BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1823 - Sher Hearing
Date: April 23, 2002 S
As Introduced: February 22, 2002 Non-FISCAL
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DESCRIPTION
Existing law requires the Power Exchange (PX) to "provide
an efficient competitive auction, open on a
nondiscriminatory basis to all suppliers, that meets the
loads of all exchange customers at efficient prices" and
authorizes the PX governing board to form technical
advisory committees.
This bill repeals those provisions.
BACKGROUND
AB 1890 (Brulte), Chapter 854, Statutes of 1996, required
the establishment of the PX as a "separately incorporated
public benefit, nonprofit corporation." The purpose of the
PX was to provide an open, efficient public auction to meet
customers' electricity loads. Pursuant to an order of the
California Public Utilities Commission, and subsequent
statute, investor-owned utilities were required to buy and
sell their electricity from the PX
On December 15, 2000, the Federal Energy Regulatory
Commission (FERC) issued an "Order Proposing Remedies for
California Wholesale Electric Market." This order
eliminated the mandatory PX "buy-sell" requirement and
terminated the PX's rate schedules as of April 30, 2001.
In the order, FERC stated "it is only by eliminating the
PX's exclusive mandatory exchange that we can assure that
prices in California wholesale markets will be just and
reasonable."
Due to FERC's elimination of its chief purpose and the fact
that Pacific Gas & Electric and Southern California Edison
were in default on payments for energy purchases, the PX
terminated its trading operations on January 31, 2001. For
these same reasons, as well as mounting litigation in
multiple venues, the PX filed for bankruptcy on March 9,
2001. The PX remains in bankruptcy, and is contesting a
plan of reorganization put forward by a participant
committee comprised of generators that would allow
generators to take over remaining PX operations, as well as
its data from previous operations. At its peak, the PX had
nearly 200 employees. It now has 12.
COMMENTS
PX wasn't meeting its statutory purpose. Due to
circumstances beyond its control, the PX was unable to
carry out the purpose contemplated when it was established.
During the last several months of its operation, its
auctions were not competitive and did not yield efficient
prices.
This bill is not likely to have any substantive effect on
the operations of the PX, such as they are. Since the PX
has ceased serving its state law purpose pursuant to FERC
order and is in bankruptcy, repealing the statute defining
its purpose seems to have no effect, beyond removing
obsolete sections of law from the code.
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None on file
Lawrence Lingbloom
SB 1823 Analysis
Hearing Date: April 23, 2002