BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 68 X2
                                                                  Page  1

          Date of Hearing:   July 18, 2001

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Carole Migden, Chairwoman

                    SB 68 X2 (Battin) - As Amended:  June 7, 2001 


          Policy Committee:                              EnergyVote:16-0

          Urgency:     Yes                  State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill requires the Public Utilities Commission (PUC) to make  
          a determination of the potential effect of extreme temperatures  
          on the health and safety of residential customers when  
          establishing priorities among the categories of electricity  
          customers. To accomplish this end, the PUC would be required to:  


          1)Take into account the potential health, safety, and  
            reliability effects on other customers resulting from  
            potentially more frequent and longer blackouts.

          2)Provide additional outage exemptions only when the temperature  
            is extreme.

          3)Consider whether alternatives to a complete exemption from  
            rolling blackouts, such as a reduced outage duration or an  
            outage at a different time of day, are appropriate.

          4)Consult with medical experts.

           FISCAL EFFECT  

          According to the PUC, to make the determinations proposed by  
          this measure would create a one-time cost of up to $500,000. 

          This figure appears high. Two full-time positions and related  
          expenses to conduct the research and make recommendations would  
          cost no more than $250,000.

           COMMENTS








                                                                 SB 68 X2
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           1)Rationale  . The author contends that additional protection is  
            warranted for individuals susceptible to heat-related  
            infirmities.

           2)Current law  requires the PUC to establish priorities among  
            customers of every electric and gas corporation, and to  
            determine which customers and uses provide the most important  
            public benefit and serve the greatest public need,  
            categorizing those customers and uses in descending priority.

           3)Background Regarding Blackout Exemptions  .  Last month, the PUC  
            issued a decision revising the list of essential customers  
            exempt from rotating outages. The list includes essential  
            public services such as police, fire, hospitals, government  
            agencies essential to the national defense, and specified  
            customers who agree to reduce their usage during rotating  
            outages.  The PUC also has a process that enables customers to  
            request to be added to the list of essential customers.

            The electric grid is divided into distribution circuits.  When  
            an essential customer is exempted from a rotating blackout,  
            every other customer on that circuit is exempted as well.   
            There are about 1,700 essential customers in the PG&E service  
            area, with an additional two million customers exempt from  
            rotating outages because they are located in the same circuit  
            as an essential customer.  Southern California Edison and San  
            Diego Gas and Electric also have a large number of "free  
            riders" within their respective service territories.   
            Statewide, approximately 50 percent of the load is exempt from  
            rolling blackouts.

            This bill requires the PUC to consider, when establishing  
            priorities in a rotating blackout, the potential effect of  
            extreme temperatures on the health and safety of residential  
            customers.  The PUC would not be required to exempt these  
            customers, but simply to consider the effect on the health and  
            safety of customers who live in extreme temperatures.

           4)Opposition/Concerns  . The PUC has a process for accommodating  
            special needs, balancing these needs against overall grid  
            reliability and equity among customers.  This bill asks the  
            Legislature to essentially override PUC policy and require the  
            agency to review policies and exemptions or special  
            accommodations, when it has already done so in light of system  








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            constraints.

            Southern California Edison writes, "This legislation will  
            leave fewer customers subject to outages and will therefore  
            increase both the frequency and the duration of outages for  
            customers that are not exempt. Further, we believe this  
            legislation reduces system reliability and increases the  
            likelihood of an electric distribution grid failure."


           Analysis Prepared by  :    Geoff Long / APPR. / (916)319-2081