BILL NUMBER: AB 428	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 23, 2003

INTRODUCED BY   Assembly  Member Richman  
Members Richman and Canciamilla 

                        FEBRUARY 14, 2003

   An act to add Section 367.6 to the Public Utilities Code, and to
amend Section 80110 of the Water Code, relating to energy resources.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 428, as amended, Richman.  Electrical corporations:  core
supply portfolio:  core bundled customers.
   (1) Under existing law, the Public Utilities Commission regulates
electrical corporations.  The Public Utilities Act requires the
commission to authorize direct transactions between electricity
suppliers and end use customers.  However, other existing law
suspends the right of retail end use customers to acquire direct
access service from certain electricity suppliers after a period of
time to be determined by the commission until the Department of Water
Resources no longer supplies electricity under a certain provision
of law.
   This bill would delete that suspension.
   The bill would require the commission, on or before January 1,
 2006   2005  , to adopt 
guidelines   regulatory criteria  for the
appropriate  and reasonable  composition of a core portfolio
of electricity supplies to be established by each electrical
corporation to meet the needs of the electrical corporation's bundled
core customers, as defined,  noncore customers electing to
remain with the electrical corporation for at least one year, 
and  to  provide an adequate reserve capacity.  Under the
bill, commencing January 1, 2006, an  electric  
electrical  corporation would have no obligation to 
serve   procure electric commodity for  a noncore
customer, as defined, except by contract for a term of no less than
 3   1   years   year
 and on terms approved by the commission that reimburse the
electrical corporation for all costs of providing electrical service.
  Commencing on that date, noncore customers  would 
 could not  be served  from the core portfolio, except
as specified, and would be served  either by direct transactions
or by contract with an electrical corporation.  The bill would
require the commission, on or before January 1, 2006, to adopt rules
to allow residential bundled core customers to elect to be served by
direct transactions in a manner that fully  accounts for
their cost of service by the electrical corporation and payments for
a proportionate share of system costs, bond payments, and public
benefits charges   compensates the electrical
corporation and the Department of Water Resources for the customers'
proportionate shape of specified categories of costs  .  
The bill would also require the commission to adopt rules to ensure
that the returning residential bundled core customers are charged the
full costs incurred by the electrical corporation to provide them
with electric commodity procurement service, including a minimum one
year contractual obligation to take bundled electric service from the
electrical corporation, unless the customer leaves the electrical
corporation's service territory.   The bill would require the
commission to adopt corresponding rules for nonresidential bundled
core customers on or before January 1, 2012.  Because a violation of
a rule or order of the commission is a crime, this bill would create
a new crime, thereby imposing a state-mandated local program.
  (2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  It is the intent of the Legislature to  provide
  do all of the following:
   (a) Establish a market structure in which the electrical
corporations have an obligation to provide bundled electric commodity
procurement service only to core retail end-use customers.
   (b) Allow noncore retail end-use customers to elect to have their
electricity commodity procured by the electrical corporations for a
fixed term at rates that fully compensate the electrical corporations
for the incremental costs of procuring the commodity.
   (c) Require the electrical corporations to serve as a default
provider of electric commodity procurement service to noncore retail
end-use customers that voluntarily or involuntarily return to the
electrical corporation for that service.
   (d) Provide a market structure  for the construction of
electric generation capacity to meet the needs of a growing state and
replace this state's most polluting and inefficient 
generation plants by phasing in a retail   electric
generation plants by phasing in a competitive retail electric
commodity  market for the largest, most financially stable
 customers  retail end-use customers of the
electrical corporation.
   (e) Ensure the protection of core retail end-use customers against
payment of stranded costs by requiring departing customers to pay
for power and other services provided on their behalf by the state
and the electrical corporations  .
  SEC. 2.  Section 367.6 is added to the Public Utilities Code, to
read:
   367.6.  (a) As used in this section, the following terms have the
following meanings:
   (1) "Bundled core customers" include all  customers
  retail end-use customers of an electrical corporation
 with a maximum peak demand of less than 500 kilowatts, or a
maximum peak demand as determined by the commission pursuant to
subdivision (b), who are not being served, or who elect not to be
served, through direct transactions.
   (2) "Noncore customers" include all  customers 
 retail end-use customers of an electrical corporation  with
a maximum peak demand of 500 kilowatts or greater, or a maximum peak
demand as determined by the commission pursuant to subdivision (b).
 For the purposes of this section, noncore customers may
aggregate their peak demand from multiple meters located anywhere in
an electrical corporation's service territory.  Customers receiving
service from electricity suppliers on January 1, 2006, shall be
considered noncore customers, except any customers exempt from any
direct access surcharge paid by other noncore customers, shall retain
that exemption until the time they return to bundled utility
service. 
