BILL ANALYSIS
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THIRD READING
Bill No: ACA 12
Author: Vargas (D)
Amended: 8/22/02 in Senate
Vote: 27
SENATE ENERGY, U.&C. COMMITTEE : 5-2, 8/28/02
AYES: Bowen, Alarcon, Dunn, Murray, Speier
NOES: Morrow, Battin
SENATE CONST. AMENDMENTS COMMITTEE : 3-1, 8/29/02
AYES: Bowen, O'Connell, Sher
NOES: Haynes
SENATE APPROPRIATIONS COMMITTEE : 7-4, 8/31/02
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Murray,
Perata
NOES: Battin, Johnson, McPherson, Poochigian
ASSEMBLY FLOOR : Not relevant
SUBJECT : Public utilities: control
SOURCE : Senator Steve Peace
DIGEST : This Constitutional Amendments attempts to
mandate state control of the states electric transmission
grid by specifying that the people of this state have the
exclusive right to protect their health, safety, and
welfare by ensuring the availability of a reliable,
adequate, and affordable supply of electricity," and by
prohibiting the Legislature, the Public Utilities
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Commission, or any state or local entity from allowing any
entity that is not subject to the exclusive authority of
the people, through state agencies or political
subdivisions, from owning or managing an electric
transmission facility.
ANALYSIS : Existing state law:
Article XII of the California Constitution authorizes the
Public Utilities Commission to establish rates and rules
for all public utilities subject to its jurisdiction. The
Public Utilities Act generally prohibits any public utility
from transferring or encumbering utility property that is
necessary or useful in the performance of its duties to the
public without an order by the Commission.
Existing federal law:
The Federal Power Act (U.S.C. Sec 791a et. Seq) 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 (Section 9).
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 (Section
10).
Comments :
According to the author, ACA 12 is designed to accomplish
two primary objectives. The first is to clarify the
connection between the activities of the ISO, the health,
safety and welfare of the people of California and a
reliable, adequate and affordable supply of electricity.
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The second is to ensure that the right of the people to
protect their health, safety and welfare cannot be
undermined by allowing for the control of electricity
transmission facilities by an entity other than one
responsible to the people of California.
Federal - state showdown:
Although ACA 12 declares that public utility electric
transmission facilities should be subject to the exclusive
control of the State of California and its agencies, there
is a serious jurisdictional question as to whether ACA 12,
if enacted, would be preempted by federal law.
It is the option of the Legislative Counsel (request number
16784 dated August 28, 2002) that Section 9 of ACA 12,
which holds the Independent System Operator answerable to
the people of California, may be inconsistent with federal
law.
"...In our opinion, a court would conclude that this
provision grants to the people of this state only the right
to hold those responsible for a reliable, adequate, and
affordable supply of electricity answerable to them where
consistent with federal law, and would not grant the people
of this state the right to hold the Independent System
Operator answerable to them where inconsistent with federal
law."
"...Proposed Section 10 of Article XII of the California
Constitution, if enacted and approved by the voters, would
prohibit any person or entity, including the Legislature,
the Public Utilities Commission, local government, and
state officers, from allowing any institution, public or
private, that is not subject to the exclusive authority of
the people of the state to own, operate, control, or manage
any public utility electric transmission facility. In our
opinion, a court would hold that Section 10 is inconsistent
with the Federal Energy Regulatory Commission's
jurisdiction over the rates, terms, and conditions of
wholesale transmission and unbundled retail transmission
and over the Independent System Operator in particular,
and, therefore, is preempted by federal law."
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It is the author's hope to have ACA 12 approved before the
adjournment of the current legislative session and placed
before voters at the next statewide election - currently
scheduled for March 2004.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/27/02)
Coalition of California Utilities Employees
NC:jk 8/31/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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