BILL NUMBER: SB 1876 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Bowen
FEBRUARY 22, 2002
An act to amend Section 352 of, to add Sections 345.1, 345.3, and
345.5 to, to repeal Section 346 of, to repeal Article 2 (commencing
with Section 334), Article 4 (commencing with Section 355), and
Article 5 (commencing with Section 359) of Chapter 2.3 of Part 1 of,
and to repeal and add Section 350 of, the Public Utilities Code,
relating to public utilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 1876, as introduced, Bowen. Electricity Oversight Board:
Independent System Operator: Power Exchange.
(1) The existing restructuring of the electrical services industry
within the Public Utilities Act provides for the establishment of an
Independent System Operator and a Power Exchange as separately
incorporated public benefit nonprofit corporations. An Electricity
Oversight Board (Oversight Board) is also established to oversee the
Independent System Operator and the Power Exchange in order to ensure
the success of electric industry restructuring and to ensure a
reliable supply of electricity in the transition to a new market
structure. Pursuant to an order of the Federal Energy Regulatory
Commission, the Power Exchange has ceased to function. The Oversight
Board is granted various powers including, but not limited to,
requiring the revision of the bylaws of the Independent System
Operator and the approval of the entry of the Independent System
Operator into a multistate entity or a regional organization.
This bill would repeal those provisions establishing, and granting
powers to, the Oversight Board. The bill would require the
Independent System Operator to revise its own bylaws, and would
require the Legislature to approve the entry of the Independent
System Operator into a multistate entity or a regional organization.
Because any violation of the Public Utilities Act is a crime, the
bill, by establishing new duties for the Independent System Operator,
would impose a state-mandated local program by changing the
definition of a crime. The bill would repeal certain provisions
relating to the Power Exchange.
(2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 2 (commencing with Section 334) of Chapter 2.3
of Part 1 of the Public Utilities Code is repealed.
SEC. 2. Section 345.1 is added to the Public Utilities Code, to
read:
345.1. The Legislature finds and declares that, in order to
ensure the success of electric industry restructuring in the
transition to a new market structure, it is important to ensure a
reliable supply of electricity. Reliable electric service is of
paramount importance to the safety, health, and comfort of the people
of California. Transmission connections among electric utilities
allow them to share generation resources and reduce the number of
powerplants necessary to maintain a reliable system. The connections
among utilities also create exposure to events that can cause
widespread and extended transmission and service outages that reach
far beyond the originating utility service area. California
utilities and those in the western United States voluntarily adhere
to reliability standards developed by the Western Systems
Coordinating Council. The economic cost of extended electricity
outages, such as those that occurred in California and throughout the
Western Systems Coordinating Council on July 2, 1996, and August 10,
1996, to California's residential, commercial, agricultural, and
industrial customers is significant. The proposed restructuring of
the electricity industry would transfer responsibility for ensuring
short- and long-term reliability away from electric utilities and
regulatory bodies to the Independent System Operator and various
market-based mechanisms. The Legislature has an interest in ensuring
that the change in the locus of responsibility for reliability does
not expose California citizens to undue economic risk in connection
with system reliability.
SEC. 3. Section 345.3 is added to the Public Utilities Code, to
read:
345.3. (a) The Independent System Operator governing board shall
be composed of a five-member independent governing board of directors
appointed by the Governor and subject to confirmation by the Senate.
Any reference in this chapter or in any other provision of law to
the Independent System Operator governing board means the independent
governing board appointed under this subdivision.
(b) A member of the independent governing board appointed under
subdivision (a) may not be affiliated with any actual or potential
participant in any market administered by the Independent System
Operator.
(c) (1) All appointments shall be for three-year terms.
(2) There is no limit on the number of terms that may be served by
any member.
(d) The Independent System Operator shall revise its articles of
incorporation and bylaws in accordance with this section, and shall
make filings with the Federal Energy Regulatory Commission as it
determines to be necessary.
(e) For the purposes of the initial appointments to the
Independent System Operator governing board, as provided in
subdivision (a), the Governor shall appoint one member to a one-year
term, two members to a two-year term, and two members to a three-year
term.
