BILL NUMBER: ABX1 8	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 22, 2001
	AMENDED IN ASSEMBLY  MARCH 12, 2001
	AMENDED IN ASSEMBLY  MARCH 5, 2001
	AMENDED IN ASSEMBLY  FEBRUARY 13, 2001

INTRODUCED BY   Assembly  Members Migden, Diaz, and Oropeza
  Member Keeley 
    (Coauthors:  Senators Alpert, Bowen, and Peace) 
    (Coauthors:  Assembly Members Kehoe, Vargas, and Wayne) 

                        JANUARY 16, 2001

    An act to amend Section 335 of, and to add Section 342
to, the Public Utilities Code, relating to public utilities.
  An act to amend Sections 332.1 and 360.5 of, to add
Section 332.2 to, and to repeal and add Section 390 of, the Public
Utilities Code, and to amend Sections 80106, 80130, 80132, and 80200
of, and to repeal Section 80114 of, the Water Code, relating to
energy, and declaring the urgency thereof, to take effect
immediately. 



	LEGISLATIVE COUNSEL'S DIGEST


   AB 8, as amended,  Migden   Keeley  .
 Electrical restructuring:  Oversight Board:  Independent
System Operator   Electric power  . 
   (1) The Public Utilities Act requires the Public Utilities
Commission to establish a ceiling of $0.065 per kilowatthour on the
energy component of electric bills for residential, small commercial,
and lighting customers of the San Diego Gas and Electric Company,
through December 31, 2002, retroactive to June 1, 2000.  The
commission may extend the ceiling through December 2003. Existing law
requires the commission to determine that portion of each existing
electrical corporation's retail rate effective on January 5, 2001,
that is equal to the difference between the generation related
component of the retail rate and the sum of the costs of the utility'
s own generation, qualifying facility contracts, existing bilateral
contracts, and ancillary services, to be known as the California
Procurement Adjustment.  Existing law requires the commission to
further determine the amount of the California Procurement Adjustment
that is allocable to the power sold by the Department of Water
Resources, which is payable by each electrical corporation to the
department for deposit in the Department of Water Resources Electric
Power Fund, and known as the Fixed Department of Water Resources
Set-Aside.
   This bill would instead require the commission to establish a
ceiling of $0.065 per kilowatthour on the energy component of
electric bills for electricity supplied to residential, small
commercial, and street lighting customers by the San Diego Gas and
Electric Company, through December 31, 2002, retroactive to June 1,
2000.  The bill would require the commission to also establish a
frozen rate of $0.065 per kilowatthour on the energy component of
electric bills for electricity supplied to all customers by the San
Diego Gas and Electric Company not subject to the ceiling imposed by
existing law, through December 31, 2002, retroactive to February 7,
2001.  The bill would provide that a frozen rate established shall
not result in any retroactive recovery of undercollections by the San
Diego Gas and Electric Company.  The bill would require the
commission to determine the California Procurement Adjustment and the
Fixed Department of Water Resources Set-Aside for those customers,
as prescribed.  The bill would make related statements about the
construction of the bill.  Since a violation of a rule or order of
the commission is a crime, this bill would impose a state-mandated
local program by creating a new crime.
   Existing law requires the Public Utilities Commission to calculate
the California Procurement Adjustment based on the generation
related component of the retail rate of an electric corporation
effective January 5, 2001.
   This bill would clarify that the generation related component of
the electricity purchased by the Department of Water Resources and
made available to retail end-use customers is revenue of the
department, and not the serving electrical corporation.
   (2) Existing law provides for a short-run avoided cost methodology
for pricing electricity generated by a nonutility, small power
production or cogeneration facility (QF), as defined.
   This bill would repeal that law and instead require the Public
Utilities Commission in accordance with specified federal law to
establish the price to be paid by a public utility electrical
corporation for power sold and delivered by a QF.
   (3) Existing law authorizes the Department of Water Resources to
contract with an electrical corporation to transmit or provide for
the transmission of, and distribute the power and provide billing,
collection, and other related services, as the agent of the
department, on terms and conditions that reasonably compensate the
electrical corporation for its services, and requires the commission,
at the request of the department, to order such actions.  Under
existing law, upon the delivery of power to them, the retail end-use
customers are deemed to have purchased that power from the
department.
