BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1753 - Bowen Hearing
Date: April 9, 2002 S
As Introduced: February 21, 2002 FISCAL B
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DESCRIPTION
Existing law requires the creation of the Independent
System Operator (ISO) as a nonprofit public benefit
corporation and requires the ISO to ensure efficient use
and reliable operation of the transmission grid.
This bill expands the ISO's charter, requiring it to
conduct its operations consistent with state laws and the
public interest, and assigning it more detailed public
obligations. Specifically, this bill requires the ISO to:
1.Perform its grid management function at the least
possible cost to consumers and the environment.
2.Coordinate with regulatory agencies to ensure its
activities are consistent with consumer and environmental
protection standards.
3.Ensure its purposes and functions are consistent with its
tax-exempt corporate status.
4.Provide public access to its meetings and records
according to standards analogous to the state open
meetings and public records laws that apply to
governmental agencies.
BACKGROUND
AB 1890 (Brulte), Chapter 854, Statutes of 1996, required
the creation of the ISO as a "separately incorporated
public benefit, nonprofit corporation." When it
established the ISO, the Legislature gave little explicit
guidance as to its public obligations. Section 345 of the
Public Utilities Code simply declares the purpose of the
ISO is to "ensure efficient use and reliable operation of
the transmission grid."
While the ISO is a corporation and not a governmental
agency, its performance of a public purpose is inherent in
its duties and fundamental to its status as a nonprofit
public benefit corporation. The ISO functions as a public
utility, performing exclusive duties delegated to it by the
state, vital to maintain public health and safety and
funded by consumer electricity rates. As such, the people
of the state have a unique and compelling interest in the
operation of the ISO.
Because the ISO is not a governmental agency, it is not
subject to general state laws governing the conduct of
state and local agencies. This bill expands on the
original charter of the ISO, requiring it to conduct its
operations consistent with state laws and the public
interest, and assigning it more detailed public
obligations.
COMMENTS
1.Jurisdictional hazards. Because the ISO is a non-public
entity engaged in interstate transmission and wholesale
power markets, its operations are subject to Federal
Energy Regulatory Commission (FERC) jurisdiction under
the Federal Power Act. The Supreme Court recently
affirmed FERC's broad assumption of authority over the
transmission grid in its Order 888 (New York, et al v.
FERC). The federal jurisdiction may frustrate efforts to
provide guidance to the ISO in state law on certain
matters. For example, state laws which seek to affect
wholesale rates or terms and conditions of transmission
service are likely to be preempted by federal law. On
the other hand, the state maintains jurisdiction over
matters related to electric service reliability and
public health and safety.
2.Reconciling cost vs. reliability vs. environment. This
bill requires the ISO to "manage the transmission grid
and related energy markets in a manner that makes the
most efficient use of available energy resources and
facilitates reliable electricity service at the least
overall economic and environmental cost to the state's
consumers." While this provision is intended to provide
general policy guidance to the ISO, there is some
question about how it would be applied in the short term
and how the ISO would reconcile potential conflicts
between economic cost, environmental cost and
reliability.
According to the author, this provision establishes a
policy, similar to the existing ISO policy of "efficient
use and reliable operation," which relies on the ISO's
governing board for specific implementation. This is
analogous to the statutory charge given to the Air
Resources Board to achieve "maximum feasible emission
reductions," which has resulted in a variety of specific
agency initiatives to meet that goal.
3.Public access. The ISO has adopted public access
policies that approximate the Public Records Act and the
Bagley-Keene Open Meetings Act in terms of process.
However, the policies are voluntary creations of the
corporation and therefore lack the enforceability and
durability of statutes. This bill would impose a
statutory requirement on the ISO to operate consistent
with these laws and to afford the greatest possible
public access, consistent with its other duties.
This provision recognizes that the ISO is not a public
agency and that certain limited exceptions to the Public
Records Act and Bagley-Keene may be appropriate, but that
substantial compliance is the objective. The ISO has
raised the concern that strict adherence to provisions of
these laws, such as the 10-day meeting notice
requirement, may be burdensome and hinder its efforts to
provide comprehensive and timely information to the
public. To address this issue, the ISO has requested an
amendment that would require it to comply with the
"general policies" of these laws. Instead, the author
and the committee may wish to consider requesting that
the ISO identify those provisions of the Public Records
Act or Bagley-Keene that it believes would be
inappropriate to apply to the ISO, and consider
exceptions on a case by case basis.
POSITIONS
Sponsor:
Author
Support:
California Municipal Utilities Association
Oppose:
None on file
Lawrence Lingbloom
SB 1753 Analysis
Hearing Date: April 9, 2002