BILL NUMBER: SBX2 18	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 16, 2001

INTRODUCED BY   Senator  Escutia   Burton 
    (Principal coauthor: Senator Burton) 
    (Coauthors: Senators Polanco and Vincent) 
    (Coauthors: Assembly Members Firebaugh and Frommer)


                        MAY 17, 2001

    An act to add Section 366.7 to the Public Utilities Code,
relating to public utilities.   An act to amend
Sections 80010, 80100, 80110, 80122, 80130, 80132, 80134, and 80200
of, and to add Section 80131 to, the Water Code, relating to electric
power, making an appropriation therefor, and declaring the urgency
therefor, to take effect immediately. 


	LEGISLATIVE COUNSEL'S DIGEST


   SB 18, as amended,  Escutia   Burton  .
 Public utilities   Department of Water
Resources:  electricity:  bond financing order  . 
   (1) Existing law authorizes the Department of Water Resources to
contract with an electrical corporation to transmit or provide for
the transmission of, and distribute the power and provide billing,
collection, and other related services, as the agent of the
department, on terms and conditions that reasonably compensate the
electrical corporation for its services, and requires the commission,
at the request of the department, to order such actions.  Existing
law authorizes the department to issue revenue bonds for certain
purposes not to exceed a certain amount, containing specified terms
and conditions, upon authorization by written determination of the
department and with the approval of the Director of Finance and the
Treasurer.  Existing law permits the department to have the Public
Utilities Commission issue finance orders to recover revenue
requirements, and delegates to the department the authority to
determine if the revenue requirements are just and reasonable.
Existing law requires the department, before the issuance of bonds,
to establish a mechanism to ensure that the bonds will be sold at
investment grade ratings and repaid on a timely basis from pledged
revenues.  Certain of these provisions enacted by Senate Bill 31 of
the 2001-02 First Extraordinary Session become effective on August
13, 2001.
   This bill would require the bond repayment mechanism to include a
DWR Bond Set-Aside, as defined, fixed by an irrevocable Public
Utilities Commission bond financing order, sufficient to pay the
costs of issuing, servicing, and retiring the bonds, and to be
adjusted as required, applicable to all electric power delivered in
this state by an electrical corporation subject to the jurisdiction
of the commission.  The bill would require the total of DWR Bond
Set-Asides to be designated as a separate rate component of a retail
end user's bill for electrical services and would require any DWR
Bond Set-Aside to consist of and be derived from a portion of the
rate levels in effect on August 31, 2001.  The bill would establish
the DWR Bond Repayment Fund, to be continuously appropriated to the
department and available for the purpose of the payment of principal,
premium, if any, and interest on bonds and associated issuance
costs, thereby making an appropriation.  The bill would require the
revenues from the DWR Bond Set-Aside to be deposited in the DWR Bond
Repayment Fund.
   (2) Existing law requires the Department of Water Resources to
establish and revise certain revenue requirements relating to the
purchase and sale of electric power and to advise the commission as
the department determines to be appropriate.
   This bill would define the term "revenue requirements."  The bill
would entitle the commission to any information necessary to review
the revenue requirements of the department and, would require the
commission to conduct at least one public hearing and provide an
opportunity for public comment on the revenue requirements prior to
their adoption.
   (3) This bill would revise certain of the provisions enacted by SB
31 of the 2001-02 First Extraordinary Session and make other
conforming changes.
   (4) A violation of an order of the Public Utilities Commission is
a crime.  The bill by requiring specified financing orders and
related orders by the commission would change the definition of a
crime and thus impose a state-mandated local program.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   (5)  The bill would declare it is to take effect immediately
as an urgency statute.  
   Existing law imposes various duties and responsibilities on the
Public Utilities Commission with respect to electrical corporations.

   This bill would require the commission to direct, after it has
determined that the rate freeze for an electrical corporation has
ended, the electrical corporation to establish a portfolio of
electric supplies to serve the needs of the electrical corporation's
bundled core customers, as defined.  The bill would also require the
core supply portfolio to include the output of the generation assets
retained by the electrical corporation under commission regulation,
along with supplies purchased by the electrical corporation under
contracts to serve the needs of core customers, and any spot market
supplies required to match core load.
   The bill would authorize the commission to establish guidelines
for the appropriate composition of the core portfolio, as specified.