   This bill would modify the existing transmission, distribution,
and related service provisions to authorize the department to
contract with an electrical corporation to transmit or provide for
the transmission of, and distribute all power made available by the
department, and provide, as the agent of the department, billing,
collection, and other related services on terms and conditions that
reasonably compensate the electrical corporation for its services and
adequately secure payment to the department, and would make
corresponding changes to the commission's requirement to order that
service at the request of the department.
   (3.5) Existing law authorizes the department to enter into
contracts for the purchase of electric power and to sell power to
retail end-use customers and to local publicly owned electric
utilities.  Existing law requires the commission to take necessary
action to ensure that all, or a portion of, the component rates that
are available to electrical corporations for the purchase of their
net short position of electricity are used to recover the revenue
requirements for the purchase and sale functions described in this
paragraph.
   This bill would repeal that commission requirement.
   (4) Existing law authorizes the department to issue revenue bonds
for purposes described in (3.5) not to exceed a certain amount,
containing specified terms and conditions, upon authorization by
written determination of the department and with the approval of the
Director of Finance and the Treasurer.
   This bill would, instead, prohibit the issuance of the bonds in an
aggregate amount greater than $10,000,000,000.
   (5) This bill would make other related clarifying and technical
changes.
  (5.5) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   (6) This bill would declare that it is to take effect immediately
as an urgency statute.  
   (1) The existing restructuring of the electrical services industry
within the Public Utilities Act provides for the establishment of an
Independent System Operator and a Power Exchange as separately
incorporated public benefit, nonprofit corporations.  An Electricity
Oversight Board (Oversight Board) is also established to oversee the
Independent System Operator and the Power Exchange in order to ensure
the success of electric industry restructuring and to ensure a
reliable supply of electricity in the transition to a new market
structure.  The Oversight Board is granted various powers in order to
carry out these purposes.
   This bill would expand the authority of the Oversight Board to act
on any matters made subject to the approval or determination by the
Oversight Board under law, and to investigate any matter and
otherwise act consistent with these provisions to ensure that the
interests of California's citizens and consumers are served,
protected, and represented in relation to the electric transmission
grid and generation system and related costs.
   The bill would require that electric generation and transmission
facilities be subject to various prescribed availability standards.
The bill would require the Independent System Operator to annually
prepare and submit to the Oversight Board a proposed protocol for the
scheduling of transmission and generation equipment outages for the
purpose of maintenance, repair, or upgrade, that is required to be
reviewed, approved or revised by the Oversight Board after notice and
public hearing.  The bill would require the Independent System
Operator to utilize the approved protocol for the purpose of
scheduling maintenance or other planned outages of equipment and to
submit a coordinated outage plan to the Oversight Board.  The bill
would require the Independent System Operator to develop and submit
proposed generation facility maintenance criteria for approval by the
Oversight Board after notice and public hearing. The bill would
require the Independent System Operator to maintain records of
generation facility outages and provide those records to the
Oversight Board on a daily basis.  The bill would require entities
that own or operate certain electric generating facilities to provide
reports on a monthly basis to the Oversight Board that identify any
periods the facilities were unavailable to produce electricity or
were available at reduced capacity.  The bill would authorize the
Independent System Operator and the Oversight Board to engage in
audits or inspection of facilities that fail to comply with
procedures, criteria, or standards established pursuant to these
provisions.  The bill would require owners or operators of generation
or transmission facilities to provide the Independent System
Operator and the Oversight Board with information and access to the
facilities as necessary to accomplish reasonable audits and
inspections.  The bill would authorize the Oversight Board to assess
a monetary penalty against an owner or operator of a facility found
to have failed to comply with criteria, standards, or procedures
established pursuant to these provisions.  Since a violation of the
Public Utilities Act is a crime under existing provisions of law, the
bill would create a state-mandated local program by expanding the
definition of a crime.
  (2)  The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.  
