BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1976
                                                                  Page  1

          Date of Hearing:   August 7, 2002

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                  SB 1976 (Torlakson) - As Amended:  June 28, 2002 

          Policy Committee:                               
          UtilitiesVote:15-0

          Urgency:     Yes                  State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill requires the California Energy Commission (CEC), in  
          consultation with the Public Utilities Commission, to report to  
          the Legislature and the governor by March 31, 2003 on the  
          feasibility of implementing dynamic pricing as a way to reduce  
          or shift peak electricity demand.

           FISCAL EFFECT  

          Minor absorbable GF costs for the CEC to complete the report.

           COMMENTS  

           Background and Purpose  .  Under real-time pricing (RTP), the  
          electricity price is no longer constant over the day but instead  
          changes every hour.  The customer usually receives the next  
          day's hourly prices one day in advance.  The utility bases those  
          prices on the expected hourly electricity production cost for  
          the next day.  Real-time prices vary greatly because a utility's  
          production costs vary greatly from hour to hour depending on the  
          utility's load and the different types of power plants that are  
          operated to satisfy demand. 

          Commercial, industrial and agricultural customers, as well as a  
          small number of residential customers currently have time-of-use  
          tariffs.  Time-of-use rates have two or three different prices  
          for different times of the day, and different rates depending on  
          the season.  The time-of- use tariff does not reflect actual  
          day-to-day variations in demand and price. 

          This bill requires the CEC to determine exactly how prices would  








                                                                  SB 1976
                                                                  Page  2

          be calculated, the options for managing an RTP program,  
          estimates of potential peak load reductions, and how the program  
          will work in harmony with the grid operation.  Chapter  
          8/Statutes of 2001, First Extraordinary Session (AB 29, Kehoe),  
          appropriated $35 million to CEC for installation of real-time  
          meters.  According to the CEC, this program will result in the  
          installation of 22,000 meters statewide, but without a RTP  
          tariff, little else can happen in the program.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081