BILL ANALYSIS
AB 6 X1
Page 1
Without Reference to File
ASSEMBLY THIRD READING
AB 6 X1 (Dutra)
As Introduced January 11, 2001
Majority vote
ENERGY 18-0 APPROPRIATIONS 17-2
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|Ayes:|Wright, Pescetti, Briggs, |Ayes:|Migden, Bates, Alquist, |
| |Campbell, Canciamilla, | |Aroner, Ashburn, Cedillo, |
| |Diaz, Dickerson, Dutra, | |Corbett, Correa, |
| |Jackson, Kelley, Leonard, | |Goldberg, Romero, |
| |Migden, Oropeza, Reyes, | |Shelley, Simitian, |
| |Richman, Steinberg, | |Thomson, Wesson, Wiggins, |
| |Vargas, Zettel | |Wright, Zettel |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Noes:|Daucher, Robert Pacheco |
| | | | |
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SUMMARY : Establishes that utility-owned generation assets shall
be subject to California Public Utilities Commission (CPUC)
regulation until their disposition has been reviewed and
approved by CPUC. Specifically, this bill requires that
generation assets owned by any public utility prior to January
1, 1997, and subject to rate regulation by CPUC, shall continue
to be subject to regulation by CPUC until those assets have
undergone market valuation in accordance with procedures
established by CPUC, and CPUC has authorized the disposition of
those assets pursuant to Section 851 of the Public Utilities
Code.
EXISTING LAW :
1)Requires generation assets owned by any public utility prior
to January 1, 1997, and subject to rate regulation, to
continue to be subject to CPUC regulation until those assets
have undergone market valuation.
2)Requires that the valuation of assets, for the purposes of
calculating public utilities' uneconomic costs, be completed
no later than December 31, 2001, using appraisal, sale, or
other divestiture.
AB 6 X1
Page 2
3)Provides that, subsequent to market valuation, if the public
utility wishes to retain ownership of non-nuclear generation
assets in the same corporation as the distribution utility,
the public utility shall demonstrate to the satisfaction of
CPUC, through a public hearing, that it would be consistent
with the public interest and would not confer undue
competitive advantage on the public utility to retain that
ownership in the same corporation as the distribution utility.
4)Provides related findings and declarations.
FISCAL EFFECT : Unknown
COMMENTS : AB 1890 (Brulte), Chapter 854, Statutes of 1996,
restructured California's electric industry in order to
establish a competitive generation market. CPUC, in D.95-12-063
(as modified by D.96-01-009) required the investor-owned
utilities (IOUs) to divest at least 50% of their fossil
generating assets. IOUs have divested most of their generating
assets, including a large number of natural gas power plants.
San Diego Gas and Electric has rights to a portion of the output
of the San Onofre Nuclear Generating Station. Pacific Gas and
Electric (PG&E) and Southern California Edison (SCE) still own a
considerable amount of generating resources, including
hydroelectric facilities. PG&E owns 3,890 megawatts (MW) of
hydroelectric generating capability made up of 68 powerhouses,
and 99 reservoirs. SCE owns 35 powerhouses that generate 1, 173
MW of electricity. (The combined hydroelectric generation
capacity of PG&E and SCE meets approximately 15% of the state's
electricity demand). SCE has an application pending at CPUC to
retain its remaining generation facilities. PG&E recently
announced its intention to retain its remaining generation
assets for the next two years.
Under existing law, IOU generation assets are subject to rate
regulation by CPUC and shall continue to be subject to CPUC
regulation until those assets have undergone market valuation.
This bill deletes the reference to market valuation, and
provides that the remaining generation assets will continue to
be regulated by CPUC until the owner of those assets has applied
to CPUC, in accordance with procedures established by CPUC under
Public Utilities Code Section 851, to dispose of those assets
and has been authorized by CPUC to undertake that disposal. PU
Section 851 requires that when a public utility seeks to divest,
AB 6 X1
Page 3
sell, or purchase facilities, they must go before CPUC for
approval.
The Federal Energy Regulatory Commission (FERC), which has
jurisdiction over the wholesale electricity market, recently
issued an order (issued December 15, 2000) which, among other
things, effectively "de-federalized" IOUs' approximately 25,000
MW of remaining generation resources by allowing California to
exercise its retail ratemaking authority and regulate this power
on a cost-of-service basis.
CPUC, citing an "extraordinary and unforeseen crisis in
wholesale and retail electric power markets in California," is
presently engaged in a proceeding which is evaluating whether it
is in the public interest for IOUs to divest their remaining
generation facilities.
Legislative intent language codified by AB 1890 provides that
the generation of electricity "should be open to competition and
utility generation should be transitioned from regulated status
to unregulated status through means of commission-approved
market valuations." (PU Section 330 (l)(2)). This bill deletes
the market valuation "trigger" for deregulation of the assets.
The author has indicated that he intends to work with parties to
modify or delete the existing legislative intent language so
that it is in conformance with the intent of this bill.
Analysis prepared by : Joseph Lyons / E. C. & A. / (916)
319-2083
FN: 0000056