BILL ANALYSIS
AB 6 X1
Page 1
Without Reference to File
CONCURRENCE IN SENATE AMENDMENTS
AB 6 X1 (Dutra)
As Amended January 16, 2001
2/3 vote. Urgency
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|ASSEMBLY: |61-10|(January 12, |SENATE: |29-6 |(January 16, |
| | |2001) | | |2001) |
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Original Committee Reference: E.C. & A.
SUMMARY : Establishes that utility-owned generation facilities
shall be subject to California Public Utilities Commission
(CPUC) regulation until their disposition has been reviewed and
approved by CPUC, and prohibits a utility-owned generation
facility from being disposed of prior to January 1, 2006.
The Senate amendments :
1)Prohibit a utility-owned generation facility from being
disposed of prior to January 1, 2006.
2)Require CPUC to ensure that public utility assets remain
dedicated to service for the benefit of the public.
3)Make changes to electric restructuring legislative findings
and declarations.
4)Add an urgency clause.
AS PASSED BY THE ASSEMBLY , this bill required 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
Public Utilities Code Section 851 (PU Section 851).
EXISTING LAW :
1)Requires generation assets owned by any public utility prior
to January 1, 1997, and subject to rate regulation, to
AB 6 X1
Page 2
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.
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.
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This bill deletes the reference to market valuation, and
provides that the remaining generation facilities will continue
to be regulated by CPUC until the owner of those facilities has
applied to CPUC to dispose of those facilities and has been
authorized by CPUC under PU Section 851 to undertake that
disposal. PU Section 851 requires that when a public utility
seeks to divest, 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." This bill amends the electric restructuring
intent language to conform with the bill's deletion of the
market valuation "trigger," and deletes the existing reference
to transitioning "from regulated to unregulated status through
means of CPUC-approved market valuation mechanisms."
Specifically, this bill provides that the Legislature's intent
is that the "generation of electricity should be open to
competition."
Analysis prepared by : Joseph Lyons / E. C. & A. / (916)
319-2083
FN: 0000061