available in the state and
rapid and substantial increases in wholesale energy costs and retail
energy rates, with statewide impact, to such a degree that it
constitutes an immediate peril to the health, safety, life and
property of the inhabitants of the state, and the public interest,
welfare, convenience and necessity require the state to participate
in markets for the purchase and sale of power and energy, but not to
own the transmission or distribution assets of any investor-owned
utility in this state.
   (d) In order for the department to adequately and expeditiously
undertake and administer the critical responsibilities established in
this division, it must be able to obtain, in a timely manner,
additional and sufficient personnel with the requisite expertise and
experience in energy marketing, energy scheduling, and accounting.
   80003.  (a) The development and operation of a program as provided
in this division is in all respects for the welfare and the benefit
of the people of the state, for the improvement of their prosperity
and their living conditions.
   (b) This division shall be liberally construed to effectuate the
purposes and objectives thereof.
   (c) To the extent this division is inconsistent with any general,
special, or local law, this division shall control.
   80004.  (a) The powers and responsibilities of the department
established under this division are within the scope of the primary
duties of the department, but are not governed by the provisions
relating to the State Water Resources Development System.
   (b) The Department of Water Resources Electric Power Fund,
established by Section 80200, and the money in that fund are separate
and distinct from any other fund and money administered by the
department.
   80010.  As used in this division, unless the context otherwise
requires, the following terms have the following meanings:
   (a) "Electrical corporation" has the same meaning as that term is
defined in Section 218 of the Public Utilities Code.
   (b) "Fund" means the Department of Water Resources Electric Power
Fund established by Section 80200.
   (c) "Public utility" has the same meaning as that term is defined
in Section 216 of the Public Utilities Code.
   80012.  The department shall do those things necessary and
authorized under Chapter 2 (commencing with Section 80100) to make
power available directly or indirectly to electric consumers in
California.  The state may not take ownership of the transmission or
distribution assets of any investor-owned utilities in this state.
   80014.  (a) The department may adopt regulations for purposes of
this division as emergency regulations in accordance with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2
of the Government Code.  For purposes of that Chapter 3.5, including
Section 11349.6 of the Government Code, the adoption of the
regulations shall be considered by the Office of Administrative Law
to be necessary for the immediate preservations of the public peace,
health and safety, and general welfare.  Notwithstanding subdivision
(e) of Section 11346.1 of the Government Code, the regulations shall
be repealed 180 days after their effective date, unless the adopting
authority or agency complies with that Chapter 3.5, as provided in
subdivision (e) of Section 11346.1 of the Government Code.
   (b) Unless the department determines that application of any such
provision to such contracts is detrimental to accomplishing the
purposes of this division, the provisions of the Government Code and
Public Contract Code applicable to state contracts, including, but
not limited to, advertising and competitive bidding requirements and
prompt payment requirements, apply to contracts entered into under
this division.
   80016.  All state agencies and other official state organizations,
and all persons connected therewith, shall and are hereby authorized
to, at the request of the department, give the department reasonable
assistance or other cooperation in carrying out the purposes of this
division.

      CHAPTER 2.  POWER PROGRAM
      Article 1.  Powers of the Department

   80100.  Upon those terms, limitations, and conditions as it
prescribes, the department may do any of the following:
   (a) (1) Contract with any person or entity for the purchase of
power on such terms and for such periods as the department determines
for a price of not more than 5.5 cents per kilowatt hour.  Prior to
commencement of the program described in this division, the
department shall assess the need for power in the state in
consultation with the Public Utilities Commission and public and
private utilities in the state and such other entities in the state
as the department determines are appropriate.  Nothing in this
division authorizes the department to enter into or engage in a
transmission or distribution enterprise.
   (2) Sell, exchange, transfer, or otherwise dispose of, or grant
options with respect to any power acquired pursuant to this division,
directly or indirectly, whichever results in the lowest cost to
consumers, at the department's acquisition costs plus those costs as
provided in paragraphs (2) to (5), inclusive, of subdivision (b) of
Section 80200, to electric consumers in California; however, to the
extent any acquired power is not required for use within the state,
or if it is otherwise advantageous or necessary, the power may be
sold, exchanged, transferred, or otherwise disposed of to any person
or entity.
   (3) A contract or agreement pursuant to this section may include
provisions for the indemnification of parties with whom the
department contracts as the department determines to be necessary to
accomplish the purposes of this division.  However, a contract or
agreement pursuant to this section may not include provisions for the
indemnification, including indemnification for any costs of defense,
of any party to the contract or agreement for acts or omissions
involving negligence, gross negligence, recklessness, or willful
misconduct by that party or by the party's employees, agents, or
contractors.
   (4) In addition, contracts under this division may provide for the
assignment thereof to public or private entities on any terms and
conditions as the contracts may specify.
   (5) Any contract for the sale of electric power shall contain any
contractual terms and security provisions as are determined by the
department to be necessary or appropriate.
   (b) Fix and establish the procedure and charges for the sale or
other disposal of power purchased by the department.
   (c) The department may do any of the following as may be, in the
determination of the department, necessary for the purposes of this
division:
   (1) Hire and appoint employees as required, at salary levels
determined by the director to be competitive to attract and retain
persons with the necessary expertise and skills.  Prior to hiring or
appointing an employee at a salary in excess of a salary approved by
the Department of Personnel Administration, the director shall submit
the proposed salary to the Director of Finance who shall submit it
to the Legislature in accordance with Section 27.00 of the annual
Budget Act.
   (2) Engage the services of private parties to render professional
and technical assistance and advice in carrying out the purposes of
this division.
   (3) Contract for the services of other public agencies.
   (d) Borrow money in anticipation of the receipt of revenues or for
cash flow management, and for such purpose issue notes or other
evidence of indebtedness and provide for repayment with respect
thereto, and to renew or refund any such notes or other evidence of
indebtedness.  However, any such notes or other evidence of
indebtedness shall be payable solely from the fund and shall mature
within 90 days of issuance.

