BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1753|
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THIRD READING
Bill No: SB 1753
Author: Bowen (D), et al
Amended: 5/2/02
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 6-2, 4/9/02
AYES: Bowen, Alarcon, Murray, Sher, Vasconcellos, Vincent
NOES: Morrow, Battin
SENATE APPROPRIATIONS COMMITTEE : 8-3, 5/6/02
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Murray,
Perata, Speier
NOES: Battin, McPherson, Poochigian
SUBJECT : Independent System Operator
SOURCE : Author
DIGEST : This bill requires the Independent System
Operator to abide by certain public interest principles, as
specified, in managing the transmission grid.
ANALYSIS : 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 applicable state
laws and the public interest, and assigning it more
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detailed public obligations. Specifically, this bill
requires the ISO to manage the grid and relate energy
markets in a manner that:
1.Makes the most efficient use of available energy
resources.
2.Assures the least overall economic cost to consumers.
3.Is consistent with, and furthers as appropriate, state
policies intended to protect public health and the
environment.
4.Assures maximum availability of electric generation
resources necessary to meet demand.
The bill also makes changes related to public meetings and
public access to specified documents.
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
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operations consistent with state laws and the public
interest, and assigning it more detailed public
obligations.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
No direct state costs. The ISO receives no state funding,
but rather derives its revenues form a surcharge on
electricity. The current surcharge is less than one
percent. The bill imposes no direct costs on the State.
However, ISO staff have estimated potentially significant
costs for implementation of this bill. For example, ISO
staff believe that item #4 above could require them to
procure, at significant cost, new generation. To the
extent that any increased costs result in an increase in
the surcharge, there could be indirect costs to the State
as a ratepayer. The State's energy costs are in the
hundreds of millions of dollars annually. On the other
hand, if implementation of this bill results in more
efficient or economical management of the grid and
electricity resources, there could be indirect cost
savings, should the surcharge decrease.
SUPPORT : (Verified 5/5/02)
California Municipal Utilities Association
NC:kb 5/7/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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