BILL NUMBER: AB 428 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 2, 2004
AMENDED IN SENATE JUNE 16, 2003
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,
relating to energy resources. An act to add Article
17 (commencing with Section 400) to Chapter 2.3 of Part 1 of Division
1 of the Public Utilities Code, and to amend Section 80110 of the
Water Code, relating to electricity.
LEGISLATIVE COUNSEL'S DIGEST
AB 428, as amended, Richman. Electrical corporations:
core, noncore, and core-elect customers Public
Utilities Commission: direct transactions .
(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. Existing law requires the commission to
review and adopt a procurement plan for each electrical corporation.
The commission is required to establish procurement
balancing accounts to track the differences between recorded revenues
and costs to ensure that each electrical corporation timely recovers
prospective procurement costs pursuant to their procurement plan.
The bill would require the commission, on or before January 1,
2005, to adopt rules under which noncore customers, as defined, by a
date certain on or before June 30, 2005, elect whether to procure
electricity service (commodity service) from an electric service
provider, elect to receive commodity service from the electrical
corporation under a procurement plan for a minimum period of 3 years,
or receive default commodity service from the electrical
corporation. Beginning January 1, 2006, an electrical corporation's
obligation to provide commodity service from its procurement plan
would extend only to core and core-elect customers, as defined, and
to provide default commodity service to noncore customers. Default
commodity service would be provided at the higher of the electrical
corporation's costs of spot electricity purchases, or the tariff rate
for core-elect customers purchasing commodity service pursuant to
the electrical corporation's procurement plan. The commission would
be required to establish rules to ensure that the costs of providing
default commodity service to noncore customers are paid solely by
those noncore customers, without impacting the rates and charges of
core customers. The bill would require the commission, on or before
July 1, 2004, to establish tariffs for noncore customers that include
all applicable transmission, distribution, public goods, and cost
recovery surcharge costs otherwise paid by noncore customers for
certain purposes. Noncore customers that begin taking commodity
service from an electric service provider on or after January 1,
2006, would be required to pay certain costs consistent with those
costs that customers of a community choice aggregator are required to
pay under existing law. The bill would require the commission to
establish rules or tariffs that provide an option for residential
customers to receive commodity service through direct transactions
from renewable resources beginning January 1, 2006, consistent with
cost recovery requirements applicable to community aggregators.
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.
This bill would require the commission, on or before April 1,
2005, to establish rules, as prescribed, for the phased
implementation of direct transactions, and a core/noncore model for
direct transactions, to commence January 1, 2009, consistent with
described principles. The bill would require the commission, for the
period commencing January 1, 2006, until January 1, 2009, in a given
year, to permit direct transactions in an amount equivalent to the
combined amount of load growth and reduction in the electricity
supply contract obligations of the department.
The bill would require the Independent System Operator to enforce
resource adequacy requirements adopted by the commission, subject to
the oversight of the commission and the Legislature.
The bill would require the commission, on or before April 1, 2005,
to prepare and submit to the Legislature and the Governor a report
on the rules the commission has adopted pursuant to the bill.
The bill would require the commission, on or before October 1,
2005, to review each procurement plan and would prohibit the
commission from adopting a procurement plan pursuant to that review
unless the commission finds that the electrical corporation has
demonstrated to the commission that its procurement plan complies
with the schedule for the phased implementation of direct
transactions adopted by the commission.
The bill would end the suspension of the right or retail end-use
customers to acquire service from other providers on January 1, 2006,
and require that, on and after that date, the acquisition of service
from other providers be in accordance with the above-described
provisions of the bill.
A violation of a rule or order of the commission is a crime. This
bill, by requiring the commission to adopt new rules, the violation
of which would be a crime, 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
SECTION 1. Article 17 (commencing with Section 400) is added to
Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, to
read:
Article 17. Direct Transactions
400. (a) On or before April 1, 2005, the commission shall
establish rules for the phased implementation of direct transactions.
The commission may establish reserve requirements, energy
efficiency obligations, and any other requirements the commission
determines to be necessary to ensure bundled customer indifference to
direct transactions. For the period commencing January 1, 2006,
until January 1, 2009, in a given year, the commission shall permit
direct transactions in an amount equivalent to the combined amount of
load growth and any reduction in the contract obligations of the
Department of Water Resources pursuant to Division 27 (commencing
with Section 80000) of the Water Code.