   The bill would prohibit, beginning 90 days after the end of a
corporation's rate freeze, as determined by the commission, or 90
days after the effective date of this bill, whichever is later,
customers with a maximum peak demand of 500 kilowatts or greater from
being served from the core portfolio.  The bill would require those
customers to be designated as noncore.  The bill would require that
any noncore customer that does not obtain service through a direct
transaction be provided with energy purchased by the electrical
corporation exclusively from the spot market, and would require the
customer to be charged the cost incurred by the electrical
corporation in providing such service.
   Because, under existing law, a violation of the above provisions
would be a crime, the bill would impose a state-mandated local
program by creating a new crime.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason. 
   Vote:   majority   2/3  .
Appropriation:   no   yes  .  Fiscal
committee: yes.  State-mandated local program:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  
  SECTION 1.  Section 366.7 is added to the Public Utilities
 
  SECTION 1.  Section 80010 of the Water Code is amended to read:

   80010.  As used in this division, unless the context otherwise
requires, the following terms have the following meanings:
   (a)  "Administrative costs" means those reasonable expenses,
including any consulting, legal, technical, or engineering services,
incurred by the department in administering this division.  The
administrative costs of the department incurred in administering this
division may only be paid for from appropriations by the
Legislature.  The department may not incur administrative costs in
excess of those appropriations.
   (b)  "Bonds" means bonds, notes, or other evidences of
indebtedness issued solely for the purposes of paying the cost of
electric power and transmission, scheduling, and other related
expenses incurred by the department on and after the effective date
of this division, or to reimburse expenditures from the fund for
those purposes; repaying to the General Fund any advances made to the
department from appropriations made to the fund pursuant hereto or
hereafter for purposes of this division, any advances made to the
department from the Water Resources Electric Power Fund, and General
Fund moneys expended by the department pursuant to the Governor's
Emergency Proclamation dated January 17, 2001; establishing or
maintaining reserves in connection with the bonds; costs of issuance
of bonds or incidental to their payment or security; capitalized
interest; or to renew or refund any bonds.  
   (b)  
   (c)  "Commission" means the Public Utilities Commission.

   (d) "DWR Bond Set-Aside" means a rate to recover a separate
dedicated revenue stream fixed by a commission bond financing order
pursuant to Section 80131.  The total of all DWR Bond Set-Asides
shall be designated as a separate rate component of a retail end-user'
s bill for electrical services.  
   (c)  
   (e)  "Electrical corporation" has the same meaning as that
term is defined in Section 218 of the Public Utilities Code.

   (d)  
   (f)  "Fund" means the Department of Water Resources Electric
Power Fund established by Section 80200.  
   (e)  
   (g)  "Local publicly owned electric utility" includes the
entities defined in subdivision (d) of Section 9604 of the Public
Utilities Code and publicly owned utilities that provide electricity.
  
   (f)  
   (h)  "Power" means electric power and energy, including, but
not limited to, capacity and output, or any of them.  
   (g)  
   (i)  "Public utility" has the same meaning as that term is
defined in Section 216 of the Public Utilities Code.  
   (j) (1) "Revenue requirements" means only the revenue necessary to
pay the actual costs for any of the following:
   (A) Purchasing power.
   (B) Contracting for the purchase of power.
   (C) Administrative costs.
   (D) Purchasing natural gas as required pursuant to a contract for
the purchase of power.
   (E) Using transmission or distribution facilities prior to the
delivery or utilization of purchased power, including scheduling and
other related expenses.
   (F) Amounts to enable the department to comply with Section 80134.

