BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
ACA 12 - Vargas Hearing Date:
August 28, 2002 A
As Amended: August 22, 2002 FISCAL C
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DESCRIPTION
Existing law , Article XII of the California Constitution, established
the California Public Utilities Commission (CPUC) in 1911 and
authorizes the CPUC to establish rates and rules for all public
utilities subject to its jurisdiction (including private corporations
and persons engaged in the production, generation, transmission, or
furnishing of electric power directly or indirectly to or for the
public).
Existing federal law , the Federal Power Act, provides for federal
regulation of the transmission and wholesale sales of electric energy
in interstate commerce, except for those matters which are subject to
state regulation.
This measure , if approved by the voters, would add two sections to
Article XII as follows:
1.Require those responsible for a reliable, adequate, and affordable
supply of electricity to be answerable to the people of this State.
2.Prohibit the ownership, operation, control, or management of any
public utility electric transmission facility by any institution
that is not subject to the exclusive authority of the people of this
State through the State's agencies or political subdivisions.
BACKGROUND
According to the author, this measure is intended to clarify the
connection between the activities of the Independent System Operator
(ISO), the health, safety and welfare of the people of California and
a reliable, adequate and affordable supply of electricity. It's also
intended to ensure that the right of the people to protect their
health, safety and welfare cannot be undermined by allowing for the
control of utility assets by an entity that isn't responsible to the
people of California.
To the extent it operates the transmission grid and electricity
markets, the ISO is among "those responsible for a reliable, adequate,
and affordable supply of electricity." It is "answerable to the
people of this State" via a governing board appointed by the Governor
pursuant to state law. However, it is also answerable to the Federal
Energy Regulatory Commission (FERC), which has proposed to abolish the
Governor-appointed board and replace it with a board selected by ISO
market participants from candidates identified by an executive search
firm.
"Public utility electric transmission facilit(ies)" include the
transmission facilities owned by Pacific Gas & Electric (PG&E),
Southern California Edison (SCE), and San Diego Gas & Electric
(SDG&E), whose operation is under the control of the ISO. As such,
this measure would require, at least as a matter of state law, that
PG&E, SCE, SDG&E, and the ISO be subject to the exclusive authority of
the state. So long as these electric transmission facilities are
inter-tied to facilities in adjacent states, there would a conflict
between this measure and the Federal Power Act, and an argument as to
whether the California Constitution may be preempted by federal law.
COMMENTS
1.Can exclusive state authority be reclaimed? This measure is the
strongest possible statement that public utility electric
transmission facilities should not be turned over to entities
subject to federal, rather than state or local, regulation. If this
measure is enacted, the California Constitution would prohibit the
existing, FERC-regulated ISO apparatus and the ISO would either have
to submit to exclusive state authority, or be replaced with another
entity subject to exclusive state authority.
Complicating the actual effect of this measure is that the ISO is
FERC-regulated as a consequence of its operation of privately-owned
transmission facilities engaged in interstate commerce, not because
the state has granted jurisdiction to FERC. Further, the state's
lack of authority over public utility electric transmission
facilities is not due to a failure to confer sufficient authority in
the California Constitution, it is due to federal preemption, or
disputed claims of jurisdiction by FERC which have not yet been
finally resolved.
2.Procedural notes. This measure has been double referred to the
Senate Constitutional Amendments Committee. As a constitutional
amendment, this measure will need voter approval on a statewide
ballot in order to take effect.
ASSEMBLY VOTES
Assembly Floor (54-22)*
Assembly Appropriations Committee (13-5)*
Assembly Elections, Reapportionment & Constitutional Amendments
Committee (8-3)*
*Votes reflect a previous, unrelated version of the bill
POSITIONS
Sponsor:
Author
Senator Steve Peace
Support:
Coalition of California Utility Employees
Oppose:
None on file
Lawrence Lingbloom
ACA 12 Analysis
Hearing Date: August 28, 2002