BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 80
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 80 (Havice)
          As Amended August 26, 2002
          Majority vote
           
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          |ASSEMBLY:  |     |(June 5, 2002)  |SENATE: |26-2 |(August 28,    |
          |           |     |                |        |     |2002)          |
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               (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
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           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
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          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  



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