   (2) "Revenue requirements" does not include costs incurred under
conservation, load management, or other programs implemented by the
commission, the department, or any other entity.   
  SEC. 2.  Section 80100 of the Water Code is amended to read: 
   80100.  Upon those terms, limitations, and conditions as it
prescribes, the department may contract with any person, local
publicly owned electric utility, or other entity for the purchase of
power on such terms and for such periods as the department determines
and at such prices the department deems appropriate taking into
account all of the following:
   (a) The intent of the program described in this division is to
achieve an overall portfolio of contracts for energy resulting in
reliable service at the lowest possible price per kilowatthour.
   (b) The need to have contract supplies to fit each aspect of the
overall energy load profile.
   (c) The desire to secure as much low-cost power as possible under
contract.
   (d) The duration and timing of contracts made available from
sellers.
   (e) The length of time sellers of electricity offer to sell such
electricity.
   (f) The desire to secure as much firm and nonfirm renewable energy
as possible.  Prior to commencement of the program described in this
division, the department shall assess the need for power in the
state in consultation with the Public Utilities Commission and local
publicly owned electric utilities and electrical corporations in the
state and such other entities in the state as the department
determines are appropriate.  The department may also enter into
options or forward contracts with respect to the foregoing, and
contract with any person, local publicly owned electric utility, or
other entity for transmission  ,  and 
scheduling  , and other related power services necessary or
desirable to accomplish the purposes of this division  .