SEC. 4. Section 345.5 is added to the Public Utilities Code, to
read:
345.5. The Independent System Operator bylaws shall contain
provisions that identify matters within state jurisdiction. The
bylaws shall also contain provisions that state that the approval
function of California's bylaws with respect to the matters within
state jurisdiction do not preclude the Federal Energy Regulatory
Commission from taking any action necessary to address undue
discrimination or other violations of the Federal Power Act (16
U.S.C. Sec. 791a et seq.) or to exercise any other commission
responsibility under the Federal Power Act. In taking any action,
the Federal Energy Regulatory Commission shall give due respect to
California's jurisdictional interests in the functions of the
Independent System Operator, and shall attempt to accommodate state
interests to the extent those interests are not inconsistent with the
Federal Energy Regulatory Commission's statutory responsibilities.
The bylaws shall state that any future agreement regarding the
apportionment of the Independent System Operator board appointment
function among participating states associated with the expansion of
the Independent System Operator into a multistate entity shall be
filed with the Federal Energy Regulatory Commission pursuant to
Section 205 of the Federal Power Act (16 U.S.C. Sec. 824d).
SEC. 5. Section 346 of the Public Utilities Code is repealed.
346. The Independent System Operator shall immediately
participate in all relevant Federal Energy Regulatory Commission
proceedings. The Independent System Operator shall ensure that
additional filings at the Federal Energy Regulatory Commission
request confirmation of the relevant provisions of this chapter and
seek the authority needed to give the Independent System Operator the
ability to secure generating and transmission resources necessary to
guarantee achievement of planning and operating reserve criteria no
less stringent than those established by the Western Systems
Coordinating Council and the North American Electric Reliability
Council.
SEC. 6. Section 350 of the Public Utilities Code is repealed.
350. The Independent System Operator, in consultation with the
California Energy Resources Conservation and Development Commission,
the Public Utilities Commission, the Western Systems Coordinating
Council, and concerned regulatory agencies in other western states,
shall within six months after the Federal Energy Regulatory
Commission approval of the Independent System Operator, provide a
report to the Legislature and to the Oversight Board that does the
following:
(a) Conducts an independent review and assessment of Western
Systems Coordinating Council operating reliability criteria.
(b) Quantifies the economic cost of major transmission outages
relating to the Pacific Intertie, Southwest Power Link, DC link, and
other important high voltage lines that carry power both into and
from California.
(c) Identifies the range of cost-effective options that would
prevent or mitigate the consequences of major transmission outages.
(d) Identifies communication protocols that may be needed to be
established to provide advance warning of incipient problems.
(e) Identifies the need for additional generation reserves and
other voltage support equipment, if any, or other resources that may
be necessary to carry out its functions.
(f) Identifies transmission capacity additions that may be
necessary at certain times of the year or under certain conditions.
(g) Assesses the adequacy of current and prospective institutional
provisions for the maintenance of reliability.
(h) Identifies mechanisms to enforce transmission right-of-way
maintenance.
(i) Contains recommendations regarding cost-beneficial
improvements to electric system reliability for the citizens of
California.
SEC. 7. Section 350 is added to the Public Utilities Code, to
read:
350. (a) It is the intent of the Legislature to provide for the
development of regional electricity transmission markets in the
western states and to improve the access of consumers served by the
Independent System Operator to those markets.
(b) The preferred means by which the voluntary evolution described
in subdivision (a) should occur is through the adoption of a
regional compact or other comparable agreement among cooperating
party states, the retail customers of which states would reside
within the geographic territories served by the Independent System
Operator.
(c) The agreement described in subdivision (b) should provide for
all of the following:
(1) An equitable process for the appointment or confirmation by
party states of members of the governing boards of the Independent
System Operator.
(2) A respecification of the size, structure, representation,
eligible membership, nominating procedures, and member terms of
service of the governing boards of the Independent System Operator.
(3) Mechanisms by which each party state, jointly or separately,
can oversee effectively the actions of the Independent System
Operator as those actions relate to ensuring electricity system
reliability within the party state and to matters that affect
electricity sales to the retail customers of the party state or
otherwise affect the general welfare of the electricity consumers and
the general public of the party state.
(4) The adherence by publicly owned and investor-owned utilities
located in party states to enforceable standards and protocols to
protect the reliability of the interconnected regional transmission
and distribution systems.
SEC. 8. Section 352 of the Public Utilities Code is amended to
read:
352. The Independent System Operator may not enter into a
multistate entity or a regional organization as authorized in Section
359 350 unless that entry is approved
by the Oversight Board Legislature .
SEC. 9. Article 4 (commencing with Section 355) of Chapter 2.3 of
Part 1 of the Public Utilities Code is repealed.
SEC. 10. Article 5 (commencing with Section 359), of Chapter 2.3
of Part 1 of the Public Utilities Code is repealed.
SEC. 11. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.