BILL ANALYSIS
Appropriations Committee Fiscal Summary
43 (Alpert)
Hearing Date: 3/5/01 Amended: 3/1/01
Consultant: Lisa Matocq Policy Vote: E, U & C
6-0
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BILL SUMMARY: SB 43x, an urgency bill, extends the
existing rate freeze of $0.065/kwh that applies to San
Diego Gas & Electric Company's (SDG&E) residential, small
and medium commercial (less than 100 kw), and street
lighting customers, to all other customers, effective
February 7, 2001, as specified.
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02
2002-03 Fund
Reimbursement loss -------See Staff Comments Below------
Gen/Spec*
PUC staff $ 27 $ 106
Unknown Special**
*Electric Power Fund
**Public Utilities Commission Utilities' Reimbursement Account
STAFF COMMENTS: AB 1x (Keeley, Ch. 4, St. of 2001), among
other things, authorized the Department of Water Resources
(DWR) to purchase power and sell it to consumers. DWR has
been purchasing power, with General Fund monies, at an
average rate of about $50 million/day (the General Fund is
to be reimbursed when revenue bonds are issued). DWR is
currently purchasing about 63% of SDG&E's load, or roughly
10.7 billion kwh annually, of which about 61% represents
customers subject to the existing rate freeze. It is
likely that extending the rate freeze to the remaining 39%,
or 4.1 billion kwh, will result in decreased reimbursements
(from ratepayers for energy consumption) of an unknown, but
potentially significant, amount. For illustrative
purposes, if DWR purchased power at $0.020/kwh, and the
energy component of the frozen rate is $0.05/kwh, the
difference (reimbursement loss) of $0.015 on 4.1 billion
kwh would be $615 million annually (as long term contracts
are secured, the undercollection should be reduced).
However, AB 1x requires the California Public Utilities
Commission (CPUC) to establish rates sufficient to cover
DWR's "revenue requirements" (costs) therefore, any
reimbursement loss resulting from this bill initially
should be recovered through CPUC's ratemaking authority.
STAFF RECOMMENDS that the bill be amended to clarify that
DWR's undercollection shall be included as a "revenue
requirement" as defined in AB 1x and therefore recoverable.
AB 265 (Davis, Ch, 328, St. of 2000), effective June 1,
2000, established a rate cap of $0.065/kwh for SDG&E's
residential, small and medium commercial, and street
lighting customers through December 31, 2002. The rate
freeze may be extended by one year if the CPUC finds it in
the public interest. The bill also required CPUC to
establish an accounting procedure to track and recover
reasonable and prudent costs, through its ratemaking
authority, after a hearing.
CPUC staff indicate they may need two staff positions to
comply with the provisions of this bill. It is unclear
whether these staff positions would be needed beyond
2001-02.