BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 7X
Author: Burton (D) & Alpert (D)
Amended: 1/18/01
Vote: 27 - Urgency
SENATE ENERGY, U.&C. COMMITTEE : 10-0, 1/18/01
AYES: Bowen, Alarcon, Murray, Speier, Vasconcellos,
Battin, Morrow, Sher, Vincent, Poochigian
SENATE APPROPRIATIONS COMMITTEE : 11-0, 1/18/01
AYES: Alpert, Battin, Bowen, Burton, Escutia, Johnson,
Karnette, McPherson, Murray, Perata, Poochigian
SENATE FLOOR : 34-2, 1/18/01
AYES: Ackerman, Alarcon, Alpert, Battin, Bowen, Brulte,
Burton, Chesbro, Costa, Escutia, Figueroa, Johnson,
Karnette, Knight, Kuehl, Machado, Margett, McPherson,
Monteith, Morrow, Murray, O'Connell, Ortiz, Peace,
Perata, Polanco, Poochigian, Scott, Sher, Soto, Speier,
Torlakson, Vasconcellos, Vincent
NOES: Dunn, McClintock
ASSEMBLY FLOOR : 72-0, 1/18/01 - See last page for vote
SUBJECT : Public utilities: appropriation
SOURCE : Author
DIGEST : The bill appropriates $400 million to the State
Department of Water Resources in order to purchase
electricity and make it available to assist in meeting
CONTINUED
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California energy needs in the short-term, as specified.
Sunsets 2/2/01.
Senate Appropriations Committee made the following changes
to the bill:
1.In no event should a consumer be charged any rate that
would have occurred without the bill.
2.The administrative costs are not to exceed $1 million.
3.Provides that no purchase of electric power entered into
by this bill may extend beyond 2/15/01.
ANALYSIS : Beginning last summer, wholesale prices for
electricity have skyrocketed in California. The IOUs power
procurement costs have been increased dramatically as a
result. Customers of Southern California Edison (SCE) and
Pacific Gas and Electric (PG&E) are currently protected by
the AB 1890 rate freeze (although the CPUC recently
approved an interim order increasing rates for 90 days),
which SCE and PG&E have to absorb the financial costs of
paying extremely high prices to buy wholesale electric
power without being able to recover those costs in retail
rates. The current uncollected out-of-pocket power
procurement costs of SCE and PG&E is currently estimated at
approximately $12 billion.
San Diego Gas and Electric (SDG&E) ratepayers, no longer
protected by the AB 1890 rate freeze, have seen their
energy bills increase substantially beginning last summer.
AB 265 (Davis), Chapter 328, Statutes of 2000, established
a "soft" floating rate cap of 6.5 cents per kWh, with an
undercollection balancing account. Since enactment of AB
265, a continued rise in wholesale electric prices has
caused SDG&E's undercollection to increase substantially,
to $450 million.
SCE and PG&E have indicated that they may be forced to
declare bankruptcy if they do not receive legislative,
regulatory, or judicial relief. Both utilities assert they
need some form of relief. Both utilities assert they need
some form of relief because they face major debt payment
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deadlines. In recent weeks, the utilities have found that
their weakening financial condition has jeopardized their
ability to borrow money to cover their procurement costs.
The Governor on January 17, 2001, declared a state of
emergency to deal with the State's electricity crisis, a
mother which he indicated will allow the State to buy power
in the short term.
SB 7X appropriates $400 million to allow the State
Department of Water Resources to purchase electric power
from and make available to assist in meeting California's
energy needs. This authorization is effective for a 12-day
period. The bill allows the department to purchase from
any party and makes the power available at the cost of its
purchase, plus any administrative costs, transmission and
scheduling costs, and other related costs incurred by the
department, to the independent systems operations, public
utility, electrical corporation, or retail end-use
customers.
Purchases so made are to be separate and apart from the
State Water Resources Recycled System, and the obligation
incurred by funding of these contracts and arrangements are
to be payment for any obligation authorized by the bill.
Requires the department to use any and all means feasible,
determined by it, to secure the State's interest in
receiving recovery funds expended pursuant to the bill.
Creates the State Department of Water Resources Electric
Power Fund where $400 million from the General Fund will be
transferred for purchase of power.
Specifies that neither the full faith and credit nor the
taxing power of the State are or may be pledged for payment
for any obligation allowed under the bill.
Requires the State Public Utilities Commission to adopt
energy regulations to effectuate delivery and payment
mechanisms relating to the sale of electric power purchased
by the department.
Sunsets 2/2/01.
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FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
Appropriates $400 million from the General Fund to be
transferred to the State Department of Water Resources
Electric Power Funds.
ASSEMBLY FLOOR :
AYES: Strom-Martin, Dickerson, Cox, Nation, Wiggins,
Thomson, Steinberg, Pescetti, Canciamilla, Shelley,
Migden, Aroner, Leach, Chan, Matthews, Corbett, Papan,
Dutra, Simitian, Alquist, Diaz, Cohn, Cogdill, Cardoza,
Keeley, Salinas, Briggs, Florez, Reyes, Maldonado, Wyman,
Jackson, Strickland, Richman, Cardenas, Hertzberg,
Pavley, Koretz, Frommer, Liu, Goldberg, Cedillo, Wesson,
Wright, Romero, Firebaugh, Horton, Washington, Nakano,
Lowenthal, Oropeza, Havice, Chavez, Calderon, Mountjoy,
Negrete McLeod, Longville, Rod Pacheco, Hollingsworth,
Harman, Correa, John Campbell, Bill Campbell, Daucher,
Bates, Wyland, Zettel, Kehoe, La Suer, Wayne, Vargas,
Kelley
DLW:kb 1/25/01 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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