BILL ANALYSIS
AB 583
Page A
Date of Hearing: April 1, 2003
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
AB 583 (Leslie) - As Amended: March 25, 2003
SUBJECT : Generation facilities: regulation.
SUMMARY : Exempts the sale of specified electric generation
facilities by public utilities from a temporary ban imposed by
law. Specifically, this bill :
Permits the sale, transfer or other disposition of an interest
in an electric generation facility that is:
a) located outside of California; and
b) owned exclusively by a public utility that serves 60,000
or fewer connections in California.
EXISTING LAW :
1)Prohibits any electricity generating facility owned by a
public utility to be sold or otherwise disposed of prior to
January 1, 2006.
2)Provides for the California Public Utilities Commission (PUC)
regulation of electric generation facilities that are owned by
a public utility.
3)Specifies a process whereby a public utility can seek to
obtain PUC authorization to sell or dispose of ownership of an
electric generation facility.
FISCAL EFFECT : Unknown.
COMMENTS :
Among other things, the electricity restructuring law, AB 1890
(Brulte)<1> separated the major functions of electric service
(generation, transmission, and distribution) in order to create
a competitive generation market.
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<1> Chapter 854, Statutes of 1996.
AB 583
Page B
Decisions<2> of PUC required the investor-owned utilities (IOUs)
to divest at least 50% of their fossil-fuel electric generating
assets. The IOUs have divested most of their generating assets,
including a large number of natural gas power plants.
Under existing law, IOU generation assets are subject to rate
regulation by PUC and shall continue to be subject to PUC
regulation until the owner of those facilities has obtained
approval of PUC to dispose of those facilities. During the
energy crisis of 2000-2001, the Legislature enacted AB X1 6
(Dutra)<3>, which prohibits the sale or disposal of any electric
generating facility owned by a public utility until January 1,
2006.
The moratorium on the sale of generation assets for utility
companies doing business in California was intended to halt any
further divestiture of California assets during the energy
crisis.
Sale or transfer of out-of-state power plants
The sponsors of this bill, Sierra Pacific Power Company and
PacifiCorp, own electric generating assets outside the state of
California, but are public utilities under California law
because each serves electricity to retail customers within the
state.
PacifiCorp serves customers in the northernmost region of the
state and Sierra Pacific serves customers in the Lake Tahoe
region. Apparently neither company serves greater than 50,000
customers within California.
Because the companies are under the jurisdiction of state public
utilities laws, the moratorium on the sale or divestiture of
electric generation assets applies to them despite the minimal
nature of their contacts with the state and that the plants are
located in other states.
This bill exempts the companies from the moratorium, but they
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<2> D.95-12-063, modified in D.96-01-009.
<3> Chapter 2, Statutes of 2001.
AB 583
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would continue to be required to obtain an order from PUC<4>
authorizing the sale or transfer of the asset before
consummating the sale.
Previous legislation
Last year, AB 1235 (Leslie)<5> was signed in to law and it
provided an exemption for the divestiture of several specified
out of state assets owned by PacifiCorp and Sierra Pacific.
This bill simply exempts any out of state generation facility
owned by these entities from the moratorium.
REGISTERED SUPPORT / OPPOSITION :
Support
PacifiCorp
Sierra Pacific Power Company
Opposition
None on file.
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083
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<4> Public Utilities Code Section 851 requires a public utility
to obtain PUC approval prior to selling utility property that is
"necessary or useful" to the utility as it performs its duties
to the public.
<5> Chapter 840, Statutes of 2002.