BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1055
                                                                  Page  1

          Date of Hearing:   August 27, 2001

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                              Roderick D. Wright, Chair
                   SB 1055 (Morrow) - As Amended:  August 23, 2001

           SENATE VOTE  :  39-0
           
          SUBJECT  :  Public Utilities Commission: customer priorities.

           SUMMARY  :  Requires the California Public Utilities Commission  
          (CPUC), when establishing priorities among the types or  
          categories of customers of an electrical or gas corporation, to  
          include as a consideration a determination of unacceptable  
          jeopardy or imminent danger to public health and safety.   
          Additionally requires CPUC to consider the effect of providing a  
          high priority to some customers on nonpriority customers.

           EXISTING LAW  :

          1)Requires CPUC to establish priorities among the types or  
            categories of customers of every electrical corporation and  
            every gas corporation, and among the uses of electricity or  
            gas by those customers.

          2)Requires CPUC, in establishing those priorities, to 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.  

           FISCAL EFFECT  :  Unknown.

           COMMENTS  :   

           Blackout Exemptions
           
          Three months ago, CPUC issued a decision revising the list of  
          "essential customers" who are exempt from rotating outages  
          (D.01-05-089).  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,  








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          every other customer on that circuit is exempted as well.   
          Pacific Gas and Electric (PG&E), Southern California Edison  
          (SCE) and San Diego Gas and Electric (SDG&E) all have a large  
          number of "free riders" within their respective service  
          territories.  Statewide, approximately 50 percent of available  
          load is exempt from rolling blackouts.  The CPUC requires  
          utilities to have 40 percent of load available to participate in  
          rolling blackouts, in order to maintain system reliability.

          "  Category M Exemptions  "

          In D.01-05-089, in addition to establishing a revised list of  
          essential customers, CPUC also created a new class of "essential  
          use" business customers, referred to as "Category M exemptions."  
           In order to qualify for the Category M exemption, an applicant  
          must demonstrate that including them in a rotating outage would  
          present unacceptable jeopardy, or imminent danger, to public  
          health and safety.  

          CPUC hired an outside consulting firm that reviewed applications  
          from 568 skilled nursing facilities but only granted exemptions  
          to 88 facilities due to CPUC requirement that the investor-owned  
          utilities maintain at least at least 40 percent of the  
          electrical load to maintain the reliability of the electric  
          grid.  California has 1,200 skilled nursing facilities.   
          Exempting all of these facilities from rotating outages would,  
          according to CPUC, reduce by 6,000 MW the amount of load  
          available for rotating outages-to 38 percent of total load. 

           CPUC Draft Decision to Investigate Exempting Skilled Nursing  
          Facilities
           
          In a draft decision issued on August 17, CPUC adopted the  
          recommendation from its consulting firm that CPUC further  
          investigate the feasibility of exempting all skilled nursing  
          facilities from rotating outages.  CPUC noted that patients in  
          skilled nursing facilities are among the most vulnerable in our  
          society, and that it is worth considering lowering the 40% of  
          load requirement for IOUs in light of changes in technology and  
          risk assessment, including requiring some distribution circuits  
          to make more circuits available for rotating outage.

          This measure requires CPUC to consider the negative health  
          effects that can be caused by rotating outages, and codifies the  
          CPUC's "Category M" exemption standard with regard to rotating  








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          outage exemptions.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California Association of Health Facilities
           
            Opposition 
           
          None on file.


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