  SEC. 3.  Section 80110 of the Water Code is amended to read: 
   80110.  The department shall retain title to all power sold by it
to the retail end use customers.  The department shall be entitled to
recover,  as a revenue requirement, 
amounts and  at the times necessary  , 
 to enable it to comply with Section 80134   its
revenue requirements  , and shall advise the commission as the
department determines to be appropriate.   Such revenue
requirements may also include any advances made to the department
hereunder or hereafter for purposes of this division, or from the
Department of Water Resources Electric Power Fund, and General Fund
moneys expended by the department pursuant to the Governor's
Emergency Proclamation dated January 17, 2001.   For
purposes of this division and except as otherwise provided in this
section, the Public  Utility   Utilities 
Commission's authority as set forth in Section 451 of the Public
Utilities Code shall apply, except any just and reasonable review
under Section 451 shall be conducted and determined by the
department.   However, the commission shall be entitled to any
information necessary to review the revenue requirements of the
department and shall conduct at least one public hearing with an
opportunity for public comment on the revenue requirements prior to
their adoption.   The commission may enter into an agreement
with the department with respect to charges under Section 451 for
purposes of this division, and that agreement shall have the force
and effect of a financing order adopted in accordance with Article
5.5 (commencing with Section 840) of Chapter 4 of Part 1 of Division
1 of the Public Utilities Code, as determined by the commission.  In
no case shall the commission increase the electricity charges in
effect on the date that the act that adds this section becomes
effective for residential customers for existing baseline quantities
or usage by those customers of up to 130 percent of existing baseline
quantities, until such time as the department has recovered the
costs of power it has procured for the electrical corporation's
retail end use customers as provided in this division.  After the
passage of such period of time after the effective date of this
section as shall be determined by the commission, the right of retail
end use customers pursuant to Article 6 (commencing with Section
360) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities
Code to acquire service from other providers shall be suspended until
the department no longer supplies power hereunder.  The department
shall have the same rights with respect to the payment by retail end
use customers for power sold by the department as do providers of
power to such customers.   
  SEC. 4.  Section 80122 of the Water Code is amended to read: 
   80122.  The department may do any of the following as may be, in
the determination of the department, necessary for the purposes of
this division:
   (a) Hire and appoint employees as required, at salary levels
determined by the director to be competitive to attract and retain
persons with the necessary expertise and skills.  Prior to hiring or
appointing an employee at a salary in excess of a salary approved by
the Department of Personnel Administration, the director shall submit
the proposed salary to the Director of Finance who shall submit it
to the Legislature in accordance with Section 27.00 of the annual
Budget Act.  No excess salary authorized under this section may be
paid on or after January 1, 2003.  The excess portion of a salary
authorized under this section may not be considered salary in the
calculation of final compensation for purposes of benefits under the
Public Employees' Retirement System.
   (b) Engage the services of private parties to render professional
and technical assistance and advice and other services in carrying
out the purposes of this division  , if funds for any of these
administrative costs have been appropriated by the Legislature 
.
   (c) Contract for the services of other public agencies.
   (d) The State Personnel Board and the Department of Personnel
Administration shall assist the department in expediting the hiring
of personnel necessary and desirable for the timely and successful
implementation and administration of the department's duties and
responsibilities pursuant to this division.   
  SEC. 5.  Section 80130 of the Water Code is amended to read: 
   80130.   (a)  The department may incur indebtedness and
issue bonds as evidence thereof, provided that bonds may not be
issued in an amount the debt service on which, to the extent payable
from the  fund   DWR Repayment Fund  , is
 expected   estimated  by the department to
exceed the amounts  expected   estimated 
to be available in the  fund   DWR Repayment
Fund  for their payment.   In no event shall the
  The  department  may  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  greater than the amount calculated by
multiplying by a factor of four the annual revenues generated by the
California Procurement Adjustment, as determined by the commission
pursuant to Section 360.5   up to thirteen billion four
hundred twenty-three million dollars ($13,423,000,000)  .  
Nothing in this section shall prohibit the department from issuing
bonds prior to the effective date of this bill based upon the
authorization granted to the department by the provisions of Chapter
4 of the Statutes of the 2001-02 First Extraordinary Session.
Refunding of bonds to obtain a lower interest rate may not be
included in the calculation of the aggregate amount.   
In  
   (b) In  addition, before the issuance of bonds  in a
public offering  , the department shall establish a mechanism to
ensure that the bonds will be sold at investment grade ratings and
repaid on a timely basis from pledged revenues.   This
mechanism may include, but is not limited to, an agreement between
the department and the commission as described in Section 80110.
  The mechanism shall include, but is not limited to, a
DWR Bond Set-Aside.   
  SEC. 6.  Section 80131 is added to the Water Code, to read:
   80131.  (a) Whenever the department proposes to issue bonds
pursuant to this article, the department shall apply to the Public
Utilities Commission for a bond financing order establishing a DWR
Bond Set-Aside.
   (b) The commission shall, within 30 days from the date of the
application, issue a bond financing order establishing a DWR Bond
Set-Aside that shall be applicable to all electric power delivered in
this state by electrical corporations that are subject to the
jurisdiction of the commission and whose customers are deemed to have
purchased power from the department pursuant to Section 80104.  The
revenues from the DWR Bond Set-Aside shall be dedicated to the
payment of the obligations of the bonds and no person or entity,
including, the electrical corporation delivering energy, shall have
any right, title, interest, or claim to any portion of the DWR Bond
Set-Aside, except the department or the trustee designated pursuant
to Section 80132.  To the extent any moneys are received by an
electrical corporation pursuant to this section in the process of
collection, and pending their payment to the DWR Bond Repayment Fund
established in subdivision (i), they shall be segregated by the
electrical corporation on terms and conditions established by the
department and shall be held in trust for the benefit of the
department.
   (c) The amount of the DWR Bond Set-Aside shall be sufficient to
pay the costs of issuing, servicing, and retiring the bonds in
accordance with their terms as applied for by the department.  The
bond financing order shall include a provision for payment of the DWR
Bond Set-Aside to the department for deposit in the DWR Bond
Repayment Fund within five days of the date of receipt by the
electrical corporation.
   (d) Notwithstanding Sections 455.5 or 1708 of the Public Utilities
Code, or any other provision of law, a bond financing order shall be
irrevocable and the commission does not have authority to determine,
either by rescinding, altering, or amending the bond financing
order, or otherwise, that the DWR Bond Set-Aside is unjust or
unreasonable, or to in any way reduce or impair the recovery of the
DWR Bond Set-Aside, either directly or indirectly, nor shall the
amount of revenues arising with respect thereto be subject to
reduction, impairment, postponement, or termination until the costs
of issuing, servicing, and retiring the bonds, together with the
interest thereon, are fully met and discharged.  Except as otherwise
provided in this division, the State of California does hereby pledge
and agree with the owners of and holders of bonds issued pursuant to
this article that the state shall neither limit nor alter the DWR
Bond Set-Aside, bond financing orders, or any rights thereunder until
the costs of issuing, servicing, and retiring the bonds, together
with the interest thereon, are fully met and discharged, provided
that nothing contained in this section precludes the limitation or
alteration if adequate provision is made by law for the protection of
the owners and holders.  The department as agent for the state is
authorized to include this pledge and undertaking for the state in
these obligations.
   (e) Notwithstanding any other provision of this section, the
commission shall approve the adjustments to the DWR Bond Set-Aside as
it determines to be necessary to ensure timely recovery of all
revenues required by the pertinent bond financing order, and the
costs associated with the provision, recovery, financing, or
refinancing thereof, including the costs of issuing, servicing, and
retiring the bonds contemplated by the bond financing order.
   (f) (1) Bond financing orders issued under this article do not
constitute a debt or liability of the state or of any political
subdivision thereof, other than the department, and do not constitute
a pledge of the full faith and credit of the state or any of its
political subdivisions, but are payable solely from the funds
provided therefor under this article and shall be consistent with
Sections 1 and 18 of Article XVI of the California Constitution.
This subdivision shall in no way preclude bond guarantees or
enhancements pursuant to this article.  All the bonds issued under
this article shall contain on the face thereof a statement to the
following effect:
   "Neither the full faith and credit nor the taxing power of the
State of California is pledged to the payment of the principal of, or
interest on, this bond."
   (2) The issuance of bonds under this article may not directly,
indirectly, or contingently obligate the state or any political
subdivision thereof to levy or to pledge any form of taxation
therefore or to make any appropriation for their payment.
   (g) The commission shall establish procedures for the expeditious
processing of applications for bond financing orders, including the
approval or disapproval thereof within 30 days of date of the
department's making such an application.  The commission shall
provide in any bond financing order for a procedure for the
expeditious approval by the commission of periodic adjustments to the
DWR Bond Set-Aside that are the subject of the pertinent bond
financing order, as required by subdivision (e).  The procedures
shall require the commission to determine not less frequently than
annually whether adjustments to the DWR Bond Set-Aside are required,
and for the adjustments, if required, to be approved within 30 days
of the date of completion of the review.
   (h) Any DWR Bond Set-Aside shall consist of and be derived from a
portion of the rate levels in effect on August 31, 2001, and may not
result in an increase in those rate levels.  This subdivision does
not affect any legal authority the commission has for changing rate
levels for any other purpose not related to the DWR Bond Set-Aside.
   (i) There is hereby established in the State Treasury the DWR Bond
Repayment Fund.  Notwithstanding Section 13340 of the Government
Code, all moneys in the fund are continuously appropriated, without
regard to fiscal year, to the department, and shall be available
solely for the purpose of the payment of principal, and premium, if
any, and interest on all bonds issued under this division and
associated issuance costs.  
  SEC. 7.  Section 80132 of the Water Code is amended to read: 
   80132.  (a) Bonds may be issued by the department upon
authorization by written determination of the director of the
department with the approval of the Director of Finance and the State
Treasurer.  The Department of Finance  shall notify the Chairperson
of the Joint Legislative Budget Committee and the chairperson of the
committee in each house that considers appropriations of its written
determination.  The bonds shall be sold at such prices and in such
manner, and on such terms and conditions, as shall be specified in
such determination, and such determination may contain or authorize
any other provision, condition, or limitation not inconsistent
herewith and such provisions as may be deemed reasonable and proper
for the security of the bondholders.  Bonds may mature at such time
or times, and bear interest at such rate or rates, which may be fixed
or variable and be determined by reference to an index or such other
method, as shall be specified in such determination.  Neither the
person executing the determination to issue bonds nor any person
executing bonds shall be personally liable therefor or be subject to
any personal liability or accountability by reason of the issuance
thereof.
   (b) In the discretion of the department, any bonds may be secured
by a trust agreement by and between the department and a corporate
trustee, which may be any trust company or bank having trust powers
within or without the state, or the State Treasurer.  Notwithstanding
any other provision of law, the State Treasurer shall not be deemed
to have a conflict of interest by reason of acting as such trustee.
The department may enter into such contracts or arrangements as it
shall deem to be necessary or appropriate for the issuance and
further security of the bonds.
   (c) Bonds shall be legal investments for all trust funds, the
funds of all insurance companies, banks both commercial and savings,
trust companies, executors, administrators, trustees, and other
fiduciaries, for state school funds, pension funds, and, for any
funds that may be invested in county, school, or municipal bonds.
   (d) Notwithstanding that bonds may be payable from a special fund,
they shall be deemed to be negotiable instruments for all purposes.

