BILL NUMBER: ABX1 1 AMENDED
BILL TEXT
AMENDED IN SENATE JANUARY 25, 2001
AMENDED IN ASSEMBLY JANUARY 16, 2001
INTRODUCED BY Assembly Members Keeley and Migden
JANUARY 3, 2001
An act to amend Section 366.5 of the Public Utilities Code,
and 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, Keeley. Department of Water Resources:
electric power.
(1) Existing law prohibits any change in the aggregator or
supplier of electric power for certain customers from being made
until the change has been verified.
This bill would provide that electric power sold to customers
pursuant to the bill is not subject to those provisions.
(2) 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 department from contracting for the purchase of electrical power
on and after January 2, 2003 . 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 Purchases
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.
The bill would require the Bureau of State Audits to conduct a
financial and performance audit of the department's implementation of
the bill.
(2)
(3) This bill would declare that it is to take effect
immediately as an urgency statute.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 366.5 of the Public Utilities Code is
amended to read:
366.5. (a) No change in the aggregator or supplier of electric
power for any small commercial customer may be made until one of the
following means of confirming the change has been completed:
(1) Independent third-party telephone verification.
(2) Receipt of a written confirmation received in the mail from
the consumer after the consumer has received an information package
confirming the agreement.
(3) The customer signs a document fully explaining the nature and
effect of the change in service.
(4) The customer's consent is obtained through electronic means,
including, but not limited to, computer transactions.
(b) No change in the aggregator or provider of electric power for
any residential customer may be made over the telephone until the
change has been confirmed by an independent third-party verification
company, as follows:
(1) The third-party verification company shall meet each of the
following criteria:
(A) Be independent from the entity that seeks to provide the new
service.
(B) Not be directly or indirectly managed, controlled, or
directed, or owned wholly or in part, by an entity that seeks to
provide the new service or by any corporation, firm, or person who
directly or indirectly manages, controls, or directs, or owns more
than 5 percent of the entity.
(C) Operate from facilities physically separate from those of the
entity that seeks to provide the new service.
(D) Not derive commission or compensation based upon the number of
sales confirmed.
(2) The entity seeking to verify the sale shall do so by
connecting the resident by telephone to the third-party verification
company or by arranging for the third-party verification company to
call the customer to confirm the sale.
(3) The third-party verification company shall obtain the customer'
s oral confirmation regarding the change, and shall record that
confirmation by obtaining appropriate verification data. The record
shall be available to the customer upon request. Information
obtained from the customer through confirmation shall not be used for
marketing purposes. Any unauthorized release of this information is
grounds for a civil suit by the aggrieved resident against the
entity or its employees who are responsible for the violation.
(4) Notwithstanding paragraphs (1), (2), and (3), an aggregator or
provider of electric power shall not be required to comply with
these provisions when the customer directly calls an aggregator or
provider of electric power to change service providers. However, an
aggregator or provider of electric power shall not avoid the
verification requirements by asking a customer to contact an
aggregator or provider of electric power directly to make any change
in the service provider.
(c) No change in the aggregator or provider of electric power for
any residential customer may be made via an Internet transaction, in
which the customer accesses the website of the aggregator or
provider, unless both of the following occur with respect to
confirming the change:
(1) In addition to any other information gathered in the course of
the transaction, the customer shall be asked to read and respond to
a separate screen that states, in easily legible text, the following:
"I acknowledge that in entering this transaction I am voluntarily
choosing to change the entity that supplies me with my electric
power."
(2) The separate screen shall offer the customer the option to
complete or terminate the transaction.
(d) (1) No change in the aggregator or provider of electric power
for any residential customer may be made via a written transaction
unless the change has been confirmed, as provided in this
subdivision. In order to comply with this subdivision, in addition
to any other information gathered in the course of the transaction,
and in addition to any other signature required, the customer shall
be asked to sign and date a document separate from that written
transaction, containing the following words printed in ten point type
or larger:
"I acknowledge that in signing this contract or agreement, I am
voluntarily choosing to change the entity that supplies me with
electric power."
(2) The acknowledgment document described in paragraph (1) may not
be included with a check or in connection with a sweepstakes
solicitation.