   Vote:   majority   2/3  .
Appropriation:  no.  Fiscal committee:  yes. State-mandated local
program:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  
  SECTION 1.  Section 335 of the Public Utilities Code is 

  SECTION 1.  Section 332.1 of the Public Utilities Code is amended
to read: 
   332.1.  (a) (1) It is the intent of the Legislature to enact Item
1 (revised) on the commission's August 21, 2000 agenda, entitled
"Opinion Modifying Decision (D.) D.00-06-034 and D.00-08-021 to
Regarding Interim Rate Caps for San Diego Gas and Electric Company,"
as modified below.
   (2) It is also the intent of the Legislature that to the extent
that the Federal Energy Regulatory Commission orders refunds to
electrical corporations pursuant to their findings, the commission
shall ensure that any refunds are returned to customers.
   (b) The commission shall establish a ceiling of six and five-tenth
cents ($0.065) per kilowatt hour on the energy component of electric
bills for  electricity supplied to  residential, small
commercial, and street lighting customers  of 
by  the San Diego Gas and Electric Company, through December
31, 2002, retroactive to June 1, 2000.  If the commission finds it
in the public interest, this ceiling may be extended through December
2003 and may be adjusted as provided in subdivision (d).
   (c) The commission shall establish an accounting procedure to
track and recover reasonable and prudent costs of providing electric
energy to retail customers unrecovered through retail bills due to
the application of the ceiling provided for in subdivision (b).  The
accounting procedure shall utilize revenues associated with sales of
energy from utility-owned or managed generation assets to offset an
undercollection, if undercollection occurs.  The accounting procedure
shall be reviewed periodically by the commission, but not less
frequently than semiannually.  The commission may utilize an existing
proceeding to perform the review.  The accounting procedure and
review shall provide a reasonable opportunity for San Diego Gas and
Electric Company to recover its reasonable and prudent costs of
service over a reasonable period of time.
   (d) If the commission determines that it is in the public interest
to do so, the commission, after the date of the completion of the
proceeding described in subdivision (g), may adjust the ceiling from
the level specified in subdivision (b),  and may adjust the
frozen rate from the levels specified in subdivision (f), 
consistent with the Legislature's intent to provide substantial
protections for customers of the San Diego Gas and Electric Company
and their interest in just and reasonable rates and adequate service.

   (e) For purposes of this section, "small commercial customer"
includes, but is not limited to, all San Diego Gas and Electric
Company accounts on Rate Schedule A of the San Diego Gas and Electric
Company, all accounts of customers who are "general acute care
hospitals," as defined in Section 1250 of the Health and Safety Code,
all San Diego Gas and Electric Company accounts of customers who are
public or private schools for pupils in kindergarten or any of
grades 1 to 12, inclusive,  restaurants, shopping centers, 
and all accounts on Rate Schedule AL-TOU under 100 kilowatts.
   (f)  The commission shall establish a program for large
commercial, agricultural, and industrial customers who buy energy
from the San Diego Gas and Electric Company, on a voluntary basis, at
the election of the customer, to set the energy component of their
bills at six and five-tenths cents ($0.065) per kilowatt hour with a
true-up after a year   The commission shall establish an
initial frozen rate of six and five-tenths cents ($0.065) per
kilowatthour on the energy component of electric bills for
electricity supplied to all customers by the San Diego Gas and
Electric Company not subject to subdivision (b), for the time period
ending with the end of the rate freeze for the Pacific Gas and
Electric Company and the Southern California Edison Company pursuant
to Section 368, retroactive to February 7, 2001.  The commission
shall consider the comparable energy components of rates for
comparable customer classes served by the Pacific Gas and Electric
Company and the Southern California Edison Company and, if it
determines it to be in the public interest, the commission may adjust
this frozen rate, and may do so, retroactive to February 7, 2001.
