BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 85 X2
                                                                  Page  1

          Date of Hearing:   September 6, 2001

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Carole Migden, Chairwoman

                  SB 85 X2 (Burton) - As Amended:  August 28, 2001 

          Policy Committee:                              E.C.&A.Vote:16-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill prohibits the Public Utilities Commission (PUC) from  
          raising electrical rates up to or above levels in effect prior  
          to imposition of the 10% rate reduction-which extends until  
          March 1, 2002 for residential and small commercial customers  
          solely for purposes of restoring rates to
          their previous level.

           FISCAL EFFECT  

          Absorbable costs to the PUC.

           COMMENTS  

           Background and Purpose  . In 1998, when electrical restructuring  
          opened up the market to direct access, a rate reduction was put  
          into place for residential and small commercial customers of  
          electrical corporations in California.  The reductions were to  
          remain in effect until March 1, 2002.  Subsequently, for reasons  
          unrelated to recovery of uneconomic costs associated with  
          competition, the PUC has ordered various rate increases for all  
          classes of customers to allow electrical corporations to recover  
          costs of operation.  

          This measure provides that when the 10% rate reduction ends on  
          March 1, 2002, that CPUC cannot order rates to go back up to or  
          to exceed the levels they were at prior to issuance of the
          reduction in 1998 solely for the purpose of restoring rates to  
          their previous levels.  Nothing in this bill precludes CPUC from  
          raising residential and small commercial customer rates for  
          other reasons related to cost recovery and revenue requirement  
          needs.








                                                                  SB 85 X2
                                                                 Page  2


           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081