BILL ANALYSIS
AB 9 X2
Page 1
ASSEMBLY THIRD READING
AB 9 X2 (Migden)
As Introduced May 15, 2001
2/3 vote. Urgency
SUMMARY : Authorizes customers to aggregate their electric loads
as individual consumers with private aggregators, or as members
of their local community with community choice aggregators.
Specifically this bill :
1)Authorizes any municipality or group of municipalities acting
together to aggregate their electrical load within its
boundaries.
2)Requires the California Public Utilities Commission (CPUC) to
authorize municipalities to file for a pro rata share of
energy efficiency funds collected from their customers by
electrical corporations and authorize the municipality to
spend the funds on energy efficiency measures that benefit its
customers.
3)Provides for "community choice aggregators" to form either
outside the jurisdiction of a municipal utility district
(MUD), or within such a district if the MUD did not provide
electrical service as of May 14, 2001.
EXISTING LAW :
1)Authorizes specified entities to aggregate electrical loads,
and defines an "aggregator" as one of those specified entities
that provides specified power supply services, including
combining the loads of multiple end-use customers and
facilitating the sale and purchase of electrical energy,
transmission, and other services on behalf of the end-use
customers.
2)Requires CPUC to order specified electrical corporations to
collect and spend certain funds for prescribed public benefit
programs, cost-effective energy efficiency, and conservation.
FISCAL EFFECT : Unknown
COMMENTS :
1)Broadening the definition of "Aggregator". In the electricity
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procurement market, aggregators of electricity purchases
benefit from certainty of supply by purchasing in large
quantities directly from the wholesale market. An additional
benefit of purchasing on the wholesale market is the
elimination of pass through charges and padded profits which
may occur in retail prices for electricity. This bill
eliminates the current, narrow definition of aggregator from
Public Utilities Code Section 331 and adds a number of
different types of aggregators to this code section to enable
wholesale, bulk purchasing of electricity for end-use
customers.
The broadened definition essentially allows for direct purchases
for end-use customers and electricity suppliers, and provides
for CPUC to facilitate these types of transactions. Under
this bill's provisions a municipal or private aggregator can
purchase electricity for residents and businesses absent a
negative declaration from any individual consumers.
Individual consumers may opt out of the aggregator group
without any fee or penalty if they wish, but if they choose to
opt back into the aggregator group they must pay a fee.
Municipal aggregators may not aggregate electrical load if
that load is served by a local publicly owned electric utility
as defined in Public Utilities Code Section 9604. This bill
appears to protect existing municipal utilities and existing
local publicly owned utilities from bypass, and instead has
broad provisions for load aggregation which would in part
bypass investor owned utilities.
2)Other Legislation. This bill's provisions with regard to
aggregator groups appear to conflict with AB 61 X1 (Alquist).
AB 61 X1 removed the rebuttable presumption clause (with
regard to property being more useful by acquisition) from
eminent domain provisions in allowing districts to seize
utility property and function as a provider of electric
service without approval of CPUC. Similarly, SB 8 X1
(Alarcon) contained provisions for community aggregators which
differ from those of this bill.
This bill has more benign provisions than AB 61 X1 and does not
contemplate seizure of utility property by aggregator groups.
This bill does not contain provisions to allow a municipal
utility acting as an aggregator to sell electrical service to
customers outside its territory, whereas SB 8 X1 does allow
for outside the service territory sales. This bill appears to
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have more benign terms of service than the other related
legislation.
3)Requirements for service - Consumer Protection/Consumer
Benefits: The same consumer protections and
non-discriminatory provision requirements would apply to
private and community aggregators as currently apply to
investor owned utilities (IOUs), and any single or group of
municipalities seeking to form such an aggregator group has
requirements of preparing a statement of intent. The
statements include information about organizational structure,
rate-setting policies and participant costs, contractual
methodologies and other rights and responsibilities of
participants, and participation by retail customers in these
aggregator groups is voluntary.
Another benefit of adding new types of aggregators to existing
authorizations in the Public Utilities Code is that municipal
aggregators can collect pro rata shares of available energy
efficiency and renewable energy funds for purposes including:
a) Support for existing renewable energy capacity; and,
b) Incentives for installation of new renewable energy
capacity.
4)Pro. Especially in an electricity market with both uncertain
supply and unstable prices, the ability of customer groups to
aggregate load and purchase electricity supply directly at the
wholesale level can have long-term benefits for those involved
in community aggregator or private aggregator groups.
Ultimately, these configurations result in lower consumer
prices and can provide for other direct benefits not generally
provided in retail end-use purchasing situations.
Allowing municipal aggregator customers to obtain pro rata
shares of available energy efficiency and renewable funding to
provide direct benefit for the programs desired by the
participants in the aggregator groups is an added and direct
benefit both to the aggregator group and to California.
5)Con. For those individual customers not able to participate
in community or private aggregator groups, the retail price of
electricity may be higher in the long run. Direct purchases
by aggregators remove retail revenue from IOUs at the same
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time they are lessening the demand on IOUs and the purchase
needs of IOUs. The same detriment can be brought to bear by
streaming off energy efficiency and renewable program funds.
Analysis Prepared by : Kelly Boyd / E. C. & A. / (916) 319-2083
FN: 0000865