      CHAPTER 3.  DEPARTMENT OF WATER RESOURCES ELECTRIC POWER FUND

   80200.  (a) There is hereby established in the State Treasury the
Department of Water Resources Electric Power Fund.  Notwithstanding
Section 13340 of the Government Code, all moneys in the fund are
continuously appropriated, without regard to fiscal year, to the
department, and shall be available for the purposes of this division.

   (b) All revenues payable to the department under this division
shall be deposited in the fund.  Notwithstanding any other provision
of law, interest accruing on money in the fund shall remain in the
fund and shall be used for the purposes of this division.  Payments
from the fund may be made only for the purposes authorized by this
division, including, but not limited to, payments for any of the
following:
   (1) The cost of electric power purchased by the department.
   (2) The pooled money investment rate on funds advanced for
electric power purchases prior to the receipt of payment for those
purchases by the purchasing entity.
   (3) Payment of any other obligation incurred by the department.
   (4) Repayment to the General Fund of any advances made to the
department from that fund.
   (5) The administrative costs of the department incurred in
administering this division.
   (c) Obligations authorized by this division shall be payable
solely from the fund.  Neither the full faith and credit nor the
taxing power of the state are or may be pledged for any payment under
any obligation authorized by this division.
   (d) Solely with regard to the issue of the fulfillment of the
department's obligation under contracts for the purchase or sale or
both of electricity, the state pledges and agrees with parties to and
holders of obligations of the department entered into pursuant to
this division that the state will not do, until such obligations are
fully performed and discharged on the part of the department, any of
the following:
   (1) Limit, alter, or restrict the rights vested in the department
under this division.
   (2) Impair the terms of any obligations of the department entered
into pursuant to this division.
   (3) Impair the rights or remedies of the holders of or other
parties to any such obligations.

      CHAPTER 4.  REPORTING

   80300.  The department shall make quarterly and annual reports to
the Governor and the Legislature regarding its activities pursuant to
this division during the respective reporting periods.

      CHAPTER 5.  SUNSET REVIEW

   80310.  This division, and in particular the provisions of Chapter
2 (commencing with Section 80100) which authorize the purchase of
electrical energy by the Department of Water Resources, shall be
subject to sunset review effective January 1, 2006.
  SEC. 2.  The sum up to four hundred million dollars ($400,000,000)
is hereby transferred from the General Fund to the Department of
Water Resources Electric Power Fund, established by Section 80200 of
the Water Code, for the purposes of Division 27 (commencing with
Section 80000) of the Water Code. The four hundred million dollars
($400,000,000) shall be repaid from the fund to the General Fund at
the earliest possible time.
  SEC. 3.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to address the rapid, unforseen shortage of electric
power and energy available in the state and rapid and substantial
increases in wholesale energy costs and retail energy rates, that
endanger the health, welfare, and safety of the people of this state,
it is necessary for this act to take effect immediately.  
 a report to the Legislature not later than January 1, 2002,
regarding the operator's success in coordinating maintenance in
advance to do all of the following:
   (a) Maintain system reliability.
   (b) Minimize the quantity and effect of congestion on the
transmission grid and connections controlled by the Independent
System Operator.
   (c) Preserve price stability for electricity.