In determining the California Procurement Adjustment and the Fixed
Department of Water Resources Set-Aside pursuant to Section 360.5 for
customers subject to this subdivision, the commission shall utilize
a retail rate consistent with the rate for the energy component of
electric bills as determined in this subdivision, in place of the
retail rate in effect on January 5, 2001.  This section shall be
construed to modify the payment provisions, but may not be construed
to modify the electric procurement obligations of the Department of
Water Resources, pursuant to any contract or agreement in accordance
with Division 27 (commencing with Section 80000) of the Water Code,
and in effect as of February 7, 2001, between the Department of Water
Resources and San Diego Gas and Electric Company  .
   (g) The commission shall institute a proceeding to examine the
prudence and reasonableness of the San Diego Gas and Electric Company
in the procurement of wholesale energy on behalf of its customers,
for a period beginning at the latest on June 1, 2000.  If the
commission finds that San Diego Gas and Electric Company acted
imprudently or unreasonably, the commission shall issue orders that
it determines to be appropriate affecting the retail rates of San
Diego Gas and Electric Company customers including, but not limited
to, refunds.   
   (h) Nothing in this section shall be construed to limit the
authority of the Department of Water Resources pursuant to Division
27 (commencing with Section 80000) of the Water Code, including
without limitation, the authority to fix and establish the procedure
and charges for the sale or other disposal of power purchased by the
department and sold to retail end-use customers and the authority to
recover its revenue requirements.  
  SEC. 2.  Section 332.2 is added to the Public Utilities Code, to
read:
   332.2.  Rates set by the commission that are subject to
subdivision (f) of Section 332.1 shall not result in any retroactive
recovery of undercollections by the San Diego Gas and Electric
Company.
  SEC. 3.  Section 360.5 of the Public Utilities Code is amended to
read: 
   360.5.   (a) As used in this section, "department" means the
Department of Water Resources.
   (b) For each kilowatthour made available by the department to
retail end-use customers pursuant to Division 27 (commencing with
Section 80000) of the Water Code, the department is entitled to and
shall receive as revenue the generation related component of the
retail rate in effect January 5, 2001, for the serving electrical
corporation, and that electrical corporation is not entitled to that
revenue.    This subdivision is declaratory of existing law.
 
   (c)  The commission shall determine that portion of each
existing electrical corporation's retail rate effective on January 5,
2001, that is equal to the difference between the generation related
component of the retail rate and the sum of the costs of the utility'
s own generation, qualifying facility contracts, existing bilateral
contracts, and ancillary services. That portion of the retail rate
shall be known as the California Procurement Adjustment.  The
commission shall further determine the amount of the California
Procurement Adjustment that is allocable to the power sold by the
department.  That amount shall be payable, by each electrical
corporation, upon receipt by the electrical corporation of the
revenues from its retail end use customers, to the department for
deposit in the Department of Water Resources Electric Power Fund,
established by Section 80200 of the Water Code. The amount determined
pursuant to this subdivision shall be known as the Fixed Department
of Water Resources Set-Aside.  
   (d) Nothing in this section limits the department's authority
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.   
  SEC. 4.  Section 390 of the Public Utilities Code is repealed.
 
   390.  (a) Subject to applicable contractual terms, energy prices
paid to nonutility power generators by a public utility electrical
corporation based upon the commission's prescribed "short run avoided
cost energy methodology" shall be determined as set forth in
subdivisions (b) and (c).
   (b) Until the requirements of subdivision (c) have been satisfied,
short run avoided cost energy payments paid to nonutility power
generators by an electrical corporation shall be based on a formula
that reflects a starting energy price, adjusted monthly to reflect
changes in a starting gas index price in relation to an average of
current California natural gas border price indices.  The starting
energy price shall be based on 12-month averages of recent,
pre-January 1, 1996, short-run avoided energy prices paid by each
public utility electrical corporation to nonutility power generators.
  The starting gas index price shall be established as an average of
index gas prices for the same annual periods.
