BILL NUMBER: AB 428 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 2, 2003
AMENDED IN ASSEMBLY APRIL 23, 2003
INTRODUCED BY Assembly 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,
2005, to adopt 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 electrical corporation would
have no obligation to procure electric commodity for a noncore
customer, as defined, except by contract for a term of no less than 1
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 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
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 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 electric generation
plants by phasing in a competitive retail electric commodity market
for the largest, most financially stable 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 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 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, 2009, the commission shall reduce the
maximum peak demand threshold 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, 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
250 kilowatts maximum peak demand.
(c) On or before January 1, 2005, the commission shall adopt
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 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 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 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 serve core customers.
(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 electrical corporation has no
obligation to procure electric commodity for any noncore customer
except by contract for a term of not less than 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). 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 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 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. 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 those customers.
SEC. 4.
SEC. 3. 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.