BILL ANALYSIS
AB 425
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Date of Hearing: May 21, 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 extends the authority for interruptible and
curtailable electricity service programs. Specifically, 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 incentive level
currently authorized by the PUC.
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 absorbable special fund costs to the PUC. [Public
AB 425
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Utilities Reimbursement Account]
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 has extended the programs administratively through
2003 or into 2004 (depending on the utility). 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.
2)Opposition . The PUC indicates that it is currently
considering a number of other demand reduction programs that
would enable customers to modify their energy usage based on
market based price signals. Unlike the interruptible
programs, which provide substantial continuous discounts but
are triggered only during emergency supply incidents, price
responsive demand seeks to reduce or shift demand during peak
periods when the cost of procuring electricity is high. The
PUC notes that the interruptible programs have cost ratepayers
over $2 billion between 1990 and 2001, and believes that
extending the current program may interfere with other,
potentially more cost-effective demand reduction programs.
The PUC recommends that the bill be amended to give the
commission the authority to establish the incentive levels for
the interruptible programs.
The Office of Ratepayer Advocates (ORA) and The Utility Reform
Network (TURN) also oppose the bill and concur with the PUC's
position. ORA also believes that the non-compliance penalty
for interruptible customers should also be established through
a PUC proceeding.
3)Amendment . Staff recommends hat the bill be amended to
authorize the PUC to establish the appropriate pricing
incentive and any non-compliance penalties for the
interruptible programs.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081
AB 425
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