   (c) The short-run avoided cost energy payments paid to nonutility
power generators by electrical corporations shall be based on the
clearing price paid by the independent Power Exchange if (1) the
commission has issued an order determining that the independent Power
Exchange is functioning properly for the purposes of determining the
short-run avoided cost energy payments to be made to nonutility
power generators, and either (2) the fossil-fired generation units
owned, directly or indirectly, by the public utility electrical
corporation are authorized to charge market-based rates and the
"going forward" costs of those units are being recovered solely
through the clearing prices paid by the independent Power Exchange or
from contracts with the Independent System Operator, whether those
contracts are market-based or based on operating costs for particular
utility-owned powerplant units and at particular times when reactive
power/voltage support is not yet procurable at market-based rates at
locations where it is needed, and are not being recovered directly
or indirectly through any other source, or (3) the public utility
electrical corporation has divested 90 percent of its gas-fired
generation facilities that were operated to meet load in 1994 and
1995.  However, nonutility power generators subject to this section
may, upon appropriate notice to the public utility electrical
corporation, exercise a one-time option to elect to thereafter
receive energy payments based upon the clearing price from the
independent Power Exchange.
   (d) If a nonutility power generator is being paid short-run
avoided costs energy payments by an electrical corporation by a firm
capacity contract, a forecast as-available capacity contract, or a
forecast as-delivered capacity contract on the basis of the clearing
price paid by the independent Power Exchange as described in
subdivision (c) above, the value of capacity in the clearing price,
if any, shall not be paid to the nonutility power generator.  The
value of capacity in the clearing price, if any, equals the
difference between the market clearing customer demand bid at the
level of generation dispatched by the independent Power Exchange and
the highest supplier bid dispatched.
   (e) Short-run avoided energy cost payments made pursuant to this
section are in addition to contractually specified capacity payments.
  Nothing in this section shall be construed to affect, modify or
amend the terms and conditions of existing nonutility power
generators' contracts with respect to the sale of energy or capacity
or otherwise.
   (f) Nothing in this section shall be construed to limit the level
of transition cost recovery provided to utilities under electric
industry restructuring policies established by the commission.
   (g) The term "going forward costs" shall include, but not be
limited to, all costs associated with fuel transportation and fuel
supply, administrative and general, and operation and maintenance;
provided that, for purposes of this section, the following shall not
be considered "going forward costs":  (1) commission-approved capital
costs for capital additions to fossil-fueled powerplants, provided
that such additions are necessary for the continued operation of the
powerplants utilized to meet load and such additions are not
undertaken primarily to expand, repower or enhance the efficiency of
plant operations; or, (2) commission-approved operating costs for
particular utility-owned powerplant units and at particular times
when reactive power/voltage support is not yet procurable at
market-based rates in locations where it is needed, provided that the
recovery shall end on December 31, 2001.   
  SEC. 5.  Section 390 is added to the Public Utilities Code, to
read:
   390.  (a) As used in this section, unless the context otherwise
requires, the following terms have the following meanings:
   (1) "Power" means electric power and energy, including, but not
limited to, capacity and output, or any of them.
   (2) "QF" means a qualifying small power production facility or a
qualifying cogeneration facility within the meaning of Sections 201
and 210 of Title II of the Public Utility Regulatory Policies Act of
1978 (16 U.S.C.  Secs. 796(17), (18) and 824a-3), including any
amendments to that act, and the regulations adopted for those
sections under that act by the Federal Energy Regulatory Commission.

   (3) "Public Utility Regulatory Policies Act of 1978" means federal
Public Law 95-617, including any amendments to that act.
   (4) "PURPA" means the Public Utility Regulatory Policies Act of
1978 and the regulations adopted under that act by the Federal Energy
Regulatory Commission.
   (b) The commission shall establish the price to be paid by a
public utility electrical corporation to a QF for power.  The
commission shall establish the price in accordance with PURPA.
  SEC. 6.  Section 80106 of the Water Code is amended to read: 
   80106.  (a) The department may contract with the related
electrical corporation or its successor in the performance of related
service, for the electrical corporation or its successor in the
performance of related service, to transmit or provide for the
transmission of, and distribute  the   all 
power  made available by the department,  and  , as
agent of the department,  provide billing, collection, and other
related services  , as agent of the department,  on
terms and conditions that reasonably compensate the electrical
corporation for its services  , and adequately secure payment to
the department  .