   (e) Any and all bonds, their transfer and the income therefrom
shall at all times be free from taxation of every kind by the state
and by all political subdivisions of the state.
   (f) Bonds shall not be deemed to constitute a debt or liability of
the state or of any political subdivision thereof, other than the
department, or a pledge of the  full  faith and credit of
the state or of any such political subdivision  , other than
the department,  but shall be payable solely from the funds
herein provided for.  All bonds shall contain a statement to the
following effect:  
   "Neither the  full  faith and credit nor the taxing power
of the State of California is pledged to the payment of the
principal of or interest on this bond."
   The issuance of bonds shall not directly or indirectly or
contingently obligate the state or any political subdivision thereof
to levy or to pledge any form of taxation whatever therefor or to
make any appropriation for their payment.
   (g) The department may pledge or assign  any revenues
under any obligation entered into   the revenues from a
DWR Bond Set-Aside  , and rights to receive the same, and moneys
on deposit in the  fund   DWR Bond Repayment
Fund  and income or revenue derived from the investment thereof,
as security for the  department's obligations hereunder
  repayment of the bonds  .  It is the intention of
the Legislature that any pledge of moneys, revenues, or property
made by the department shall be valid and binding from the time when
the pledge is made; that the  moneys, revenues, or property
 DWR Bond Set-Aside  so pledged and  moneys
derived therefrom  thereafter collected from retail end use
customers, or paid directly or indirectly to or for the account of
the department, is hereby made, and shall immediately be, subject to
the lien of such pledge without any physical delivery thereof or
further act; that the lien of any such pledge shall be valid and
binding as against all parties having claims of any kind in tort,
contract, or otherwise against the department irrespective of whether
such parties have notice thereof, and that no resolution or
instrument by which such pledge or lien created pursuant to this
subdivision is expressed, confirmed, or approved need be filed or
recorded in order to perfect such pledge or lien.  The provisions
hereof shall in all respects govern the creation, perfection,
priority, and enforcement of any lien created hereby or hereunder.

