BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 31X
Author: Burton (D)
Amended: 5/7/01
Vote: 21
SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : 49-29, 5/7/01 - See last page for vote
SUBJECT : Electric power
SOURCE : Author
DIGEST : This bill caps the State Department of Water
Resources revenue bond authority at $13.4 billion with
respect to purchases of power, requires repayment to the
State General Fund be made as soon as practicable and makes
other clarifying and technical changes to the State
Department of Water Resources ' electricity purchase and
sales programs.
Assembly Amendments delete the previous version. As it
left the Senate, the bill was authored by Senator Bowen and
required appointments to the governing board of the
Independent System Operator be for three years, with
staggered terms, and required Senate confirmation.
ANALYSIS : Current law establishes a process for DWR to
buy electricity and sell it directly to customers using the
investor-owned utilities (IOUs) as billing and collection
agents. In connection with such purchases and sales, DWR
CONTINUED
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is authorized to issue bonds in compliance with a statutory
formula.
This bill caps the State Department of Water Resources
(DWR) bond authority at $13,423,000,000 with respect to
purchases of power, requires that repayment to the State
General Fund and DWR be made as soon as practicable,
prohibits revenues of the DWR Electric Power Fund from
being used to pay for any under-collected amount due to any
electrical corporation or to any entity to which the amount
has been assigned, and makes other clarifying and technical
changes to the DWR electricity purchase and sales program.
Specifically, this bill:
1.Provided for expedited review of a cause of action
arising out of implementation of AB 1X (Keeley).
2.Provides that no CPUC order interpreting or implementing
AB 1X shall be subject to review in the courts of
appeal.
3.Makes clarifying and technical changes to the appellate
review process and writ of review timelines applying to
judicial review of a CPUC order relating to AB 1X.
4.Authorizes DWR to contract with an electrical
corporation and its successor to transmit and distribute
all power made available by DWR, and other related
services, on terms and conditions that adequately secure
payment to DWR.
5.Requires CPUC, at request of DWR, to order an electrical
corporation or its successor to transmit and distribute
all power made available by DWR, and other related
services, on terms and conditions that adequately secure
payment to DWR.
6.Authorizes DWR to authorize the issuance of bonds
(excluding notes issued in anticipation of the issuance
of bonds and retired from the proceeds of those bonds)
in an aggregate amount up to the greater of
$13,423,000,000 or the amount calculated by multiplying
by a factor of four the annual revenues generated by the
California Procurement Adjustment, as determined by the
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CPUC. Until the effective date of this bill, DWR is
authorized to use the formula as specified in ABX 1, but
not to exceed the $13,423,000,000 total cap
7.Provides that the refunding of bonds to obtain a lower
interest rate shall not be included in the calculation
of the aggregate amount.
8.Provides that bonds issued in a public offering are sold
at investment grade ratings and repaid on a timely basis
from pledged revenues.
9.Requires that repayment to the General Fund and DWR be
made as soon as practicable.
10.Provides that, after November 15, 2001, the State
Department of Finance (DOF) deficiencies pursuant to AB
1 X1, shall be limited to amounts required for
short-term cash flow purposes of no more than $500
million in the aggregate and shall be repaid from the
DWR Electric Power Fund within 180 days.
11.Requires DOF to certify to the Joint Legislative Budget
Committee and the Senate Appropriations Committee as to
the need for a short-term cash flow loan not less than
ten days prior to the written notification, and repeal
these provisions as of January 1, 2003.
12.Prohibits revenues of the DWR Electric Power Fund
established pursuant to AB X1 from being used to pay for
any undercollected amount due to any electrical
corporation or to any entity to which the amount has
been assigned.
13.Makes other clarifying and technical changes to DWR
electricity purchase and sales program.
Comments
AB 1X (Keeley, Chapter 4, Statutes of 2001) authorized DWR
to purchase power and then sell it to consumers,
appropriated $500 million for this purpose, and authorized
DWR to sell revenue bonds. In February of this year,
pursuant to AB 1X, DWR stepped in and assumed the
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utilities' role of procuring power.
AB 1X established a process for DWR to assume that role and
created a direct relationship between DWR and the customer
- the utility was charged only with providing billing and
collection services. The vast majority of DWR's purchases
have been funded via loans from the state's General Fund,
and rates remitted by Pacific Gas and Electric Company and
Southern California Edison have not been sufficient to
cover DWR's purchase costs.
DWR intends to finance its purchases through the sale of
bonds and levelize charges to its customers to ensure those
bonds will be repaid. That financing has been delayed
because of uncertainties in the legislation and,
apparently, challenges to the CPUC decisions implementing
that legislation. This bill attempts to clear up some of
that ambiguity in order to facilitate the financing process
and ensure the monies advanced from the General Fund will
be paid back.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR :
AYES: Alquist, Aroner, Calderon, Canciamilla, Cardenas,
Cardoza, Cedillo, Chan, Chavez, Cohn, Corbett, Correa,
Diaz, Dutra, Firebaugh, Florez, Frommer, Goldberg,
Havice, Horton, Jackson, Keeley, Kehoe, Koretz, Liu,
Longville, Lowenthal, Matthews, Migden, Nakano, Nation,
Negrete McLeod, Oropeza, Papan, Pavley, Pescetti, Reyes,
Salinas, Shelley, Simitian, Steinberg, Strom-Martin,
Thomson, Vargas, Washington, Wayne, Wesson, Wiggins,
Hertzberg
NOES: Aanestad, Ashburn, Bates, Bogh, Briggs, Bill
Campbell, John Campbell, Cogdill, Cox, Daucher,
Dickerson, Harman, Hollingsworth, Kelley, La Suer, Leach,
Leonard, Leslie, Maddox, Maldonado, Mountjoy, Robert
Pacheco, Rod Pacheco, Richman, Runner, Strickland,
Wyland, Wyman, Zettel
NC:kb 5/8/01 Senate Floor Analyses
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SUPPORT/OPPOSITION: NONE RECEIVED
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