BILL ANALYSIS
Appropriations Committee Fiscal Summary
1 (Keeley)
Hearing Date: 1/31/01 Amended: 1/30/01
Consultant: Lisa Matocq Policy Vote: E, U & C
6-2
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BILL SUMMARY: AB 1X, an urgency measure, (1) authorizes
the Department of Water Resources (DWR) to purchase power
and then sell it either directly or indirectly to
consumers, (2) appropriates a total of $500 million from
the General Fund (GF) to the Department of Water Resources,
as specified, for this purpose, and (3) authorizes DWR to
sell revenue bonds.
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02
2002-03 Fund
Appropriation $495,755* --
-- General
Deficiency authorization Unknown, potentially multibillions
General
Revenue bond debt Unknown, potentially $10 billion plus
interest Special**
Offsetting revenues Unknown, potentially
multibillions Gen/Spec.**
Administrative costs $ 4,245*** Potentially $9,000
annually General
Audits ----------- Unknown ----------
General
*The bill transfers $495,755 from the General Fund to the EPF.
**Electric Power Fund.
***Appropriated in the bill.
STAFF COMMENTS: As amended on 1/30/01 this bill:
authorizes DWR to contract for the purchase of power at
prices DWR deems appropriate, taking into account
specified factors, and to sell it at prices which
include the costs of acquisition, transmission,
scheduling, administration, bond payments, GF repayment
of appropriations made to the Electric Power Fund
pursuant to SB 7X (Burton), and amounting to $400 million
and monies expended by DWR pursuant to the Governor's
Emergency Proclamation (approx. $13 million), interest on
funds advanced, and other related costs;
authorizes DWR to issue revenue bonds, with DOF approval,
at prices, terms, and maturity dates to be determined by
DWR, and specifies that bonds may not be issued in an
amount that exceeds four times the annual revenues
generated by the "California Procurement Adjustment"
(CPA);
defines the CPA as the difference between the generation
related component of the each electrical corporation's
retail rate and the sum of costs of the utility's own
generation, qualifying facility and bilateral contracts,
and ancillary services, and requires the Public Utilities
Commission (PUC) to determine the amount of the CPA
allocable to the power sold by DWR, and provides that
that amount be paid to DWR upon receipt;
requires the power purchased by DWR to be allocated on a
pro-rata basis;
prohibits DWR from entering into any contract after
January 1, 2003; however, it appears that options or
"forward contracts" could result in sales beginning after
that date;
transfers up to $495.7 million from the GF to the EPF and
requires repayment as soon as possible;
appropriates $4.2 million from the GF to DWR for admin.
costs for the 2000-01 fiscal year and provides that in
subsequent years such costs will be subject to the budget
process;
for purposes of this bill, authorizes DOF to approve
deficiencies, in an unlimited amount, with 10-day
notification to the Joint Legislative Budget and
Appropriations Committees;
authorizes DWR to contract with electrical corporations
for transmission, distribution, billing, and collection
services;
authorizes PUC to set rates to cover revenue requirements
of DWR's power purchasing program. It prohibits any
future rate increase for residential customers for usage
up to 130% of baseline quantities, as specified;
until January 1, 2003, authorizes DWR to hire staff at
salaries which exceed Department of Personnel
Administration standards but prevents such "excess"
salaries from being used in calculating final year
compensation for PERS retirement purposes;
establishes the EPF, a continuously appropriated fund,
and provides that payments from the fund may only be made
for specified purposes, including, but not limited to,
the cost of purchased power, repayment of GF advances as
specified, payment of bonds or other obligations, and
interest;
specifies that "neither the full faith and credit nor the
taxing power of the state are pedged for any payment
under any obligation authorized by this division";
requires DWR to report quarterly and annually to the
Legislature and the Governor on its activities and
expenditures, and requires the Bureau of State Audits to
conduct a financial and performance audit of the program
by December 31, 2001, and issue a final report by March
31, 2003; and
makes related changes.
STAFF NOTES that (1) based on the expenditure of $400
million appropriated by SB 7X, Burton) in approximately 10
days, there is considerable General Fund pressure to
continue power purchases at a potential cost of $1.2
billion per month until such time as revenue bonds are
issued.
SB7X (Burton, Ch. 3, St. of 1999-2000, First Extraordinary
Session), appropriated $400 million from the General Fund
to DWR to purchase and sell electricity on a short-term
basis, and created the Electric Power Fund.