BILL ANALYSIS Appropriations Committee Fiscal Summary ------------------------------------------------------------ | |1876(Bowen) | |-------------------------------+----------------------------| | | | |-------------------------------+----------------------------| |Hearing Date: 5/13/02 |Amended: 5/1/02 | |-------------------------------+----------------------------| |Consultant: Lisa Matocq |Policy Vote: E, U & C 5-0 | | | | | | | ------------------------------------------------------------ ____________________________________________________________ ___ BILL SUMMARY: SB 1876 is an omnibus bill that (1) repeals statutes establishing and granting certain powers to the Electricity Oversight Board (EOB), (2) establishes a Ratepayer Refund Accounts for the deposit of any refunds of excessive wholesale power costs recovered by the electrical corporations, and (3) makes a variety of other changes. Fiscal Impact (in thousands) Major Provisions 2002-03 2003-04 2004-05 Fund PUC Potential costs of $125 annually. Costs Special* should be offset by fee revenues. EOB Unknown, potentially significant cost Special*/ savings General *Public Utilities Reimbursement Account (PURA) STAFF COMMENTS: The EOB was established pursuant to AB 1890 (Brulte, Ch. 854, St of 1996) to oversee the Independent System Operator (ISO) and the Power Exchange (PX). Due to a number of factors, including federal preemption issues, the EOB's powers have been significantly diminished. Additionally, the EOB has no voting members currently. This bill, among other things: authorizes the Public Utilities Commission (PUC) to regulate an electrical corporation's holding company for a specified purpose; states legislative intent that regional electricity transmission markets in the western states be developed and that access to those markets be improved. ; The bill specifies that voluntary adoption of a regional compact is the preferred means to accomplish this development; requires the PUC to establish rates for electrical corporations which include a reasonable rate of return on retained generation assets, as specified; and requires that any gain or loss on the sale of an electrical corporation's asset, which was included in its rate base, should be allocated to ratepayers. The EOB's 2001-2002 budget is about $3.4. It is unknown whether part or all of the EOB's authority and responsibilities would be transferred to another entity, and therefore difficult to determine cost savings. The Senate Budget Subcommittee No. 2 recently took a number of actions related to the EOB including, deleting funding and positions associated with generation maintenance, deleting six vacant positions and related funding, and requiring the SB 1876 (Bowen) Page Two EOB to submit various reports related to staff activities compared to the board's authority, and the status of pending litigation. PURA revenues are derived from an annual fee imposed on electrical, gas, telephone, and water corporations and every other public utility providing service directly to customers. Therefore, any increased costs to the PUC should be offset by fee revenues. Presumably, the Independent System Operator (ISO) would be the entity participating in any voluntary regional compact to develop transmission markets. The ISO is a nonprofit public benefit corporation which receives no state funding, but rather derives its revenues from a surcharge imposed on electricity bills. Staff notes that it is unclear whether striking lines 5-9 on page 9 (the December 31, 2001 sunset on the electrical corporation's ability to recover uneconomic costs, as specified) would effectively allow the electrical corporations to continue recovery of such costs upon enactment of this bill.