BILL ANALYSIS
AB 8 X1
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 8 X1 (Keeley)
As Amended March 22, 2001
2/3 vote. Urgency
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|ASSEMBLY: | |(March 15, |SENATE: |27-9 |(March 22, |
| | |2001) | | |2001) |
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(vote not relevant)
Original Committee Reference: E. C. & A.
SUMMARY : Requires the California Public Utilities Commission
(CPUC) to establish an initial frozen rate for large industrial
customers of San Diego Gas and Electric Company (SDG&E) of
$0.065, retroactive to February 7, 2001, when the Department of
Water Resources (DWR) first began to purchase power for the
state.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Repeal and add Section 390 to the Public Utilities Code
relating to qualified facilities (QFs).
2)Prohibit DWR from authorizing the issuance of bonds for
purposes of purchasing power subject to Water Code Section
390, if such issuance causes the total amount of bonds to
exceed $10 billion.
EXISTING LAW:
1)Establishes a rate ceiling of $0.065 on the energy component
of electric bills of residential, small commercial and
lighting customers of SDG&E.
2)Authorizes QFs or non-utility generators to sell power into
the grid and establishes a payment mechanism between public
utility electrical corporations and QFs.
3)Authorizes DWR to issue bonds to fund the procurement of power
for the state of California.
FISCAL EFFECT : Unknown
AB 8 X1
Page 2
COMMENTS :
This bill Removes Large Industrial customers of SDG&E from the
peril of market rates . Large industrial customers are the only
customer class of SDG&E which remained subject to market rates
for electricity after enactment of SB 265 (Alpert), Chapter 810,
Statutes of 2000. AB 8 X1 provides for freeze for the remaining
customers, retroactive to the date DWR began to purchase power
for the state. AB 8 X1 specifies that no electrical corporation
shall recover any undercollection associated with the measure,
since DWR has been the purchaser or the power.
AB 8 X1 also makes a technical amendment to clarify that
restaurants and small shopping malls are included the in small
commercial class of customers. AB 8 X1 does not apply any
additional retroactive rate freeze to any customer class and
does not subject SDG&E or DWR to any undercollection except
those specified for the large industrial customers.
Payment to QFs Specified . Since the onset of the energy supply
and utility financial crises in California in 2000, QFs have
provided much needed power into California's grid. Because of
investor-owned utility (IOU) cash flow shortages, QFs have not
been paid for generated electricity in months. This bill
provides for revised payment and pricing requirements for QFs.
Specifically this bill requires CPUC to establish the price to
be paid to a QF for power by an electric corporation in
accordance with the Public Utilities Regulatory Policy Act
(PURPA), which reverts pricing to pre-AB 1890 formulas. This
eliminates the avoided cost methodology specified in existing
Public Utilities Code Section 390. This bill facilitates quick
and equitable payment to QFs for power generated and specifies
that such payment shall be made by electric corporations.
Capping DWR bonds at $10 billion . This bill also explicitly
caps any DWR bond authority at $10 billion with respect to
purchases of power. This bill also clarifies that the bonds
shall be issued in a public offering, subject to establishment
of a mechanism to ensure that the bonds are sold at investment
grade ratings and repaid on a timely basis from pledged
revenues.
The cap ensures that encumbrances for the bonds are reasonable
AB 8 X1
Page 3
and that favorable ratings will be achieved for financial
soundness.
Analysis Prepared by : Kelly Boyd / E. C. & A. / (916)
319-2083
FN: 0000225