(b) On or before April 1, 2005, the commission shall establish a
core/noncore model for direct transactions, to commence January 1,
2009, consistent with all of the following principles:
(1) Permits specified electrical corporation customers to purchase
electricity directly from electric service providers.
(2) Provides that noncore customers forgo both the benefits and
future-incurred costs of bundled electricity service from the
electrical corporation.
(3) Provides that remaining core customers are served by the
electrical corporation's electricity resource portfolio.
(4) Requires each electrical corporation to maintain the value of
its electricity resource portfolio for core customers.
(5) Ensures electrical corporations and core customers full and
timely recovery of costs, including investments in long-term resource
additions to the system, originally incurred to serve departing
customers.
(6) Provides for full recovery of existing direct access customers'
energy cost obligations on a schedule comparable to the recovery of
comparable costs from core customers.
(7) Provides an election process for determining which customers
wish to remain core customers, and which customers opt for noncore
service, administered in a manner that ensures a stable customer base
for electrical corporations to support long-term integrated resource
planning and investment.
(8) Requires electric service providers to comply with conditions,
including resource adequacy standards, that the commission
determines to be necessary and appropriate to ensure there is no
adverse effect on the reliability or cost of electricity for core
customers.
(9) Requires electric service providers to comply with the
requirements established pursuant to Article 16 (commencing with
Section 399.11).
(10) Permits core customers to purchase renewable power at cost
via electrical corporation renewable service options, in addition to
an electrical corporation's obligations under Article 16 (commencing
with Section 399.11).
(11) Restricts the eligibility of noncore customers to return to
bundled service. The commission shall determine whether the
electrical corporation service should provide service to returning
noncore customers, and at what terms, or establish a default service
provider. Any option shall ensure that there is no cost shifting
from noncore to core customers.
(12) Shows that a core/noncore program will support, and not be
detrimental to, system reliability and future investments in
electricity infrastructure and the objective of acquiring all
cost-effective demand reduction resources on the system.
(13) Compares the public benefits of core/noncore to other
electric service options, including bundled service and community
choice aggregation, as provided in Section 366.2.
(14) Protects existing contractual rights.
(c) The Independent System Operator shall enforce any resource
adequacy requirements adopted by the commission pursuant to this
section, subject to the oversight of the commission and the
Legislature.
(d) On or before April 1, 2005, the commission shall prepare and
submit to the Legislature and the Governor a report on the rules the
commission has adopted pursuant to subdivisions (a) and (b),
including, but not limited to, the specific actions taken by the
commission to comply with the principles listed in subdivision (b).
(e) On or before October 1, 2005, the commission shall review each
procurement plan prepared and submitted by an electrical corporation
pursuant to Section 454.5 and shall not adopt a plan pursuant to
that review unless it finds that the electrical corporation has
demonstrated to the commission that its procurement plan complies
with the schedule for the phased implementation of direct
transactions adopted by the commission pursuant to this section. The
commission shall establish transition rules that allow an electrical
corporation to avoid stranding capacity through its procurement plan.
SEC. 2. 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 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
The 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 Public Utility Utilities
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 The commission shall not
increase the electricity charges in effect on the date that the act
that adds this section becomes effective 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
end-use customers as provided in this division.
After the passage of such a period of
time after the effective date of this section
February 1, 2001, as shall be determined by the commission,
the right of retail end use end-use
customers pursuant to Article 6 (commencing with Section 360) of
Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code to
acquire service from other providers shall be suspended until
the department no longer supplies power hereunder
January 1, 2006. On and after January 1, 2006, the acquisition
of service from other providers shall be in accordance with Article
17 (commencing with Section 400) of Chapter 2.3 of Part 1 of Division
1 of the Public Utilities Code . The department shall have
the same rights with respect to the payment by retail end
use end-use customers for power sold by the
department as do providers of power to such
those customers.
SEC. 2. 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. _____________________________________ All
matter omitted in this version of the bill appears in the bill as
amended in the Senate, June 16, 2003 (JR 11)
____________________________________