BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 57
                                                                  Page  1

          Date of Hearing:   May 16, 2001

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Carole Migden, Chairwoman

                    AB 57 (Wright) - As Amended:  April 26, 2001 

          Policy Committee:                               
          UtilitiesVote:14-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill establishes legislative intent regarding power  
          purchasing contracts by the electrical utilities and standards  
          of reasonableness for those contracts.  Specifically, this bill:  


          1)Declares legislative intent that the utilities, when they  
            resume purchasing electricity for their customers, shall have  
            contracts for up to 10 years that will supply 50% to 95% of  
            their purchasing needs.  

          2)Establishes that such a portfolio is not subject to  
            reasonableness review by the Public Utilities Commission  
            (PUC).  

          3)Requires the PUC to deem reasonable, and prohibits  
            after-the-fact reviews of, power purchase contracts meeting  
            various guidelines specified in the bill.  

          4)Requires the utilities to file their forward contracts with  
            the PUC on a quarterly basis, and authorizes the PUC to verify  
            compliance with the contracting guidelines.  

          5)Requires the PUC to establish electric rates so that utility  
            customers pay for their proportionate share of the utilities'  
            long-term contract obligations.

           FISCAL EFFECT  

          Cost savings to the PUC from avoided reasonableness reviews.









                                                                  AB 57
                                                                  Page  2

           COMMENTS  

           Purpose  .  AB 57 requires the PUC to forego the standard  
          reasonableness reviews generally applied to contracts for  
          generated electricity entered into by electrical corporations,  
          under specified conditions, to better facilitate the  
          investor-owned utilities continued pursuit of such contracts.   
          This bill is intended to ensure that sufficient additional  
          electrical supply is provided through long term contracts to  
          provide both a dedicated supply for customers and a fixed price  
          for the contract term.  Elimination of the reasonableness review  
          process if specified terms are met is intended to ensure that  
          contract terms can be locked in to help lower the overall cost  
          of such contracting and encourage generators to engage in long  
          term contracting with the limited oversight now required.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081