BILL ANALYSIS
Appropriations Committee Fiscal Summary
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| |57(Wright) |
|-------------------------------+----------------------------|
| | |
|-------------------------------+----------------------------|
|Hearing Date: 9/14/01 |Amended: 7/18/01 and |
| |proposed to be amended |
|-------------------------------+----------------------------|
|Consultant: Lisa Matocq |Policy Vote: E, U & C |
| |5-3 |
| | |
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BILL SUMMARY: AB 57 restructures the "reasonableness
review" process, conducted by the Public Utilities
Commission (PUC), for energy procurement contracts of
electrical corporations (ECs), directs ECs to establish and
maintain a diversified procurement portfolio, and makes
related changes.
Fiscal Impact (in thousands)
Major Provisions 2001-02 2002-03
2003-04 Fund
PUC $600 annually*, potentially offset by fee
Special*
revenues
Office of Ratepayer $350 annually, potentially offset by fee
Special*
Advocate (ORA) revenues
*Appropriated in the bill. Public Utilities' Reimbursement Account
(PURA)
STAFF COMMENTS: The author intends to propose substantive
amendments which are reflected in this analysis. Current
law requires investor-owned utilities' rates to be just and
reasonable, and authorizes the PUC to conduct a
"reasonableness review" of such charges. This bill, among
other things, is intended to eliminate the need for
after-the-fact reasonableness reviews by requiring ECs to
submit procurement plans in advance. Existing law also
prohibits the Department of Water Resources (DWR) from
entering into power purchase contracts after January 1,
2003. The bill:
requires each EC to submit to the PUC a procurement plan,
by a specified date, that contains certain components
such as (1) a competitive procurement process, and (2) a
diversified portfolio of both short- and long-term
contracts,
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 5% of the EC's actual recorded generation
revenues for the prior calendar year,
appropriates $600,000 to the PUC from the PURA,
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,
allows the PUC to periodically review and modify the
plan,
requires the PUC to, by January 1, 2002, determine the
allocation of electricity to be provided by DWR,
authorizes the PUC to contract out for risk
management/strategy services,
Page Two
AB 57 (Wright)
allows an EC with less than 500,000 retail customers to
be exempted from these provisions,
requires the PUC to, 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,
and makes related changes.
Increased costs to the PUC are about $600,000 annually. In
addition, the ORA estimates increased costs of about
$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.
SB 997 (Morrow), pending in the Senate, allows the use of
forward or bilateral contracts.