BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 68 X2
                                                                  Page  1

          SENATE THIRD READING
          SB 68 X2 (Battin)
          As Amended June 7, 2001
          2/3 vote.  Urgency 

           SENATE VOTE  :39-0  
           
           ENERGY              16-0        APPROPRIATIONS      20-0        
           
           ----------------------------------------------------------------- 
          |Ayes:|Wright, Pescetti, Briggs, |Ayes:|Migden, Bates, Alquist,   |
          |     |                          |     |Aroner, Washington,       |
          |     |Bill Campbell, John       |     |Corbett, Correa, Daucher, |
          |     |Campbell, Cancimilla,     |     |Goldberg, Maldonado,      |
          |     |Diaz, Dickerson, Florez,  |     |Robert Pacheco, Papan,    |
          |     |Leonard, Reyes, Richman,  |     |Pavley, Runner, Simitian, |
          |     |Steinberg, Vargas, Wesson |     |Thomson, Wesson, Wiggins, |
          |     |Zettel                    |     |Wright, Zettel            |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
          
          SUMMARY  :  Requires the California Public Utilities Commission  
          (CPUC) to consider, when establishing priorities in a rotating  
          blackout, the potential effect of extreme temperatures on the  
          health and safety of residential customers.  Specifically,  this  
          bill  :

          1)Requires CPUC 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 customers of electrical corporation, and to do  
            all of the following:

             a)   Consult with medical experts;

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

             c)   Only provide additional outage exemptions to those  
               customers when the temperature is extreme; and,

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

           EXISTING LAW  requires CPUC to: 






                                                                  SB 68 X2
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          1)Establish priorities among the types of customers of every  
            electric and gas corporation, and among the uses of  
            electricity or gas by such customers.

          1)Determine which customers and uses provide the most important  
            public benefit and serve the greatest public need, and  
            categorize those customers and uses in descending priority.   
            When establishing those priorities, CPUC must include a  
            determination of:

             a)   The customers and uses of electricity and gas, which  
               provide the most important public benefits and serve the  
               greatest public need; and,

             b)   The economic, social, and other effects of a temporary  
               discontinuance in electricity and gas service to those  
               customers and uses. 

           FISCAL EFFECT  :  Unknown

           COMMENTS  :  Two months ago, CPUC issued a decision revising the  
          list of "essential customers" who are 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 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.   
          Statewide, approximately 50% of the load is exempt from rolling  
          blackouts.

          This bill requires CPUC to consider, when establishing  
          priorities in a rotating blackout, the potential effect of  
          extreme temperatures on the health and safety of residential  
          customers.  CPUC 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.

          Adding customers to the list of essential customers would  
          decrease the amount of load available for rotating outages.   
          This would increase both the frequency and duration of outages  
          for non-exempt customers.  (Currently, rolling blackouts  
          typically last between one and two hours for most customers.)   
          Additionally, any of these customers may already have petitioned  






                                                                  SB 68 X2
                                                                  Page  3

          CPUC for an exemption based on health and safety issues.  There  
          has been a process in place at CPUC to accommodate special needs  
          and balance these against overall grid reliability and equity  
          among customers.  This bill asks the Legislature to effectively  
          override the policy decision already made at CPUC in this regard  
          and to require the agency to review policies and exemptions or  
          special accommodations, when it has already done so in light of  
          system constraints.  

          Increasing the number of exempt customers could threaten the  
          reliability of the grid.  CPUC currently requires utilities to  
          have 40% of their load available to participate in rolling  
          blackouts.  (As noted above, approximately 50% of circuits are  
          presently available for this purpose.)  If CPUC, pursuant to  
          this bill, elected to exempt customers living in areas of  
          extreme temperatures from rotating outages, the number of exempt  
          customers could potentially rise above the utilities' current  
          40% of load requirement. 

          Overexposure to heat can prove deadly, especially for the  
          elderly.  In 1995, Chicago experienced a heat wave that resulted  
          in 465 deaths.  These deaths occurred as a result of prolonged  
          exposure to heat.  Rolling blackouts, on the other hand,  
          typically last between one and two hours.  The limited duration  
          of rotating outages limits a customer's exposure to extreme  
          heat.  Disconnection of electric service, on the other hand,  
          poses a more significant threat to the health of customers in  
          areas of extreme heat.  Legislation enacted in the First  
          Extraordinary Session [AB X1 3 (Wright), Chapter 11, Statutes of  
          2001] prohibits utilities from disconnecting customers that are  
          in compliance with payment arrangements offered by a gas or  
          electric utility.

           Analysis Prepared by  :  Joseph Lyons / E. C. & A. / (916)  
          319-2083 

                                                              FN: 0002168