  SEC. 8.  Section 80134 of the Water Code is amended to read: 
   80134.  (a) The department shall, and in any obligation entered
into pursuant to this division may covenant to, at least annually,
and more frequently as required, establish and revise revenue
requirements sufficient, together with any moneys on deposit in the
fund, to provide all of the following:
   (1) The amounts necessary to pay the principal of and premium, if
any, and interest on all bonds as and when the same shall become due
 if there are insufficient funds in the DWR Bond Repayment Fund
 .
   (2) The amounts necessary to pay for power purchased by it and to
deliver  it   that power  to purchasers
 , including the cost of electric power and transmission,
scheduling, and other related expenses incurred by the department, or
to make payments under any other contracts, agreements, or0
obligations entered into by it pursuant hereto   as
specified in subparagraphs (A), (B), (D) and (E) of paragraph (1) of
subdivision (j) of Section 80010  , in the amounts and at the
times the same shall become due.
   (3) Reserves in such amount as may be determined by the department
from time to time to be necessary or desirable.
   (4) The pooled money investment rate on funds advanced for
electric power purchases prior to the receipt of payment for those
purchases by the purchasing entity.
   (5) Repayment to the General Fund of appropriations made to the
fund pursuant hereto or hereafter for purposes of this division,
appropriations made to the Department of Water Resources Electric
Power Fund, and General Fund moneys expended by the department
pursuant to the Governor's Emergency Proclamation dated January 17,
2001.
   (6) The administrative costs of the department incurred in
administering this division  , if an amount for those costs has
been appropriated by the Legislature    .
   (b) The department shall notify the commission of its revenue
 requirement   requirements  pursuant to
Section 80110.   
  SEC. 9.  Section 80200 of the Water Code is amended to read: 
   80200.  (a) There is hereby established in the State Treasury the
Department of Water Resources Electric Power Fund.  Notwithstanding
Section 13340 of the Government Code, all moneys in the fund are
continuously appropriated, without regard to fiscal year, to the
department, and shall be available for the purposes of this division.
  It is the intent of the Legislature that this fund be a
continuation of the fund created in Chapter 3 of the Statutes of 2001
(SB 7 of the First 2001-02 Extraordinary Session).
   (b) All revenues payable to the department under this division
 , including the net proceeds of bonds,  shall be deposited
in the fund  , other than the revenues from the DWR Bond
Set-Aside,                                             which shall be
deposited into the DWR Bond Repayment Fund  .  Notwithstanding
any other provision of law, interest accruing on money in the fund
shall remain in the fund and shall be used for the purposes of this
division.  Payments from the fund may be made only for the purposes
authorized by this division, including, but not limited to, payments
for any of the following:
   (1) The cost of electric power and transmission, scheduling, and
other related expenses incurred by the department.
   (2) The pooled money investment rate on funds advanced for
electric power purchases prior to the receipt of payment for those
purchases by the purchasing entity.
   (3) Payment of any bonds or  of any  other contractual
obligations authorized by this division.
   (4) Repayment to the General Fund of appropriations made to the
fund pursuant hereto or hereafter for purposes of this division,
appropriations made to the Department of Water Resources Electric
Power Fund, and General Fund moneys expended by the department
pursuant to the Governor's Emergency Proclamation dated January 17,
2001.   It is the intent of the Legislature that such
repayment   That repayment shall  be made as soon
as practicable.
   (c) Except as provided in subdivision (b) of Section 5 of the
statute adding this section, the administrative costs of the
department incurred in administering this division shall be provided
in the annual Budget Act  , if an amount for those costs has been
appropriated by the Legislature  .
   (d) Obligations authorized by this division shall be payable
solely from the fund.  Neither the full faith and credit nor the
taxing power of the state are or may be pledged for any payment under
any obligation authorized by this division.
   (e) While any obligations of the department incurred under this
division remain outstanding and not fully performed or discharged,
the rights, powers, duties, and existence of the department and the
commission shall not be diminished or impaired in any manner that
will affect adversely the interests and rights of the holders of or
parties to such obligations.  The department may include this pledge
and undertaking of the state in the department's obligations.   
  SEC. 10.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution. 