   (b) At the request of the department, the commission shall order
the related electrical corporation or its successor in the
performance of related service, to transmit or provide for the
transmission of, and distribute  the   all 
power  made available by the department,  and  , as
agent of the department,  provide billing, collection, and other
related services  , as agent of the department,  on
terms and conditions that reasonably compensate the electrical
corporation for its services  , and adequately secure payment to
the department  .   
  SEC. 6.5.  Section 80114 of the Water Code, as added by Chapter 4
of the Statutes of 2001, is repealed.  
   80114.  The commission shall take those actions necessary to
ensure that all, or a portion of, the component rates that are
available to electrical corporations for the purchase of their net
short position of electricity are used to recover the revenue
requirements established pursuant to this division.   
  SEC. 7.  Section 80130 of the Water Code is amended to read: 
   80130.  The department may incur indebtedness and issue bonds as
evidence thereof, provided that bonds may not be issued in an amount
the debt service on which, to the extent payable from the fund, is
 expected   estimated  by the department to
exceed the amounts  expected   estimated 
to be available in the fund for their payment.   In no event
shall the   The  department  may not 
authorize the issuance of bonds (excluding notes issued in
anticipation of the issuance of bonds and retired from the proceeds
of those bonds)  in an aggregate amount greater than the
amount calculated by multiplying by a factor of four the annual
revenues generated by the California Procurement Adjustment, as
determined by the commission pursuant to Section 360.5  
in an aggregate amount greater than ten billion dollars
($10,000,000,000)  .   Refunding of bonds to obtain a lower
interest rate shall not be included in the calculation of the
aggregate amount.   In addition, before the issuance of bonds
 in a public offering  , the department shall establish a
mechanism to ensure that the bonds will be sold at investment grade
ratings and repaid on a timely basis from pledged revenues.  This
mechanism may include, but is not limited to, an agreement between
the department and the commission as described in Section 80110.

  SEC. 8.  Section 80132 of the Water Code is amended to read: 
   80132.  (a) Bonds may be issued by the department upon
authorization by written determination of the director of the
department with the approval of the Director of Finance and the State
Treasurer.  The Department of Finance shall notify the Chairperson
of the Joint Legislative Budget Committee and the chairperson of the
committee in each house that considers appropriations of its written
determination.  The bonds shall be sold at such prices and in such
manner, and on such terms and conditions, as shall be specified in
such determination, and such determination may contain or authorize
any other provision, condition, or limitation not inconsistent
herewith and such provisions as may be deemed reasonable and proper
for the security of the bondholders.  Bonds may mature at such time
or times, and bear interest at such rate or rates, which may be fixed
or variable and be determined by reference to an index or such other
method, as shall be specified in such determination.  Neither the
person executing the determination to issue bonds nor any person
executing bonds shall be personally liable therefor or be subject to
any personal liability or accountability by reason of the issuance
thereof.
   (b) In the discretion of the department, any bonds may be secured
by a trust agreement by and between the department and a corporate
trustee, which may be any trust company or bank having trust powers
within or without the state, or the State Treasurer.  Notwithstanding
any other provision of law, the State Treasurer shall not be deemed
to have a conflict of interest by reason of acting as such trustee.
The department may enter into such contracts or arrangements as it
shall deem to be necessary or appropriate for the issuance and
further security of the bonds.
   (c) Bonds shall be legal investments for all trust funds, the
funds of all insurance companies, banks both commercial and savings,
trust companies, executors, administrators, trustees, and other
fiduciaries, for state school funds, pension funds, and, for any
funds that may be invested in county, school, or municipal bonds.
   (d) Notwithstanding that bonds may be payable from a special fund,
they shall be deemed to be negotiable instruments for all purposes.

   (e) Any and all bonds, their transfer and the income therefrom
shall at all times be free from taxation of every kind by the state
and by all political subdivisions of the state.