   (b) Commencing January 1,  2008, and every two years
thereafter,   2009,  the commission shall reduce
the maximum peak demand threshold  by an amount sufficient to
convert   for defining noncore customers in subdivision
(a), by converting  the bundled core customers with the largest
peak demand prior to reduction of the threshold to noncore
customers,  who shall contract for electricity service from
third parties or an electric corporation to   in
sufficient amounts, so that the forecast load attributable to
converted customers is forecast to  meet all growth in
electricity demand forecasted by the State Energy Resources
Conservation and Development Commission during the following
five-year period and any reduction in the aggregate supply of
electricity provided by Department of Water Resources contracts
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.  The commission  shall complete its proceeding in this
matter no later than December 31, 2007, and  may not lower the
threshold beyond  100   250  kilowatts
maximum peak demand.
   (c) On or before January 1,  2006   2005
 , the commission shall adopt  guidelines for the
appropriate   regulatory criteria for the appropriate
and reasonable  composition of a core portfolio of electricity
supplies to be established by each electrical corporation to meet the
needs of the electrical corporation's bundled core customers
 and   and noncore customers electing to remain
with the electrical corporation for at least one year pursuant to
subdivision (e) and to  provide an adequate reserve capacity.
The commission shall include a minimum renewable energy component and
demand-side management programs, including, but not limited to,
time-of-use rates and reserve requirements  established by
the State Energy Resources Conservation and Development Commission.
 consistent with existing law. 
   (d) (1) The core supply portfolio shall also include the following
components:
   (A) Output of the generation assets retained by the electrical
corporation under commission regulation.
   (B) The total amount of Department of Water Resources contract
electricity purchased  to supply bundled customers 
 pursuant to Division 27 (commencing with Section 80000) of the
Water Code and allocated to the core customers of the electrical
corporation  .
   (C) Other supplies purchased by the electrical corporation under
contracts to serve the needs of its core customers.
   (D) Any spot market supplies required to  provide for core
demand   serve core customers  .  
   (2) The commission shall ensure that noncore customers are
responsible for an appropriate amount of the costs of the Department
of Water Resources contracts to the extent those costs exceed the
average cost of the remaining supply components of the core supply
portfolio.  
   (2) The commission shall adopt rules that protect the core
customer of an electrical corporation from cost shifting resulting
from direct transactions, customers who depart the electrical
corporation's system in order to be served by a competing publicly
owned utility, or undercollections of utility costs of service or
costs incurred by the Department of Water Resources to serve
customers who are no longer core customers.  These rules shall ensure
that a retail end-use customer purchasing electricity from another
electric service provider or electricity supplier shall reimburse the
electrical corporation that previously served that customer, or had
the obligation to serve that customer, on a nonbypassable basis for
the categories of costs described in subdivisions (d), (e), (f), and
(g) of Section 366.1.
   (3) The commission shall ensure that no customer moving from core
to noncore will have any obligation for any future costs incurred by
the electrical corporation or Department of Water Resources
associated with the core supply portfolio that are not recovered from
core customers, and that costs of the core supply portfolio shall be
recoverable only from core customers and noncore customers served by
electrical corporations as described in subdivision (e). 
   (e) Commencing January 1, 2006, an  electric 
 electrical  corporation has no obligation to  serve
  procure electric commodity for  any noncore
customer except by contract for a term of not less than 
three   one  years and on terms approved by the
commission that reimburse the electrical corporation for all costs of
providing electrical service.   On or before January 1, 2005,
the commission shall adopt rules, as it deems necessary to establish
a nondiscriminatory tariff for noncore customers.  These rules shall
include all of the following:
   (1) A time certain, no later than July 1, 2005, by which a noncore
customer currently receiving electric commodity procurement service
from the electrical corporation shall either elect to be served by an
electricity supplier other than the electrical corporation or agree
to be served by the electrical corporation for a minimum of one year.
  Noncore customers electing to remain with the electrical
corporation on or before July 1, 2005, may be served from the core
customer portfolio described in paragraph (1) of subdivision (d).
   (2) Notice requirements of not less than six months for noncore
customers to provide notice to their electrical corporation and the
Department of Water Resources of their intent to obtain service from
an electricity supplier other than the electrical corporation or
voluntarily contract with the electrical corporation for bundled
noncore electric commodity procurement service pursuant to this
subdivision.
