BILL ANALYSIS
AB 426
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 426 (Cox)
As Amended August 18, 2004
Majority vote
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|ASSEMBLY: | |(June 2, 2003) |SENATE: |24-5 |(August 23, |
| | | | | |2004) |
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(vote not relevant)
Original Committee Reference: U. & C.
SUMMARY : Prohibits the California Public Utilities Commission
(PUC) from imposing any charge, including a cost responsibility
surcharge (CRS) on a customer of a local publicly owned electric
utility (muni) if the customer's service location has not
previously received service from an investor owned utility
(IOU).
The Senate amendments delete the Assembly version of this bill,
and instead inserted the above provision.
EXISTING LAW provides that each retail end-use customer that has
purchased power from an electrical corporation on or after
February 1, 2001, should bear a fair share of the Department of
Water Resources' (DWR) electricity purchase costs, as well as
electricity purchase contract obligations that are recoverable
from electrical corporation customers in PUC-approved rates.
AS PASSED BY THE ASSEMBLY , this bill required DWR to establish a
program allowing private entities to lease space above the State
Water Project conveyance facilities for solar panels.
FISCAL EFFECT : Unknown
COMMENTS : As amended in the Senate, this bill tries to address
a long-time dispute over what, if any, fees should be imposed on
electricity customers in areas that that were within an IOU's
service territory but are then annexed by a muni. Munis may
form or expand in areas where IOUs have customers and
infrastructure or in areas of new development without IOU
customers or infrastructure (greenfields). Various exit fees
can be imposed on these customers to cover costs that were
incurred by IOUs to serve these customers and prevent those
AB 426
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costs from being shifted to other IOU customers.
CRS: During the energy crisis in 2001, IOUs and then DWR
procured power to serve IOU customers at wholesale rates that
exceeded the rates IOUs could charge ratepayers. Then DWR
entered into a number of long-term power contracts to meet
future IOU electricity needs.
Since 2001, PUC has issued several orders establishing
responsibility for DWR and IOU procurement costs for customers
leaving IOU service for direct access, self-generation, and muni
service. Collectively, the charges to recover these costs are
known as CRS. In July 2003, PUC issued a decision establishing
a CRS applicable to customers departing IOU service for muni
service. PUC has only partially excluded greenfield customers
from CRS. The decisions excluded greenfield annexations by
existing munis from CRS, but not greenfield annexations by munis
formed after that date. In August of 2003, PUC granted several
munis' request for rehearing of this decision, but limited
review to the issue of where to draw the line between existing
and new munis. The rehearing is pending.
This bill would preempt the rehearing at PUC and instead prevent
any CRS from being imposed on greenfield customers, even if IOU
or DWR entered into long-term contracts and procured power on
those customer's behalf.
The Dedicated Rate Component of SB 772: Most recently, SB 772
(Bowen), Chapter 46, Statutes of 2004, addressed recovery of a
bond charge to finance a portion of PG&E's bankruptcy recovery
costs. SB 772 requires PUC to ensure collection of PG&E's
recovery costs from all electric consumers in PG&E's current
service territory, with specified exceptions. As for munis, SB
772 generally provides that recovery costs are unavoidable by
customers taking service from a muni that forms in, or expands
into, PG&E's current service territory. However, SB 772
requires PUC to determine the extent to which recovery costs are
recoverable in greenfield areas served by a muni.
AB 426 would preempt the hearing at PUC and instead prevent any
recovery costs from being imposed on greenfield customers.
Other charges: While the sponsors of AB 426 state that the
intent of this bill is to statutorily exempt greenfield
customers from paying CRS or SB 772 recovery bond charges, this
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bill is drafted to be much broader and exempts greenfield
customers from any charge imposed by the PUC. Currently, other
non-bypassable charges imposed by PUC that would potentially be
exempted in this bill include the rate reduction bonds
authorized under AB 1890 (Brulte), Chapter 854, Statutes of 1996
and nuclear decommissioning charges.
This bill was substantially amended in the Senate and the
Assembly approved provisions of this bill were deleted. The
subject matter in this bill, as amended, has not been considered
by a policy committee in the Assembly
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083
FN: 0008328