BILL ANALYSIS
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THIRD READING
Bill No: AB 6X
Author: Dutra (D)
Amended: 1/16/01 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE : Unavailable at time of
writing
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 61-10, 1/12/01 - See last page for vote
SUBJECT : Public utilities
SOURCE : Author
DIGEST : This bill clarifies that public utility-owned
generation assets remain regulated by the California Public
Utilities Commission until the California Public Utilities
Commission authorizes their disposal under Section 851 of
the Public Utilities Code.
The bill further prohibits the sale of any public
utility-owned power plant until January 1, 2006, and
requires the California Public Utilities Commission to
ensure that generation assets remain dedicated to service
for the benefit of California ratepayers.
ANALYSIS :
Existing Law
CONTINUED
AB 6X
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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 California Public Utilities
Commission (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 divesture.
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 the 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.
Comments
Section 851 of the Public Utilities Code requires any
public entity, such as Pacific Gas and Electric (PG&E),
Southern California Edison (SCE) and San Diego Gas and
Electric (SDG&E), to secure authorization from the CPUC
prior to disposing of any property "necessary or useful in
the performance of its duties to the public."
The authority conferred to the CPUC in Section 851 of the
Public Utilities Code, which dates back to 1915 and the
original Railroad Commission, is fundamental to utility
regulation - ensuring that the CPUC maintains the powers
and functions necessary to protect the public interest.
In the case of an application to sell a power plant, CPUC
review under Section 851 would entail a finding of public
interest and environmental review under the California
Environmental Quality Act (CEQA).
AB 1890 (Brulte), Chapter 854, Statutes of 1996,
restructured California's electric industry in order to
establish a competitive generation market. The CPUC, in
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D.95-12-063 (as modified by D.96-01-009), required the
investor-owned utilities (IOUs) to divest at least 50
percent of their fossil generating assets. IOUs have
divested most of their generating assets, including a large
number of natural gas power plants. SDG&E has rights to a
portion of the output of the San Onofre Nuclear Generating
Station. PG&E and 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 percent 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 the CPUC and shall continue to be
subject to CPUC regulation until those assets have
undergone market valuation. This bill deletes this
provision.
The Federal Energy Regulatory Commission, 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.
The 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.
Prior Legislation
SB 1095 (Bowen) in the 1999-2000 Legislative Session was
substantially similar to this bill. SB 1095 also amended
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Sections 216(h) and 377 of the Public Utilities Code to
explicitly require Section 851 review. SB 1095 was
defeated in the Assembly Utilities and Commerce Committee
on August 23, 1999.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
ASSEMBLY FLOOR :
AYES: Strom-Martin, Dickerson, Leslie, Cox, Nation,
Wiggins, Thomson, Steinberg, Pescetti, Canciamilla,
Shelley, Migden, Aroner, Chan, Matthews, Corbett, Dutra,
Simitian, Alquist, Diaz, Cohn, Cardoza, Keeley, Salinas,
Florez, Reyes, Ashburn, Maldonado, Jackson, Richman,
Hertzberg, Pavley, Koretz, Frommer, Liu, Goldberg,
Cedillo, Wesson, Wright, Romero, Firebaugh, Horton,
Washington, Nakano, Lowenthal, Oropeza, Havice, Chavez,
Calderon, Negrete McLeod, Longville, Leonard, Harman,
Correa, Bill Campbell, Bates, Wyland, Zettel, Kehoe,
Wayne, Vargas
NOES: Aanestad, Leach, Cogdill, Wyman, Strickland,
Hollingsworth, Maddox, John Campbell, Daucher, La Suer
DLW:cm 1/17/01 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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