   (3) Provisions for ensuring prompt and full recovery of costs that
the electrical corporation and Department of Water Resources have
incurred to serve customers pursuant to paragraph (2) of subdivision
(d) and in meeting the obligation to serve.  Rates and tariffs that
require noncore customers who choose to return to bundled utility
electric commodity procurement service to pay the actual costs
incurred by the electrical corporation to procure electric commodity
for that returning customer on a basis separately tariffed from the
costs of the noncore portfolio of the electrical corporation for a
period of not less than one year or the tariffed rate under this
section, whichever is higher. 
   (f) Commencing January 1, 2006, noncore customers may not be
served from the core portfolio  , except as provided in paragraph
(1) of subdivision (e)  . Noncore customers shall be served by
direct transactions, as described in Section 365, or by contract with
an electrical corporation as described in subdivision  (e).
Customers may aggregate their load at multiple locations in order to
be classified as noncore customers.  Any noncore customer who elects
to remain with, or return to, service from its electrical
corporation rather than engage in direct transactions shall provide
the electrical corporation at least 18 months' advance written notice
of that election.   (e).  In coordination with the
resource planning and procurement process defined in Section 454.5,
the commission shall annually establish the appropriate mix and level
of long-term, medium-term, and short-term resource commitments to be
made by the electrical corporation consistent with the utility
procurement obligations defined in this section. 
   (g) (1) On or before January 1, 2006, the commission shall adopt
rules to allow residential bundled core customers to elect to be
served by direct transactions in a manner that fully 
accounts for their cost of service by the electrical corporation and
payments for a proportionate share of system costs, bond payments,
and public benefits charges.   compensates the
electrical corporation and the Department of Water Resources for the
customers' proportionate share of the categories of costs described
in subdivisions (d), (e), (f), and (g) of Section 366.1.  The
commission shall also adopt rules to address the return of those
residential bundled core customers being served by direct
transactions to bundled service that ensure that the returning
customers are charged the full costs incurred by the electrical
corporation to provide them with electric commodity procurement
service, including a minimum one year contractual obligation to take
bundled electric service from the electrical corporation, unless the
customer leaves the electrical corporation's service territory. 

   (2) On or before January 1, 2012, the commission shall adopt rules
to allow nonresidential bundled core customers to elect to be served
by direct transactions in a manner that fully  accounts for
their cost of service by the electrical corporation and payments for
a proportionate share of system costs, bond payments, and public
benefits charges.  compensates the electrical
corporation and the Department of Water Resources for the customers'
proportionate share of the categories of costs described in
subdivisions (d), (e), (f), and (g) of Section 366.1.  The commission
shall also adopt rules to address the return of those nonresidential
bundled core customers being served by direct transactions to
bundled service that ensure that the returning customers are charged
the full costs incurred by the electrical corporation to provide them
with electric commodity procurement service, including a minimum one
year obligation to take bundled electric service from the electrical
corporation, unless the customer leaves the electrical corporation's
service territory.
   (h) A noncore customer shall not be responsible for any new
transition costs or procurement-related obligations incurred on
behalf of the core portfolio during the period when the customer is
served by direct transactions, except to the extent that the costs
were incurred during the period when the noncore customer had elected
to receive core portfolio service pursuant to paragraph (1) of
subdivision (e) and the costs cover the actual cost of electricity
used by the customer. 
  SEC. 3.  Section 80110 of the Water Code is amended to read:
   80110.  The department shall retain title to all power sold by it
to the retail end use customers. The department shall be entitled to
recover, as a revenue requirement, amounts and at the times necessary
to enable it to comply with Section 80134, and shall advise the
commission as the department determines to be appropriate.  
Such   Those  revenue requirements may also include
any advances made to the department hereunder or hereafter for
purposes of this division, or from the Department of Water Resources
Electric Power Fund, and General Fund moneys expended by the
department pursuant to the Governor's Emergency Proclamation dated
January 17, 2001.  For purposes of this division and except as
otherwise provided in this section, the commission's authority as set
forth in Section 451 of the Public Utilities Code shall apply,
except any just and reasonable review under Section 451 shall be
conducted and determined by the department.  The commission may enter
into an agreement with the department with respect to charges under
Section 451 for purposes of this division, and that agreement shall
have the force and effect of a financing order adopted in accordance
with Article 5.5 (commencing with Section 840) of Chapter 4 of Part 1
of Division 1 of the Public Utilities Code, as determined by the
commission.  In no case shall the commission increase the electricity
charges in effect on February 1, 2001 for residential customers for
existing baseline quantities or usage by those customers of up to 130
percent of existing baseline quantities, until such time as the
department has recovered the costs of power it has procured for the
electrical corporation's retail end use customers as provided in this
division.   The department shall have the same rights with respect
to the payment by retail end use customers for power sold by the
department as do providers of power to  such  
those  customers.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.