BILL ANALYSIS
AB 54 X1
Page 1
Date of Hearing: February 20, 2001
ASSEMBLY COMMITTEE ON ENERGY COSTS AND AVAILABILITY
Roderick D. Wright, Chair
AB 54 X1 (Wright) - As Introduced: February 14, 2001
SUBJECT : Electricity: governmental entities in Los Angeles
County: contracts.
SUMMARY : Permits specified governmental entities that are
served by the Southern California Edison (SCE) Company within
Los Angeles County to purchase electricity for use in those
areas from the Los Angeles Department of Water and Power
(LADWP). Specifically, this bill :
1)Permits specified governmental entities to enter into a direct
transaction contract for electricity to be delivered for use
within the geographic boundaries of the County of Los Angeles
to be served by SCE.
1)Exempts the sales from specified generation-related transition
charges.
1)Requires that the electricity be used only for facilities
owned or leased by a governmental entity that are used for
governmental purposes, and prohibits reselling the
electricity.
2)Contains an urgency clause
EXISTING LAW :
1)Prohibits a local publicly-owned electric utility or an
investor-owned utility (IOU) from selling electric power to
the retail customers of another city or municipally-owned
electric utility or IOU unless the first utility has agreed to
let the second utility make sales of electric power to the
retail customers of the first utility.
1)Requires that a customer of a public utility that purchases
electricity through a direct transaction contract pay certain
generation-related transition charges.
FISCAL EFFECT : Unknown.
AB 54 X1
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COMMENTS :
1)Local Agencies' Power Needs . Facing mounting cash-flow
problems, SCE is no longer able to procure power for its
customers beyond what it produces through its retained
generation assets. ABX 1 (Keeley, Ch. 4, Statutes of 2001),
signed into law earlier this month, requires the Department of
Water Resources to cover the full "net short" of the IOUs, and
to a limited extent, the net short of municipal utilities. The
net short is the electricity needs of customers that are not
met by the generation resources owned or under contract to the
utilities. Unlike the IOUs, LADWP has surplus generating
capacity. It is a "net seller" of electricity; it sells more
than it buys in the wholesale electricity market. In Los
Angeles County, there are numerous local agencies in which
part of the geographical area served by the agency is served
by SCE and the remaining parts are served by LADWP. This bill
would allow specified local agencies and school districts
located in the SCE service territory to purchase power from
LADWP. The list of eligible public agencies includes 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 electricity
purchased could only be used for facilities owned and leased
by the governmental entity and used to perform governmental
services, and could not be resold by the governmental entity.
1)Purpose of the Bill . LADWP is the only utility in the state
that is a net seller of electricity. By allowing local
agencies to buy more of their electricity from LADWP, this
bill would reduce demand on SCE by approximately 120 MW, which
is one-third of the 360 MW shortfall during a Stage Three
emergency, when reserves drop below 1.5 percent. This measure
would also reduce energy costs for specified local public
agencies and educational institutions, including Los Angeles
Unified School District, the largest school district in the
state. This would reduce the need to reimburse the agencies
for high energy costs, as several measures currently in the
Assembly would do.
1)Reciprocal Competition . Competition between utilities, both
public and private, is prohibited unless the right to compete
for customers is reciprocal. Under AB 1890 (Brulte), [Chapter
AB 54 X1
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854, Statutes of 1996), an IOU or publicly-owned electric
utility cannot enter into a direct access relationship with
customers in the service territory of another publicly-owned
electric utility or IOU unless it has agreed to let the other
utility sell power to its own customers. This bill permits
specified governmental entities that are served by SCE within
Los Angeles County to purchase electricity for use in those
areas from LADWP, and would not require reciprocity of
electricity sales be provided to SCE.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles Community College District
Los Angeles Unified School District
Opposition
None on file.
Analysis Prepared by : Joseph Lyons / E. C. & A. / (916)
319-2083