BILL NUMBER: AB 58 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Keeley
(Coauthors: Assembly Members Hertzberg, Kehoe, Leonard, Wesson,
and Wright)
DECEMBER 4, 2000
An act to amend Sections 335, 337, and 338 of, and to add Section
352 to, the Public Utilities Code, relating to public utilities, and
declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 58, as introduced, Keeley. Electrical restructuring: Oversight
Board: Independent System Operator: Power Exchange.
(1) The Public Utilities Act provides for the establishment of an
Independent System Operator and a Power Exchange as separately
incorporated public benefit, nonprofit corporations, each governed by
a governing board composed as prescribed, including, but not limited
to, representatives of specified groups. Existing law provides
that, prior to a specified agreement, the state retains the right to
change the Independent System Operator and the Power Exchange
governing boards into nonstakeholder boards. An Electricity
Oversight Board is established by the act to oversee the Independent
System Operator and the Power Exchange. The board determines the
composition of the governing boards and the terms of service of the
members, and exercises the exclusive right to decline to confirm the
appointments of specific members of the governing boards of the
Independent System Operator and the Power Exchange.
This bill would amend the act to remove those provisions requiring
the governing boards to include those specified representatives.
The bill would make conforming changes regarding the board's
authority. The bill would prohibit the Independent System Operator
from entering into a multistate entity or a regional organization
unless that entry is approved by the board. Since a violation of the
act is a crime, this bill would impose a state-mandated local
program by establishing a new crime. The bill would make related
legislative findings and declarations and statements of legislative
intent.
(2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
(3) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares all of the
following:
(1) In restructuring electricity in 1996, the Legislature
established the Independent System Operator and the Power Exchange,
each with governing boards with designated representatives from the
investor-owned utility transmission owners, publicly owned utility
transmission owners, nonutility electricity sellers, public and
private buyers and sellers, consumers, public interest groups, and
nonmarket participants.
(2) It was the intent of the Legislature and the Governor in
establishing the Independent System Operator and the Power Exchange
that the two organizations would not expose California citizens to
undue economic risk.
(3) It is now necessary to change the structure of governance of
the Independent System Operator and the Power Exchange to ensure that
the economic interests of California's citizens are protected from
an unstable electricity market at least during a period of transition
until a fully functional electricity market is established and
demonstrated.
(4) On November 1, 2000, the Federal Energy Regulatory Commission
(FERC), which regulates the services provided by the Independent
System Operator and the Power Exchange under the Federal Power Act
(16 U.S.C.A. Sec. 791a et seq.), issued an order that, if
implemented, would restructure the governing boards of the
Independent System Operator and the Power Exchange in a manner that
is likely to conflict with existing state law.
(b) It is the intent of the Legislature that the Electricity
Oversight Board, which is responsible for confirming the appointments
to the governing boards of the Independent System Operator and the
Power Exchange, shall make appointments such as it determines to be
appropriate, qualified, and necessary.
SEC. 2. The Legislature further finds and declares all of the
following:
(a) In establishing the Independent System Operator and the Power
Exchange, the Legislature and the Governor intended that the two
entities should evolve into, or otherwise establish through compact
or other agreement, regional transmission organizations to increase
access of consumers to the electricity markets of other states.
(b) In view of the instability of the California electricity
market and the transitional nature of the electricity sector
restructuring, it is premature for the Independent System Operator or
the Power Exchange to undertake steps that would further commit
California citizens to the form and substance of the restructuring
that was originally contemplated unless it has been clearly
established to be in the interest of California's citizens.
(c) Entering into a compact or an agreement that would extend
California's electric sector into a regional transmission grid may
not be appropriate at this time.
SEC. 3. Section 335 of the Public Utilities Code is amended to
read:
335. In order to ensure that the interests of the people of
California are served, a five-member Electricity Oversight Board is
hereby created as provided in Section 336. For purposes of this
chapter, any reference to the Oversight Board shall mean the
Electricity Oversight Board. Its functions shall be all of the
following:
(a) To oversee the Independent System Operator and the Power
Exchange.
(b) To determine the composition of the board and
the terms of service of the members of the board and
to exercise the exclusive right to confirm or decline to
confirm the appointments of specific members of
the governing boards of the Independent System Operator and the Power
Exchange , as specified in subdivision (d) .
(c) To serve as an appeal board for majority decisions of the
Independent System Operator governing board, as they relate to
matters subject to exclusive state jurisdiction, as specified in
Section 339.
(d) Those members of the Independent System Operator and Power
Exchange governing boards whose appointments the Oversight Board has
the exclusive right to decline to confirm include proposed governing
board members representing agricultural end-users, industrial
end-users, commercial end-users, residential end-users, end-users at
large, nonmarket participants, and public interest groups.
SEC. 4. Section 337 of the Public Utilities Code is amended to
read:
337. The Oversight Board shall have the exclusive right to
approve procedures for the election and submission for confirmation
and the qualifications for Independent System Operator governing
board members specified in subdivision (d) of Section 335
, all of whom shall be required to be electricity consumers
in the area served by the Independent System Operator. The
Independent System Operator governing board shall include, but not
be limited to, representatives of investor-owned utility transmission
owners, publicly owned utility transmission owners, nonutility
electricity sellers, public buyers and sellers, private buyers and
sellers, industrial end-users, commercial end-users, residential
end-users, agricultural end-users, public interest groups, and
nonmarket participant representatives. A simple majority of the
board shall consist of persons who are themselves unaffiliated with
electric generation, transmission or distribution corporations. The
structural composition of the Independent System Operator governing
board existing on July 1, 1999, shall remain in effect until an
agreement with a participating state is legally in effect. However,
prior to such an agreement, California shall retain the right to
change the Independent System Operator governing board into a
nonstakeholder board. In the event of such a legislative change,
revised bylaws shall be filed with the Federal Energy Regulatory
Commission under Section 205 of the Federal Power Act (16 U.S.C.A.
Sec. 824d).
SEC. 5. Section 338 of the Public Utilities Code is amended to
read:
338. The Oversight Board shall have the exclusive right to
approve procedures and the qualifications for Power Exchange
governing board members specified in subdivision (d) of
Section 335 , all of whom shall be required to be
electricity customers in the area served by the Power Exchange.
The Power Exchange governing board shall include, but not be
limited to, representatives of investor-owned electric distribution
companies, publicly owned electric distribution companies, nonutility
generators, public buyers and sellers, private buyers and sellers,
industrial end-users, commercial end-users, residential end-users,
agricultural end-users, public interest groups, and nonmarket
participant representatives. The structural composition of the Power
Exchange governing board existing on July 1, 1999, shall remain in
effect until an agreement with a participating state is legally in
effect. However, prior to such an agreement, California shall retain
the right to change the Power Exchange governing board into a
nonstakeholder board. In the event of such a legislative change,
revised bylaws shall be filed with the Federal Energy Regulatory
Commission under Section 205 of the Federal Power Act (16 U.S.C.A.
Sec. 824d).
SEC. 6. Section 352 is added to the Public Utilities Code, to
read:
352. The Independent System Operator may not enter into a
multistate entity or a regional organization as authorized in Section
359 unless that entry is approved by the Oversight Board.
SEC. 7. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
SEC. 8. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to make the Independent System Operator and the Power
Exchange more accountable to the people of this state by eliminating
stakeholder governing boards, thereby acting to mitigate the state's
current energy crisis, it is necessary for this act to take effect
immediately.