  SEC. 11.  If this act becomes effective on or before the effective
date of Chapter 9 of the 2001-02 First Extraordinary Session, then
Sections 80130, 80132, and 80200 of the Water Code, as amended by
Chapter 9 of the 2001-02 First Extraordinary Session shall not be
operative.
   If this act becomes effective after the effective date of Chapter
9 of the 2001-02 First Extraordinary Session, then the amendments
made to Sections 80130, 80132, and 80200 of the Water Code by this
act shall prevail on the effective date of this act, pursuant to
Section 9605 of the Government Code.
  SEC. 12.  This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  The facts constituting the necessity are:
   In order to assure the timely issuance of revenue bonds by the
Department of Water Resources to provide for the repayment of funds
advanced from the General Fund to pay for the purchase of electric
power needed to protect the safety, health, and well-being of the
people of California, it is necessary that this act take effect
immediately.    Code, to read:
   366.7.  (a) Once the commission has determined that the rate
freeze established pursuant to Section 368 for an electrical
corporation has ended, the commission shall direct the electrical
corporation to establish a portfolio of electric supplies to serve
the needs of the electrical corporation's bundled core customers.
   (b) For the purposes of this section, "bundled core customers" are
all customers with a maximum peak demand of less than 500 kilowatts
who are not being served via direct transactions.
   (c) The core supply portfolio shall include the output of the
generation assets retained by the electrical corporation under
commission regulation, along with supplies purchased by the
electrical corporation under contracts to serve the needs of its core
customers, and any spot market supplies required to match core load.

   (d) The commission may establish guidelines for the appropriate
composition of the core portfolio, including a minimum renewable
energy component, and may also establish appropriate financial
incentives for the electrical corporation to achieve the lowest
stable price for the core portfolio.
   (e) Beginning 90 days after the end of the corporation's rate
freeze, as determined by the commission, or 90 days after the
effective date of this section, whichever is later, customers with a
maximum peak demand of 500 kilowatts or greater will no longer be
served from the core portfolio.  These customers shall be designated
as noncore.  Any noncore customer that does not obtain service
through a direct transaction shall be provided with energy purchased
by the electrical corporation exclusively from the spot market, and
shall be charged the cost incurred by the corporation in providing
the service.
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.