BILL ANALYSIS
AB 425
Page A
Date of Hearing: April 1, 2003
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
AB 425 (Richman) - As Introduced: February 14, 2003
SUBJECT : Electric service: rates: interruptible programs.
SUMMARY : Extends the statutory authority for interruptible or
curtailable service programs administered by the investor-owned
utilities (IOUs). Specifically, this bill :
Requires the California Public Utilities Commission (PUC) to
direct each IOU to continue the availability of optional
interruptible or curtailable electric service until December 31,
2008.
EXISTING LAW :
1)Authorizes PUC to establish rates for public utilities,
including electrical corporations or IOUs.
2)Requires PUC to maintain efforts to reduce the rates charged
heavy industrial customers to a level competitive with other
states, and to do so without shifting recovery of costs to
other customer classes.
3)Specifies that PUC shall continue the availability of optional
interruptible or curtailable service at least until March 31,
2002.
FISCAL EFFECT : Unknown.
COMMENTS :
California's three IOUs have interruptible programs targeted
mainly at industrial and large commercial customers. Customers
participating in these programs receive a discount off their
electric rates in exchange for agreeing to be interrupted up to
a specified number of hours each year.
The Independent System Operator (ISO) activates these
interruptible or curtailable programs when electric generation
reserves fall below 5%. The specified customers agree to
interrupt electric service for up to 6 hours per event, and up
AB 425
Page B
to 150 hours per year. The participating customers get roughly
a one-cent per kilowatt-hour rate incentive in return.
These demand reduction programs have been regarded as a valuable
resource to the overall operation of the grid during peak demand
hours, and were particularly useful during periods of supply
shortages.
The statutory authority under which IOUs operate these programs
expired March 31, 2002. PUC extended these programs and is
currently considering the continuation of the demand reduction
programs administered by IOUs as a component of their respective
general rate cases, which are expected to be complete by the end
of this year.
The author and the sponsor wish to ensure that the statutory
directive to continue these programs continues, at least until
December 31, 2008.
Opponents object to continuation of a "multi-billion dollar
subsidy" which provides poor and expensive insurance against
blackouts.
Real Time Meters
Opponents also believe that the program conflicts with the goal
of encouraging a price-responsive demand response from large
customers, such as real time metering. In SB X1 5 (Sher)<1> the
Legislature appropriated $35 million from the General Fund to
install real time meters for large industrial customers. Real
time meters are designed to elicit a demand response from
customers who pay electric rates according to a real time tariff
tying the rates to changes in the on the spot market price of
electricity.
Opponents object to the fact that large industrial customers are
proposing to continue the interruptible rate program while
supporting only a voluntary real time billing program during
current PUC proceedings.
REGISTERED SUPPORT / OPPOSITION :
Support
---------------------------
<1> Chapter 7, Statutes of 2001.
AB 425
Page C
California Large Energy Consumers Association (CLECA) - sponsor
Schnitzer Steel Products Co.
California Manufacturers & Technology Association
Opposition
The Utility Reform Network (TURN)
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083