BILL NUMBER: SB 2000 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 14, 2002
AMENDED IN SENATE APRIL 30, 2002
INTRODUCED BY Senator Dunn
FEBRUARY 22, 2002
An act to add Title 3.6 (commencing with Section 1883) to Part 4
of Division 3 of the Civil Code, relating to energy resources.
LEGISLATIVE COUNSEL'S DIGEST
SB 2000, as amended, Dunn. Electric power and natural gas:
unlawful practices.
Existing law sets forth the obligations that arise from
particular transactions.
This bill would prohibit any person engaged in the business of
generating, selling, distributing, transferring, or
marketing , or trading electricity or natural
gas from engaging in specified unlawful acts or practices. This bill
would provide that a person found in violation of these provisions
would be required to disgorge the revenue
profits from the unlawful acts conduct
, and would be liable for, among other things, 3 times the
amount of the disgorgement and attorney fees. The bill would require
that actions for relief under these provisions be brought in a court
of competent jurisdiction by the Attorney General or by another
person, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Title 3.6 (commencing with Section 1883) is added to
Part 4 of Division 3 of the Civil Code, to read:
TITLE 3.6. UNLAWFUL ELECTRIC POWER AND NATURAL GAS PRACTICES
1883. For purposes of this chapter:
(a) "Competitive benchmark" for assessing market power is
determined as the short-run marginal costs of the highest cost unit
needed to meet demand.
(b) "Exercise of market power" means charging prices above the
competitive benchmark.
(c) "Market power" means the ability to profitably maintain prices
above competitive levels for a period of time. A person may also
possess market power with respect to significant competitive
dimensions other than price such as quality, service, or innovation.
(d) "Person" means and includes a natural person, corporation,
firm, partnership, joint stock company, association, and other
organization or entity of persons.
1883.1. (a) A person engaged in the business of generating,
selling, distributing, transferring, or marketing electricity or
natural gas may not possess and exercise market power.
(b) There shall be a rebuttable presumption affecting the burden
of proof that market power was exercised in any case in which prices
above the competitive benchmark were charged.
1883.2.
1883. (a) For purposes of this chapter, "person" means and
includes a natural person, corporation, firm, partnership, joint
stock company, association, or other organization or entity of
persons.
(b) A person engaged in the business of generating, selling,
distributing, transferring, marketing, or trading electricity or
natural gas may not engage in any of the following unlawful acts or
practices:
(1) The physical withholding of electricity from the generation,
sale, distribution, transfer, marketing, or trading of electricity,
resulting in increased electricity prices or the creation of a
scarcity of supply in any electricity market.
(2) The economic withholding of electricity by submitting bids
above the reasonable price for that electricity in a fair and
competitive market, resulting in any bid not being accepted so as to
force an increase in electricity prices or create a scarcity of
supply in any electricity market.
(3) The acquiring, using, or disseminating of electric system
reliability information in connection with the generation, sale,
marketing, or trading of electricity, resulting in increased
electricity prices by the manipulation of the generation, sale,
distribution, transfer, marketing, or trading of electricity.
(4) The using or providing of false or misleading information in
connection with the generation, sale, distribution, transfer,
marketing, or trading of electricity, resulting in increased
electricity prices.
(5) The creating, prolonging, or using of shortages or outages to
increase the price of electricity.
(6) The selling, distributing, transferring, marketing, or trading
of electricity in any other state, resulting in a reduction of
supply to increase the price of electricity.
(7) The refusing of any dispatch order of any transmission system
operator to generate electricity.
(8) The scheduling of electricity into the electricity
transmission system with the intent or knowledge that the schedule
will create congestion or the false impression of congestion in that
system.
(9) The overscheduling of electricity generation into the
electricity transmission system with the intent or knowledge that the
actual load will be lower and result in congestion counterflow
payment, or the schedule will result in compensation to reduce
congestion.
(10) The selling, distributing, transferring, marketing, or
trading of electricity to any person in any other control area with
the intent or knowledge that a similar amount of electricity will be
repurchased in the original control area for the purpose of avoiding
applicable market rules.
(11) The intentional or knowing withholding of electricity from
any market subject to a price cap with the intent to sell,
distribute, transfer, market, or trade the electricity to a market
not subject to a price cap.
(12) The misrepresentation of the availability of electricity or
natural gas.
(13) The misrepresentation of the supply of electricity or natural
gas.
(14) The misrepresentation of the reason or reasons for
electricity generating facility closures, outages, or maintenance.
(15) The selling, distributing, transferring, marketing, or
trading of electricity or natural gas between subsidiaries of the
same company, resulting in increased electricity or natural gas
prices.
(16) The creation of an artificial increase in demand for natural
gas, or refusal to sell natural gas, in order to raise the market
price or cause any of the prohibited acts or practices set forth in
this subdivision.
(17) The engaging in strategies, acts, or conduct in the sale,
distribution, transfer, marketing, or trading of electricity or
natural gas, that results in prices above the reasonable price for
that electricity or natural gas in a fair and competitive market.
1883.1. A person who violates Section 1883.1
1883 shall, in addition to other damages, be
required to disgorge the revenue that is equal to the
difference between the actual price charged and the competitive
benchmark price as a result of that unlawful conduct.
profits of that unlawful conduct. As used in this section,
"disgorgement" shall be measured by the difference in the actual
price charged and the competitive benchmark price as a
result of that unlawful conduct. In addition, for the
electricity or natural gas in the course of the unlawful conduct and
the reasonable price for that electricity or natural gas in a fair
and competitive market. In addition, a person found to be in
violation of Section 1883.1 1883 shall
be liable for three times the amount of damages sustained, as
measured by the amount of disgorgement, because of the act or acts of
that person. A person found to be in violation of Section
1883.1 1883 shall also be liable for the costs
of a civil action brought to recover those damages and attorney fees.
1883.3.
1883.2. (a) Specific or preventive relief may be granted to
enforce a penalty, forfeiture, or penal law in any case of a
violation of Section 1883.1 1883 .
(b) A person who engages, has engaged, or proposes to engage in
any of the conduct set forth in Section 1883.1
1883 , may be enjoined in any court of competent
jurisdiction. The court may make these orders or judgments,
including the appointment of a receiver, as may be necessary to
prevent the use or employment by a person of a practice or conduct
set forth in Section 1883.1 1883 , or
as may be necessary to restore to a person in interest money or
property. The court shall order the disgorgement of the revenue from
the use or employment of any act or practice prohibited by Section
1883.1 1883 , and shall establish a
fluid recovery fund for the return of the funds.
1883.4.
1883.3. Actions for relief pursuant to this chapter shall
be prosecuted exclusively in a court of competent jurisdiction by the
Attorney General, or by a person acting for the interests of itself,
its members, or the general public.
1883.5.
1883.4. Unless otherwise expressly provided, the remedies
or penalties provided by this section are cumulative to each other
and to the remedies or penalties available under all other laws of
this state.