   (f) Bonds shall not be deemed to constitute a debt or liability of
the state or of any political subdivision thereof, other than the
department, or a pledge of the faith and credit of the state or of
any such political subdivision  , other than the department,
 but shall be payable solely from the funds herein provided
for.  All bonds shall contain a statement to the following effect:
"Neither the faith and credit nor the taxing power of the State of
California is pledged to the payment of the principal of or interest
on this bond."  The issuance of bonds shall not directly or
indirectly or contingently obligate the state or any political
subdivision thereof to levy or to pledge any form of taxation
whatever therefor or to make any appropriation for their payment.
   (g) The department may pledge or assign any revenues under any
obligation entered into, and rights to receive the same, and moneys
on deposit in the fund and income or revenue derived from the
investment thereof, as security for the department's obligations
hereunder.  It is the intention of the Legislature that any pledge of
moneys, revenues, or property made by the department shall be valid
and binding from the time when the pledge is made; that the moneys,
revenues, or property so pledged and thereafter collected from retail
end use customers, or paid directly or indirectly to or for the
account of the department, is hereby made, and shall immediately be,
subject to the lien of such pledge without any physical delivery
thereof or further act; that the lien of any such pledge shall be
valid and binding as against all parties having claims of any kind in
tort, contract, or otherwise against the department irrespective of
whether such parties have notice thereof, and that no resolution or
instrument by which such pledge or lien created pursuant to this
subdivision is expressed, confirmed, or approved need be filed or
recorded in order to perfect such pledge or lien.  The provisions
hereof shall in all respects govern the creation, perfection,
priority, and enforcement of any lien created hereby or hereunder.

  SEC. 9.  Section 80200 of the Water Code is amended to read: 
   80200.  (a) There is hereby established in the State Treasury the
Department of Water Resources Electric Power Fund.  Notwithstanding
Section 13340 of the Government Code, all moneys in the fund are
continuously appropriated, without regard to fiscal year, to the
department, and shall be available for the purposes of this division.
  It is the intent of the Legislature that this fund be a
continuation of the fund created in Chapter 3 of the Statutes of 2001
(SB 7 of the First 2001-02 Extraordinary Session).
   (b) All revenues payable to the department under this division
shall be deposited in the fund.  Notwithstanding any other provision
of law, interest accruing on money in the fund shall remain in the
fund and shall be used for the purposes of this division.  Payments
from the fund may be made only for the purposes authorized by this
division, including, but not limited to, payments for any of the
following:
   (1) The cost of electric power and transmission, scheduling, and
other related expenses incurred by the department.
   (2) The pooled money investment rate on funds advanced for
electric power purchases prior to the receipt of payment for those
purchases by the purchasing entity.
   (3) Payment of any bonds or other contractual obligations
authorized by this division.
   (4) Repayment to the General Fund of appropriations made to the
fund pursuant hereto or hereafter for purposes of this division,
appropriations made to the Department of Water Resources Electric
Power Fund, and General Fund moneys expended by the department
pursuant to the Governor's Emergency Proclamation dated January 17,
2001.   It is the intent of the Legislature that such
  That  repayment  shall  be made as soon
as practicable.
   (c) Except as provided in subdivision (b) of Section 5 of the
statute adding this section, the administrative costs of the
department incurred in administering this division shall be provided
in the annual Budget Act.
   (d) Obligations authorized by this division shall be payable
solely from the fund.  Neither the full faith and credit nor the
taxing power of the state are or may be pledged for any payment under
any obligation authorized by this division.
   (e) While any obligations of the department incurred under this
division remain outstanding and not fully performed or discharged,
the rights, powers, duties, and existence of the department and the
commission shall not be diminished or impaired in any manner that
will affect adversely the interests and rights of the holders of or
parties to such obligations.  The department may include this pledge
and undertaking of the state in the department's obligations.   
  SEC. 10.  The provisions of Division 27 of the Water Code,
including amendments made thereto in this act and the provisions of
Section 360.5 of the Public Utilities Code, including amendments made
thereto in this act are severable.  If any provision of Division 27
of the Water Code, including amendments made thereto in this act or
the provisions of Section 360.5 including amendments made thereto in
this act or application thereof are held to be invalid, such
invalidity shall not affect other provisions of either Division 27 of
the Water Code or provisions of
       Section 360.5 of the Public Utilities Code.
