BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2523
                                                                  Page  1

          Date of Hearing:  May 22, 2002

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                  AB 2523 (Canciamilla) - As Amended:  May 16, 2002 

          Policy Committee:                              Utilities and  
          Commerce     Vote:                            16-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill requires that, if the Public Utilities Commission  
          (PUC) determines the electrical rate increases adopted in May  
          2001 should be reduced prior to January 2006, any reductions  
          must be allocated among an electrical corporation's customer  
          classes in proportion to the last year's rate increases. 

           FISCAL EFFECT  

          Absorbable special fund costs to the PUC.  [Public Utilities  
          Reimbursement Account]

           COMMENTS  

           1)Background  . In May 2001, the PUC approved a 3.5-cent/kWh rate  
            increase to provide revenue for covering costs incurred by the  
            Department of Water Resources since assuming the net power  
            purchase responsibility of the investor-owned utilities  
            effective January 18, 2001.  The PUC's decision, and statutory  
            provisions of AB X1 1 (Keeley) prohibited the PUC from  
            imposing electric rate increases for residential consumption  
            below 130 percent of the customer's baseline level, medical  
            baseline customer usage, and for the California Alternate  
            Rates for Energy (CARE) customers. 

           2)Purpose  .  The author notes the exemptions to last year's rate  
            increase shifted the burden of the increase to some  
            residential users (those consuming above 130% of baseline),  
            but mostly to commercial and industrial users-particularly  
            large users, who experienced increases of  40% to more than  
            70%.  This bill is intended to provide policy guidance to the  








                                                                  AB 2523
                                                                  Page  2

            PUC any future reductions of that rate increase should be  
            allocated to affected customers in proportion to the manner in  
            which the burden was assumed.

           Analysis Prepared by  :  Chuck Nicol / APPR. / (916) 319-2081