BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1823|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 1823
Author: Sher (D)
Amended: As introduced
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 8-0, 4/23/02
AYES: Bowen, Morrow, Alarcon, Battin, Murray, Sher,
Speier, Vincent
SUBJECT : Public utilities: Power Exchange
SOURCE : Author
DIGEST : This bill repeals the statute defining the
purpose of the Power Exchange.
ANALYSIS : 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
CONTINUED
SB 1823
Page
2
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 and 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.
SB 1823
Page
3
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
NC:sl 4/25/02 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****