BILL ANALYSIS
AB 425
Page 1
Date of Hearing: May 7, 2003
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Darrell Steinberg, Chair
AB 425 (Richman) - As Amended: April 30, 2003
Policy Committee: Utilities and
Commerce Vote: 13-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill:
1)Requires each investor-owned utility (IOU) to continue the
availability of optional interruptible or curtailable electric
service, for customers with demand in excess of 500 kilowatts,
through 2008.
2)Requires the Public Utilities Commission (PUC) to establish a
rate for interruptible or curtailable service that reflects a
cost-based pricing incentive equal to the level of incentive
authorized by the PUC as of May 1, 2003.
3)Establishes a penalty of $9.30 per kilowatt hour for excess
power taken by interruptible or curtailable service customers
that do not shed electrical load when called upon by an IOU.
4)Requires an IOU to remove from interruptible or curtailable
service a customer who fails to substantially comply with its
commitment to shed load on two consecutive occasions.
5)Requires the IOUs to eliminate any incentive other than that
specified in (2) by the earlier of January 1, 2005 or the date
of the next final PUC decision on the IOUs' rate case
proceedings.
FISCAL EFFECT
Minor special fund costs to the PUC. [Public Utilities
Reimbursement Account]
AB 425
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COMMENTS
1)Purpose . California's three IOUs have interruptible programs
targeted mainly at industrial and large commercial customers.
Participating customers receive a discount off their electric
rates in exchange for agreeing to be interrupted for up to a
specified number of hours each year during times when
electricity reserves fall below acceptable levels. The
statutory authority for these programs expired March 31, 2002.
The PUC extended the programs administratively and is
currently considering continuation of demand reduction
programs as a component of the IOUs' respective general rate
cases, which are expected to be complete by the end of this
year.
The author and the sponsor, California Large Energy Consumers
Association, wish to ensure that the statutory directive to
continue the programs continues at least until through 2008.
As introduced, the bill required the pricing incentive for
interruptible service to be kept at the level effective in
June 1996. The author has amended the bill to give the PUC
the ability to establish a cost-based incentive, within
specified parameters, and to establish sanctions for
interruptible customers who do not comply with IOU requests to
shed load.
2)Opposition . The bill, as introduced, was opposed by The
Utility Reform Network (TURN), who objected to continuation of
what it believes is a multi-billion dollar subsidy that
provides poor and expensive insurance against blackouts. TURN
also maintained that the program conflicts with the goal of
encouraging a price-responsive demand response from large
customers, such as that accomplished by real time metering.
The PUC also opposed the measure due to the price incentive
freeze.
At the time this analysis was written, both TURN's and the PUC's
position on the amended bill were unknown.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081