BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 69|
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THIRD READING
Bill No: AB 69
Author: Wright (D), et al
Amended: 7/17/01 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 6-0, 7/10/01
AYES: Bowen, Morrow, Alarcon, Battin, Murray, Vincent
ASSEMBLY FLOOR : Not relevant
SUBJECT : Electricity: governmental entities in Los
Angeles County:
contracts
SOURCE : Los Angeles County Board of Supervisors
Los Angeles Community College District
DIGEST : This bill waives the reciprocity requirement in
current law to permit the Los Angeles Department of Water
and Power (LADWP) to sell power to specified customers of
Southern California Edison (SCE) without allowing SCE to
sell power to LADWP's customers.
ANALYSIS : Current law bars municipal utilities from
providing electric service to retail customers of
investor-owned utilities (IOUs) unless the customer
confirms in writing an obligation to pay a
generation-related transition charge established by the
California Public Utilities Commission (CPUC).
Current law bars one utility from selling to the customers
CONTINUED
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of another utility unless the two utilities enter into a
reciprocity agreement whereby each is allowed to sell power
to the retail customers of the other.
This bill gives five specified governmental agencies (the
County of Los Angeles, the Los Angeles Unified School
District, the Los Angeles County Metropolitan
Transportation Authority, the Los Angeles County Office of
Education, and the Los Angeles Community College District)
the ability to buy power from LADWP. Such service will be
via a "direct access" arrangement whereby LADWP provides
the power that's transported over SCE's electric
distribution grid. It's estimated that the total load
eligible to be shifted to LADWP under this bill will be
about 125 megawatts.
This bill requires any entity that takes advantage of the
option given to it under this bill to pay Department of
Water Resources (DWR) for the difference between DWR's
actual cost of providing electricity and the rate charged
by DWR for that electricity. This difference results from
the fact that DWR's costs for electricity currently exceed
the revenues it receives. That difference will be financed
by customers through the sale of bonds which have already
been authorized by the Legislature.
The bill also allows the CPUC to limit the right of these
customers to obtain service form LADWP to the extent such
limitation is necessary to ensure DWR's ability to meet its
obligation to repay the bonds.
According to Senate Energy, Utilities and Communications
Committee:
The issue of direct access has been the subject of a great
deal of discussion in the Legislature and at the CPUC in
recent weeks. Direct access is a relatively simple notion
- instead of being required to buy power from the municipal
or IOU where the person or business is located, that person
or business can choose to buy power directly from another
supplier.
The direct access issue became complicated in January when
DWR began buying power on behalf of SCE's customers (and
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customers of Pacific Gas and Electric and San Diego Gas and
Electric) as a result of SB 7X (Burton), Chapter 3,
Statutes of 2001. It was further complicated in February
when DWR began entering into long-term contracts to buy
power for customers of the IOUs as a result of AB 1X
(Keeley), Chapter 4, Statutes of 2001.
The "complication" is that DWR's procurement costs are
higher than current rates and DWR has incurred debt for
each customer served since it began procuring power for IOU
customers in January.
Related legislation
AB 54X (Wright), a similar bill, was constituted in the
First Extraordinary session (with 11 members, instead of
the nine members who constitute the regular session
committee).
AB 9XX (Migden) makes it easier for communities to
aggregate their power purchases and enter into direct
access transactions.
AB 11XX (Wright) is similar to this measure.
AB 42XX (Kelley) is similar to SB 27XX (described below)
but provides for a number of exemptions to the requirement
that customers leaving IOU/DWR service have to repay DWR
for the benefit they've received in order to ensure that
power costs don't get shifted to other customers.
SB 1172 (Kuehl) permits certain customers that straddle the
LADWP service line and receive part of their service from
LADWP to opt to receive all of their service from LADWP.
SB 8XX (Alarcon) permits LADWP (or any other municipal
utility) to sell that power to communities that choose to
aggregate their power purchases.
SB 23XX (Soto) makes it easier for local governments to
form their own municipal utility districts.
SB 27XX (Bowen) requires any entity that purchases power
from a direct access provider to repay DWR for the cost of
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the power it's purchased on behalf of that customer and
ensures that future contract costs aren't shifted to other
customers who can't or don't take advantage of the ability
to buy power through a direct access arrangement. That
bill was defeated on the Senate Floor on July 5, but it may
be reconsidered in the future.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/17/01)
Los Angeles County Board of Supervisors (co-source)
Los Angeles Community College District (co-source)
City of Los Angeles
Los Angeles Unified School District
NC:sl 7/17/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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