BILL ANALYSIS
AB 1 X1
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Date of Hearing: January 16, 2001
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Carole Migden, Chairwoman
AB 1 X1 (Keeley) - As Proposed to be Amended: January 16, 2001
Policy Committee: E.C&A.Vote:10-0
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill authorizes the Department of Water Resources (DWR) to
purchase electric power from generators and sell the power to
consumers in California. Specifically, this bill:
1)Authorizes the DWR to:
a) Contract for purchasing power for a price not to exceed
5.5 cents per kilowatt hour.
b) Sell the power to electric consumers, either directly or
indirectly, at the cost of acquisition plus administrative
and borrowing costs.
c) Borrow money for cash flow purposes, including
short-term debt with a maturity not to exceed 90 days.
d) Adopt emergency regulations to implement the power
purchase program.
2)Exempts the department from certain administrative procedures
related to public contracting, but only if the department
determines such procedures are a detriment to accomplishing
the purpose of the program.
3)Establishes a continuously appropriated fund-the Department of
Water Resources Electric Power Fund-and provides that interest
accrued on moneys in the fund shall remain in the fund.
Payments from the fund are only for the purposes authorized in
the bill, and include:
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a) Cost of purchased power.
b) Interest on cash advances to the fund.
c) Repayment of General Fund advances to the fund.
d) DWR administrative costs.
e) Other obligations incurred by the DWR.
4)Transfers an unspecified amount from the General Fund to the
Electric Power Fund to cover start-up costs of the purchase
program.
5)Requires repayment to the General Fund of the amount
appropriated in the bill.
6)Requires the DWR to report quarterly and annually to the
Legislature and the Governor on activities in the program.
FISCAL EFFECT
1)Assuming a General Fund appropriation in the range of $300
million, potential cost to the General Fund in foregone
interest earnings could be in the range of $5 million to $30
million.
(The General Fund could forgo interest earnings from the
period of the transfer to the Electric Power until complete
repayment of the appropriated amount to the General Fund.
This should be clarified as the bill moves forth. The amount
of these foregone interest earnings would depend on the amount
of the appropriation and the time until full repayment. The
estimate assumes an average five percent interest and a
repayment within two years.)
2)Administrative costs for DWR in the range of $2 million
annually paid by revenues in the Electric Power Fund.
COMMENTS
Purpose . This measure is the result of recent discussions
between the Governor, the Legislature, and parties affected by
the state energy situation. The author indicates that this
measure is intended take advantage of the state's good credit
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rating for purchasing electric power on the wholesale market in
lieu of purchases by the investor-owned utilities.
Amendments . Amendments are recommended to: (1) clarify that
the power will be sold at the state's cost; (2) the consumers
or utilities will purchase the power, whichever is less costly;
and (3) require repayment of the General Fund appropriation.
Analysis Prepared by : Chuck Nicol / APPR. / (916)319-2081