BILL ANALYSIS
SB 1519
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Date of Hearing: June 24, 2002
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
SB 1519 (Bowen) - As Amended: June 20, 2002
SENATE VOTE : 30-2
SUBJECT : Department of Water Resources: power.
SUMMARY : Directs the California Public Utilities Commission
(PUC) to set up a mechanism allowing retail customers of
investor-owned utilities (IOU) to buy renewable power, and
allows IOU customers to obtain renewable power from alternate
providers of electricity via direct access. Specifically, this
bill :
1)Declares the intent of the Legislature that each retail
customer that purchased power from an IOU on or after February
1, 2001, regardless of whether the customer thereafter takes
service from an alternate provider, bear a pro rata share of
the Department of Water Resources' (DWR) power purchase costs,
as well as contract obligations that are attributable to the
customer and are recoverable from IOU customers in rates.
2)Requires PUC, if it determines there is a shifting of
recoverable costs from customers who take service from an
alternate provider to the customers of an IOU, to recover
those costs from each customer class in proportion to the load
of each class that is served by alternate providers.
3)Declares that the above statements and requirements are
consistent with those contained in AB X1 1 (Keeley), Chapter
4, Statutes of 2001, First Extraordinary Session, and are
therefore declaratory of existing law.
4)Requires PUC to establish a mechanism to allow customers of an
IOU for whom direct access has been suspended, to elect to
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<1> For purposes of this bill, "renewable power" means
electricity produced from geothermal, wind, solar, biomass, or
landfill gas sources.
SB 1519
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purchase renewable power<1> from an alternate provider.<2>
5)Stays provisions allowing IOU customers to elect to purchase
renewable power until PUC develops a cost-recovery mechanism
that applies to customers who elected to purchase electricity
from a direct access provider between February 1, 2001, and
the effective date of this bill.
6)Requires PUC to submit a report certifying it has satisfied
the cost-recovery mechanism requirements to this Committee and
the Senate Energy, Utilities & Communications Committee.
7)Authorizes PUC to require an IOU to offer renewable power
service to its customers.
8)Requires a customer electing to purchase renewable power from
an alternate provider to reimburse DWR and IOU that previously
served the customer for IOU's net unavoidable power purchase
contract costs,<3> charges that would otherwise be imposed on
the customer to recover bond-related costs pursuant to the
agreement between DWR and PUC, <4> and other related charges.
9)Authorizes DWR and PUC to impose a charge, in certain
circumstances, on a customer if the customer returns to
receiving electricity from DWR or IOU. The alternate provider
would be responsible for the charge where customers are
involuntarily returned to be a customer of the IOU.
10)Requires all electric service providers (ESPs) to register
with PUC.
11)Provides that IOUs shall notify customers of the conditions
for purchasing power from an alternate provider within 90 days
after this bill becomes effective.
EXISTING LAW:
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<2> "Alternate provider" means an entity, other than an IOU,
supplying electricity to a retail end use customer within the
service territory of an IOU as the territory existed on February
1, 2001.
<3> This bill specifies that revenues from these charges are the
property of IOU.
<4> This bill specifies that revenues from these charges are the
property of DWR.
SB 1519
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1)Authorizes DWR to enter into contracts for the purchase of
electric power, to sell power to retail end use customers and
to local publicly owned electric utilities at costs not to
exceed DWR's acquisition costs.
2) Provides that DWR retains title to all power it sells to
retail customers.
3)Directs PUC to suspend direct transactions between electricity
suppliers and end use customers of IOUs until DWR no longer
supplies electrical power.
4)Requires non-IOU ESPs to register with PUC, but only if they
serve residential and small commercial customers.
FISCAL EFFECT : Unknown
COMMENTS :
Renewable direct access - stated reasons for this bill
According to the author's background materials, Californians
have long expressed support for renewable power. In the past,
the state has demonstrated leadership in the development of
renewable power resources. During the energy crisis, that
leadership has suffered some setbacks. Prior to its suspension,
direct access had been the only method for IOU customers to
directly purchase renewable power, short of installing their own
renewable power source onsite. The author also states that,
notwithstanding legislative intent in AB X1 1 that DWR secure as
much renewable energy as possible, DWR's portfolio contains
negligible renewable power, and the renewable share of overall
power has stagnated. Barring some change, the author states
that it will likely diminish in coming years as planned
investment in renewable megawatts is vastly outpaced by
investment in megawatts derived from natural gas.
Direct access & exit fees
In enacting AB X1 1, the Legislature authorized PUC to suspend
additional direct access in order to ensure a predictable
revenue stream necessary for the issuance of bonds and to
prevent cost shifting from direct access to bundled service
customers.
SB 1519
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PUC issued a proposed decision suspending direct access as of
July 1, 2001. Issuance of this decision was postponed by PUC,
which ultimately issued an order suspending direct access
effective September 20, 2001. Earlier this year, a PUC
administrative law judge issued a proposed decision establishing
July 1, 2001 as the suspension date. But on March 22, 2002 PUC
adopted an alternate decision confirming September 20 as the
suspension date. Soon thereafter, PUC opened a proceeding to
determine the direct access exit fee. This rulemaking is
currently underway.
This bill directs the outcome of some of the issues currently
before PUC in that rulemaking. For example, it provides that
each customer that purchased power from an IOU on or after
February 1, 2001, regardless of whether the customer thereafter
takes service from an alternate provider, bear a pro rata share
of DWR power purchase costs, as well as IOU contractual
obligations.
The author states that anti-cost shifting provisions of this
bill have been negotiated with Administration bond counsel to
ensure that they are consistent with, and support, the issuance
of revenue bonds to repay the General Fund.
Alternate providers - electric service providers
This bill uses the term "alternate provider" in the manner
similar to the "electric service provider" in the Rate Agreement
between DWR and PUC, but the definition is not identical. In
the Rate Agreement, the term electric service provider
specifically excludes DWR and any other public agency to the
extent that it offers electrical service to customers within its
jurisdiction or the service territory of a local publicly owned
electric utility, and IOUs.
In addition, it is unclear whether the author intends to include
those entities employing cogeneration or self-generation within
the meaning of the term alternate provider. This bill appears
to establish exit fee liability for self-generation customers
who are not receiving electricity from IOUs.
REGISTERED SUPPORT / OPPOSITION :
Support
SB 1519
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Clean Power Campaign
East Bay Municipal Utility District (if amended)
Independent Energy Producers Association
Office of Ratepayer Advocates
Sierra Club California
Southern California Edison
Opposition
California Aerospace Technology Association
California Independent Petroleum Association
California Large Energy Consumers Association
California Manufacturers & Technology Association
Coalition of California Utility Employees
Sempra Energy
Western States Petroleum Association
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083