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  ****