BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 57|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 57
Author: Wright (D)
Amended: 9/14/01 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 5-3, 7/10/01
AYES: Morrow, Alarcon, Battin, Murray, Vincent
NOES: Bowen, Sher, Speier
SENATE APPROPRIATIONS COMMITTEE : Not available
ASSEMBLY FLOOR : 65-0, 5/24/01 - See last page for vote
SUBJECT : Electrical energy: contracts
SOURCE : Author
DIGEST : This bill restructure the reasonableness review
process, conducted by the California Public Utilities
Commission, for energy procurement contracts of electrical
corporations, directs electrical corporations to establish
and maintain a diversified procurement portfolio, and makes
related changes.
ANALYSIS : Existing law requires that charges demanded or
received by an investor-owned utility (IOU) be just and
reasonable and assigns responsibility for ensuring the
reasonableness of such charges to the California Public
Utilities Commission (PUC).
This bill, among other things, is intended to eliminate the
CONTINUED
AB 57
Page
2
need for after-the-fact reasonableness reviews by requiring
electrical corporations (ECs) to submit procurement plans
in advance. Existing law also prohibits the State
Department of Water Resources (DWR) from entering into
power purchase contracts after January 1, 2002.
This bill :
1.Requires each EC to submit to the PUC a procurement
plan, by a specified date, that contains certain
components such as a competitive procurement process and
a diversified portfolio of both short- and long-term
contracts.
2.Authorizes the PUC to, until January 1, 2006, establish
balancing accounts for each of the ECs to track the
differences between recorded revenues and costs
incurred, and to adjust rates or issue refunds to
amortize a balancing account whenever it is under- or
over-collected by more than five percent of the EC's
actual recorded generation revenues for the prior
calendar year.
3.Appropriates $600,000 to the PUC from the Public
Utilities' Reimbursement Account (PURA).
4.Requires the PUC to adopt a plan, no later than 60 days
prior to the proposed date by which the EC intends to
resume procurement.
5.Allows the PUC to periodically review and modify the
plan.
6.Requires the PUC to, by January 1, 2002, determine the
allocaiton of electricity to be provided by DWR.
7.Authorizes the PUC to contract out for risk
management/strategy services.
8.Allows an EC with less than 500,000 retail customers to
be exempted from these provisions.
9.Requires the PUC to adopt ratemaking procedures to
ensure than an EC's customers remain obligated for, and
AB 57
Page
3
pay, their proportionate share of the EC's obligations
under its procurement contracts.
10.Requires the PUC, prior to its approval of any
divestiture of generation assets owned by an EC on
September 1, 2001, determine the impact of the
divestiture on the EC's procurement rates and allows
approval only if the PUC determines that the divestiture
will result in net ratepayer benefits.
11.Makes related changes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Increased costs to the PUC are approximately $600,000
annually. In addition, the Office of Ratepayer Advocate
estimates increased costs of approximately $350,000
annually. PURA revenues are derived from an annual fee
charged by the PUC to public utilities, sufficient to cover
the PUC's annual budget. Therefore, increased costs should
be recovered through fee revenues.
ASSEMBLY FLOOR :
AYES: Aanestad, Alquist, Ashburn, Bates, Bogh, Briggs,
Calderon, Bill Campbell, John Campbell, Canciamilla,
Cardenas, Cardoza, Cedillo, Chavez, Chu, Cohn, Correa,
Cox, Daucher, Diaz, Dickerson, Dutra, Firebaugh, Florez,
Harman, Havice, Hollingsworth, Horton, Keeley, Kelley,
Koretz, La Suer, Leach, Leonard, Leslie, Liu, Maddox,
Maldonado, Matthews, Mountjoy, Nakano, Nation, Oropeza,
Robert Pacheco, Rod Pacheco, Papan, Pavley, Pescetti,
Reyes, Richman, Runner, Salinas, Simitian, Steinberg,
Strickland, Strom-Martin, Thomson, Vargas, Wesson,
Wiggins, Wright, Wyland, Wyman, Zettel, Hertzberg
NC:cm 9/14/01 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****