BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 9 X2
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          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  








                                                                  AB 9 X2
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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 



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