BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1753| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 1753 Author: Bowen (D), et al Amended: 6/27/02/02 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 SENATE FLOOR : 21-12, 5/29/02 AYES: Alarcon, Alpert, Bowen, Burton, Chesbro, Dunn, Escutia, Figueroa, Karnette, Kuehl, Machado, Murray, O'Connell, Ortiz, Perata, Romero, Scott, Sher, Speier, Torlakson, Vasconcellos NOES: Ackerman, Battin, Brulte, Haynes, Knight, Margett, McClintock, McPherson, Monteith, Morrow, Oller, Poochigian ASSEMBLY FLOOR : 49-29, 8/28/02 - See last page for vote SUBJECT : Independent System Operator SOURCE : Author DIGEST : This bill requires the Independent System Operator to abide by certain public interest principles, as CONTINUED SB 1753 Page 2 specified, in managing the transmission grid. Assembly Amendments make changes to further clarify ISO's operations and specify that it shall conduct its operations consistent with state and federal law. 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 and federal laws and the public interest, and assigning it more detailed public obligations. Specifically, this bill requires the ISO to manage the grid and related energy markets in a manner that: 1.Makes the most efficient use of available energy resources. 2.Reduces, to the extent possible, overall economic cost to consumers. 3.Is consistent to applicable state law intended to protect public health and the environment. 4.Maximizes availability of existing electric generation resources necessary to meet demand. The bill also directs the ISO to: 1.Consult and coordinate with appropriate state and local agencies to ensure the ISO operates in furtherance of state laws governing environmental and consumer protection. 2.Ensure that the purposes and functions of ISO are consistent with the purposes and functions of nonprofit public benefit corporations in the State, including conflict of interest standards for officers and directors of a corporation. SB 1753 Page 3 3.Maintain open meeting standards consistent with open meeting statutes applicable to state agencies. 4.Provide public access to corporate records, consistent with the general policies of the California Public Records Act. 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. 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. SB 1753 Page 4 SUPPORT : (Verified 5/5/02 - unable to reverify at time of writing) California Municipal Utilities Association ASSEMBLY FLOOR AYES: Alquist, Aroner, Calderon, Canciamilla, Cardenas, Cardoza, Cedillo, Chan, Chavez, Chu, Cohn, Corbett, Correa, Diaz, Dutra, Firebaugh, Florez, Frommer, Goldberg, Havice, Hertzberg, Horton, Jackson, Keeley, Kehoe, Koretz, Liu, Longville, Lowenthal, Matthews, Migden, Nakano, Nation, Negrete McLeod, Oropeza, Pavley, Reyes, Salinas, Shelley, Simitian, Steinberg, Strom-Martin, Thomson, Vargas, Washington, Wayne, Wiggins, Wright, Wesson NOES: Aanestad, Ashburn, Bates, Bogh, Briggs, Bill Campbell, John Campbell, Cogdill, Cox, Daucher, Dickerson, Harman, Hollingsworth, Kelley, La Suer, Leach, Leonard, Leslie, Maddox, Maldonado, Mountjoy, Robert Pacheco, Rod Pacheco, Pescetti, Richman, Strickland, Wyland, Wyman, Zettel NC:kb 8/30/02 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****