(e) Any aggregator or provider of electric power offering
electricity service to residential and small commercial customers
that switches the electric service of a customer without the customer'
s consent shall be liable to the aggregator or provider of electric
power offering electricity services previously selected by the
customer in an amount equal to all charges paid by the customer after
the violation and shall refund to the customer any amount in excess
of the amount that the customer would have been obligated to pay had
the customer not been switched.
(f) An aggregator or provider of electric power shall keep a
record of the confirmation of a change pursuant to subdivision (b),
(c), or (d) for two years from the date of that confirmation, and
shall make those records available, upon request, to the customer and
to the commission in the course of a commission investigation of a
customer complaint or an investigation pursuant to subdivision (c) of
Section 394.2.
(g) Public agencies are exempt from this section to the extent
they are serving customers within their jurisdiction.
(h) Notwithstanding subdivisions (c) and (d), the commission may
require third-party verification for all residential changes to
electric service providers if it finds that the application of
subdivisions (c) and (d) results in the unauthorized changing of a
customer's electric service provider.
(i) An electrical corporation is exempt from this section for
customers that default to the service of the electrical corporation.
(j) Electric power sold to customers pursuant to Section 80100 of
the Water Code is not subject to this section.
SEC. 1.5. 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 A number of 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)
(b) 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
construed in a manner so as 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
Purchases 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) "Local publicly owned electric utility" includes the
entities defined in subdivision (d) of Section 9604 of the Public
Utilities Code and publicly owned utilities that provide electricity.
(d) "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
Except as otherwise stated, nothing in this division authorizes the
department to take ownership of the transmission ,
generation, or distribution assets of any
investor-owned utilities electrical corporation
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 ,
local publicly owned electric utility, or other 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. determines and at such prices the
department deems appropriate taking into account all of the
following:
(a) The intent of the program described in this division is to
achieve an overall portfolio of contracts for energy resulting in the
lowest possible price per kilowatthour.
(b) The need to have contract supplies to fit each aspect of the
overall energy load profile.
(c) The desire to secure as much low-cost power as possible under
contract.
(d) The duration and timing of contracts made available from
sellers.
(e) The length of time sellers of electricity offer to sell such
electricity.
(f) The desire to secure as much firm and nonfirm renewable energy
as possible. 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 local publicly
owned electric utilities and electrical corporations 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 by the department
pursuant to this division, directly or indirectly, whichever
results in the lowest cost to consumers
retail end-use customers , at the department's acquisition
costs plus those costs as provided in paragraphs (2) to (5),
inclusive, of subdivision (b) of Section 80200, either to
electric consumers of electrical corporations, or to any local
publicly owned electric utility in California; however, to the
extent any acquired power is not required for use within the state,
or and if it is otherwise advantageous
or necessary, the power may be sold, exchanged, transferred, or
otherwise disposed of outside California 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)
(3) 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)
(4) 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) A contract with an electric corporation for the utility
to purchase electric power from the department shall include a
provision giving the department an enforceable security interest in
assets of the utility to secure the payment for the power sold to the
utility. If the utility defaults on the contract, the department is
authorized to take possession of those assets, including
transmission, distribution, and generation assets, and to operate
those assets.
(c) Fix and establish the procedure and charges for the sale
or other disposal of power purchased by the department. With
respect to electricity made available to customers of electrical
corporations, those customers shall be responsible for costs at no
more than the rates established by the Public Utilities Commission in
effect on the date the electricity is made available to the
customers.
(c)
(d) 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)
(e) 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 PURCHASES FUND
80200. (a) There is hereby established in the State Treasury the
Department of Water Resources Electric Power
Purchases 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)
(3) 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)
(c) The administrative costs of the department incurred in
administering this division shall be provided in the annual Budget
Act.
(d) 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.
CHAPTER 5. TERMINATION OF AUTHORITY TO CONTRACT
80310. The department shall not contract for the purchase of
electrical power on and after January 1, 2003. This section does not
effect the authority of the department to administer contracts
entered into prior to that date or the department's authority to sell
electricity.
CHAPTER 6. AUDIT
80320. The Bureau of State Audits shall conduct a financial and
performance audit of the department's implementation of this
division. The audit shall be completed before December 31, 2001.
The bureau shall issue a final report on or before March 31, 2003.
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 Purchases
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.