BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 43 X1
                                                                  Page  1

          Date of Hearing:  April 2, 2001

                 ASSEMBLY COMMITTEE ON ENERGY COSTS AND AVAILABILITY
                              Roderick D. Wright, Chair
            SB 43 X1 (Alpert) - As Proposed to be Amended:  April 2, 2001
           
          SUBJECT  : San Diego Gas and Electric Company:  rates: Department  
          of Water Resources: revenues.

           SUMMARY  :    Specifically,  this bill  :  

          1)Requires the Public Utilities Commission (PUC) to establish an  
            initial frozen rate of $.065 per kilowatthour (kWh) for all  
            customers of San Diego Gas and Electric Company (SDG&E) not  
            subject to Section 332.1 (b) of the Public Utilities Code.

          2)Requires the PUC to consider the comparable energy components  
            of rates for comparable customer classes by Pacific Gas and  
            Electric (PG&E) and Southern California Edison (SCE), if it  
            determines it to be in the public interest. 

          3)Prohibits any retroactive recovery of undercollections by any  
            investor-owned utilities.

           EXISTING LAW  :

          Establishes a rate ceiling on the energy component of electric  
          bills by residential, small commercial and lighting customers of  
          SDG&E.

           FISCAL EFFECT  :  Unknown

           COMMENTS  :   

           SB 43X removes large industrial customers of SDG&E from the  
          peril of market rates  .  Large industrial customers are the only  
          remaining customer class of SDG&E which remained subject to  
          market rates for electricity after enactment of SB 265.  SB 43X  
          provides for a rate freeze for this remaining customer class  
          retroactive to the date the Department of Water Resources (DWR)  
          began to purchase electricity for California.  The retroactive  
          provision is dated back to February 7, 2001 and any  
          undercollection resulting from the new rate will be provided for  
          by bill credit from SDG&E to its customers going forward.  The  
          payments forwarded from SDG&E to DWR from the effective date of  








                                                                  SB 43 X1
                                                                  Page  2

          the measure will be net of the rate adjustment, but no amount  
          shall flow from DWR to SDG&E.

          Section 332.2 of SB 43X specifically mandates that no investor  
          owned utility shall receive any retroactive recovery of  
          undercollections associated with the rate freeze.  This should  
          incentivize the PUC to develop an appropriate energy rate  
          component going forward to minimize any undercollection to the  
          DWR.
            
          Existing payment provisions Between SDG&E and DWR  Modified.  The  
          measure modifies the payment provisions of SDG&E to DWR with  
          regard to pass through and undercollection associated with the  
          rate freeze.  This is necessary because the energy rate  
          component of these payments will change with the effectiveness  
          of the new rate.  However, the measure does not modify the  
          electric procurement obligations of the DWR pursuant to any  
          contract or agreement in accordance with the Water Code  
          provisions. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file.

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Kelly Boyd / E. C. & A. / (916)  
          319-2083