BILL ANALYSIS AB 80 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 80 (Havice) As Amended August 26, 2002 Majority vote ----------------------------------------------------------------- |ASSEMBLY: | |(June 5, 2002) |SENATE: |26-2 |(August 28, | | | | | | |2002) | ----------------------------------------------------------------- (vote not relevant) Original Committee Reference: E. S. & T. M. SUMMARY : Authorizes the cities participating in the Magnolia Power Project to aggregate their electricity loads and provide direct electricity access to their residents. The Senate amendments delete the Assembly version of this bill, and instead: 1)Authorize the cities participating in the Magnolia Power Project to act as community aggregators and provide direct access service to their residents. 2)Require the California Public Utilities Commission (PUC) to develop a cost recovery mechanism for DWR's uncollected costs, including financing, of providing service to those customers who subsequently receive service from the cities of San Marcos and Cerritos. EXISTING LAW : 1)Authorizes retail competition within investor-owned utility (IOU) service areas (direct access) and authorizes marketers, public agencies, cities, counties, and special districts to offer electric service to customers aggregated on a voluntary basis, provided that each customer in their jurisdiction agrees to participate by a positive written declaration (community aggregation). 2)Requires the PUC to suspend the right of retail customers of IOUs to acquire electric power service from non-IOU providers until the Department of Water Resources (DWR) no longer supplies power to IOU customers. AB 80 Page 2 AS PASSED BY THE ASSEMBLY , this bill directed school districts to require district level maintenance supervisors to participate in training by the Department of Health Services through its California Lead-Safe Schools Project. FISCAL EFFECT : Unknown COMMENTS : Law enacted last year [AB 1X (Keeley), Chapter 4, Statutes of 2001] requires PUC to suspend the right of retail customers of IOUs to acquire electric power service from non-IOU providers until DWR no longer supplies power to IOU customers. Pursuant to AB 1X, the PUC suspended direct access effective September 20, 2001. This bill authorizes the cities participating in the Magnolia Power Project to act as community aggregators and provide direct access service to their residents. The two cities are San Marcos and Cerritos and most of the residents currently receive their electricity from Southern California Edison. The bill requires the PUC to develop a cost recovery mechanism for DWR's uncollected costs, including financing, of providing service to those customers who subsequently receive service from the cities of San Marcos and Cerritos. Community aggregation is a form of direct access by which a municipality may act as a purchasing agent on behalf of its residents. Among other things, AB 1X permits the issuance of ratepayer-backed revenue bonds to finance DWR purchasing costs. To ensure the predictable revenue stream necessary for the issuance of bonds and prevent cost shifting from direct access to bundled service customers, the PUC was authorized to prevent additional migration of IOU customers by suspending direct access. The cities affected by this bill (Cerritos and San Marcos) are partners in the development of the Magnolia Power Project, along with five other cities (Anaheim, Colton, Glendale, Burbank and Pasadena) which operate municipal electric utilities. Magnolia is currently under review at the California Energy Commission (CEC). The CEC projects a decision on the project in August, and, if approved, an on-line date of August 2004. According to the author, Cerritos and San Marcos were relying on direct AB 80 Page 3 access to sell their share of the output of Magnolia to their residents and committed $5 million to Magnolia prior to the CPUC's suspension of direct access. Proponents suggest the bill will allow the cities to sell their share of the output of Magnolia to their residents. Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083 FN: 0007672