  SEC. 10.5.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
  SEC. 11.  This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  The facts constituting the necessity are:
   To help avoid rolling blackouts in California, it is necessary
that this act take effect immediately.    amended to
read:
   335.  In order to ensure that the interests of the people of
California are served, a five-member Electricity Oversight Board is
hereby created as provided in Section 336.  For purposes of this
chapter, any reference to the Oversight Board shall mean the
Electricity Oversight Board.  Its functions shall be all of the
following:
   (a) To oversee the Independent System Operator and the Power
Exchange.
   (b) (1) To exercise the exclusive right to decline to confirm the
appointments of members of the governing board of the Independent
System Operator.
   (2) To determine the composition and terms of service and to
exercise the exclusive right to decline to confirm the appointments
of specific members of the governing board of the Power Exchange.
   (c) To serve as an appeal board for majority decisions of the
Independent System Operator governing board, as they relate to
matters subject to exclusive state jurisdiction, as specified in
Section 339.
   (d) Those members of the Power Exchange governing board whose
appointments the Oversight Board has the exclusive right to decline
to confirm include proposed governing board members representing
agricultural end users, industrial end users, commercial end users,
residential end users, end users at large, nonmarket participants,
and public interest groups.
   (e) To act on any matters made subject to approval or
determination by the Oversight Board under law.
   (f) To investigate any matter and otherwise act consistent with
this chapter to ensure that the interests of California's citizens
and consumers are served, protected, and represented in relation to
the electric transmission grid and generation system and related
costs.
  SEC. 2.  Section 342 is added to the Public Utilities Code, to
read:
   342.  (a) The Legislature finds and declares that electric
generation and transmission facilities are critical infrastructure
and their predictable availability is essential to the public
welfare.
   (b) Electric generation and transmission facilities shall be
subject to availability standards, in accordance with this section.
   (c) Owners or operators of electric generating facilities in the
State of California shall comply with all standards approved or
established pursuant to this chapter.
   (d) The Independent System Operator shall prepare and submit to
the Oversight Board, a proposed protocol for the scheduling of
transmission and generation equipment outages for the purposes of
maintenance, repair, or upgrade.  The Independent System Operator
shall resubmit this protocol, including any proposed revisions of the
protocol, at least annually.  The Oversight Board shall review and
approve or direct revision of the proposed protocol as it determines
is appropriate and necessary to protect the public interest after
notice and public hearing.  The Independent System Operator shall
utilize an approved protocol for the purpose of scheduling
maintenance or other planned outages of equipment including the
preparation of a coordinated outage plan.  The Independent System
Operator shall prepare and submit to the Oversight Board, a
coordinated outage plan that shall be updated not less than once each
quarter.
   (e) The Independent System Operator shall develop and submit to
the Oversight Board proposed generation facility maintenance
criteria.  The Oversight Board shall review the proposed generation
maintenance criteria and approve or direct revision of the criteria
as it determines necessary to protect the public interest after
notice and public hearing.
   (f) The Independent System Operator shall maintain records of
generation facility outages and shall provide those records to the
Oversight Board on a daily basis.  Each entity that owns or operates
an electric generating facility in California with a rated maximum
combined capacity of 50 megawatts or greater for all units at a
single location, shall provide a monthly report to the Independent
System Operator and the Oversight Board that identifies any periods
during the preceding month when the facility was unavailable to
produce electricity or was available only at reduced capacity.  The
report shall identify the reasons for any such unavailability or
reduced capacity.
   (g) The Independent System Operator and the Oversight Board may
engage in audits or inspection of facilities that fail to comply with
procedures, criteria, or standards established pursuant to this
section or for which compliance is in question.  Owners or operators
of generation or transmission facilities shall provide information
and access to the Independent System Operator and the Oversight Board
as necessary to accomplish reasonable audit or inspection.  The
Oversight Board may, on petition of the Independent System Operator
or acting on its own motion, and after public notice and hearing,
assess a monetary penalty against the owner or operator of a facility
found to have failed to comply with criteria, standards, or
procedures approved or established pursuant to this section.
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.