BILL ANALYSIS
AB 5 X1
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Without Reference to File
CONCURRENCE IN SENATE AMENDMENTS
AB 5 X1 (Keeley)
As Amended January 16, 2001
2/3 vote. Urgency
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|ASSEMBLY: |60-9 |(January 12, |SENATE: |28-8 |(January 16, |
| | |2001) | | |2001) |
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Original Committee Reference: E.C.& A.
SUMMARY : Revises specific provisions relating to the governance
structures and authority of the California Independent System
Operator (ISO); the Power Exchange (PX) and Electricity
Oversight Board (EOB).
The Senate amendments:
1)Require the replacement of the existing ISO governing board,
composed of 26 "stakeholders," with a governing board composed
of five members appointed by the Governor who must be
independent of any ISO market participant.
2)Prohibit ISO from entering into a multi-state entity or
regional organization unless EOB approves such a move.
3)Require ISO to publish a list of California power plants that
are out of service due to either a planned or unplanned
outage.
AS PASSED BY THE ASSEMBLY , this bill:
1)Repealed existing law directing EOB to determine the
composition and terms of service for ISO and PX governing
boards.
2)Repealed existing law which specifies an EOB member's right to
decline or confirm representative groups on governing boards.
3)Repealed EOB's responsibility for approval of election and
qualifications of ISO and PX governing board members.
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4)Required that in 90 days of the effective date of this bill,
that ISO and PX governing boards be composed of an unlimited
term, three member, annually and Governor appointed,
independent governing board of directors composed of
individuals not affiliated with any actual or potential
ISO-related market participant.
5)Required that EOB revise ISO and PX articles of incorporation
and bylaws to reflect the aforementioned changes and make
necessary filings with the Federal Energy Regulatory
Commission (FERC) necessary to implement this act.
6)Removed the existing authority of EOB to hold a closed session
to consider matters involving the removal of an ISO or PX
governing board member. All such issues must now be voted on
in open session.
7)Prohibited ISO participation in any multi-state entity or
regional organization unless approved by EOB.
EXISTING LAW provides for the creation of EOB and describes its
functions, which includes oversight of ISO and PX, its board's
composition and terms of service and appeals processes.
FISCAL EFFECT : Unknown
COMMENTS :
1)AB 1890, (Brulte), Chapter 854, Statutes of 1996, contained
intent language that established the process for California's
entry into an interstate compact with other western states to
require utilities selling energy into the California markets
to adhere to standards and protocols to protect the
reliability of regional transmission and distribution systems.
This bill repeals those provisions and requires EOB approval
prior to ISO's participation in any multistate entity or
regional transmission organization.
2)The restructuring of California's electric industry came in
the form of comprehensive electric restructuring legislation,
AB 1890. Additionally, because ISO and PX are non-public
entities engaged in the interstate transmission and wholesale
power markets, their operations are subject to FERC
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jurisdiction under the Federal Power Act.
On December 15, 2000, FERC issued an Order Proposing Remedies
for California Wholesale Electric Markets (order), which
outlined its desire to establish procedures to discuss with
state representatives the process for selection of the
independent ISO board members that will replace the current
stakeholder board. The FERC decision proposes to replace the
existing stakeholder boards with independent boards.
Presently, ISO and PX are governed by what FERC calls
stakeholder boards (i.e., those who have business in the
market/market participants). Under the FERC order, the new
board would be made up of non-market participants. The order
sets out FERC's desire to discuss the process for selection of
the new board structure with state representatives.
Generally, the FERC order proposes to replace the existing
stakeholder boards with independent boards.
3)This bill speaks to the ISO and PX governance issue only and
proposes a governance structure for EOB to communicate the
state's intent to FERC. This bill makes modifications to
existing law that affect the appointment, governance
structure, member affiliation limitation and terms of ISO and
PX board members to effectuate a five member,
Governor-appointed governance structure for both ISO and PX.
4)Future of state oversight function. AB 1890 transferred
responsibility for transmission reliability from electric
utilities regulated by the California Public Utilities
Commission (CPUC) to ISO and market-based mechanisms.
5)ISO functions as a quasi-utility, performing exclusive duties
delegated by the state that are vital to California residents
in the deregulated generation market. As such, the state has
a compelling interest in the operation of these institutions.
AB 1890 recognized this and established EOB "to ensure that
the interests of the people of California are served." FERC's
orders have steadily decreased the state's role by diminishing
state representation on the ISO governing board and limiting
its accountability to the Governor and the Legislature.
Analysis prepared by : Roderick A. Campbell / E.C. & A. /
(916) 319-2083
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