BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 583 - Leslie Hearing Date:
June 10, 2003 A
As Amended: March 25, 2003 FISCAL B
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DESCRIPTION
Under existing law , the California Public Utilities Commission
(CPUC) must authorize the sale of property owned by a public
utility that is "necessary or useful in the performance of its
duties to the public" (Section 851 of the Public Utilities
Code).
Existing law further prohibits the sale of any public
utility-owned power plant until January 1, 2006, and requires
the CPUC to continue to regulate utility generation facilities
and ensure they remain dedicated to service for the benefit of
California ratepayers (Section 377 of the Public Utilities
Code).
This bill exempts from Section 377 the disposition of any
electric generation facility located outside the state and owned
by a utility with 60,000 or fewer service connections in
California.
BACKGROUND
Section 851 of the Public Utilities Code requires any public
utility to secure CPUC authorization prior to disposing of any
property "necessary or useful in the performance of its duties
to the public." In the case of an application to sell a power
plant, CPUC review under Section 851 would entail a public
interest finding and environmental review under the California
Environmental Quality Act.
AB 6X (Dutra), Chapter 2, Statutes of 2001, flatly prohibited
the sale of any public utility-owned power plant until January
1, 2006, and required, in any event, that utility generation
assets remain subject to CPUC regulation and dedicated to
service for the benefit of California ratepayers.
Sierra Pacific Power (SPP) is a Nevada-based electric utility
which serves most of northern Nevada and a small part of
California around Lake Tahoe. PacificCorp is an Oregon-based
electric utility which serves Del Norte and Siskiyou Counties in
northern California. Although their primary places of business
are outside the state, to the extent SPP and PacificCorp operate
as public utilities in California, they are subject to CPUC
regulation, including a requirement that the CPUC approve
divestiture of utility property pursuant to Section 851. SPP
and PacificCorp are the only utilities that meet the bill's
criteria (own generation out-of-state and have fewer than 60,000
customers in state.)
COMMENTS
1)Prior legislative exemptions have been facility-specific.
Since AB 6X was enacted, the Legislature has approved two
special statutes exempting utility-owned generation assets
from the divestiture ban. In 2001, AB 19X (Florez) exempted
PG&E's defunct Kern facility from the ban, but was withdrawn
from enrollment in favor of an Executive Order. AB 1235
(Leslie), Chapter 840, Statutes of 2002, applied to four SPP
hydroelectric projects and two PacificCorp hydroelectric
projects. The CPUC has yet to approve the sale of any of
those facilities.
In contrast to the prior legislation, this bill doesn't apply
to any specific facilities, but applies to all SPP and
PacificCorp facilities located outside California.
2)Is this bill consistent with the purpose of AB 6X? The
purpose of AB 6X was to end both market valuation and
divestiture of utility generation, and to ensure that retained
generation remained dedicated to California ratepayers. The
CPUC has implemented AB 6X by regulating utility generation on
a traditional cost-of-service basis.
The author and the committee may wish to consider amendments
to clarify that sale of SPP's and PacificCorp's out-of-state
generation facilities is not prohibited by Section 377, but
that the other provisions of Section 377 (providing for CPUC
regulation and requiring CPUC approval of facility sales)
still apply.
The author and the committee also may wish to consider whether
the exemption in this bill should be limited to facilities not
needed to serve California customers.
ASSEMBLY VOTES
Assembly Floor (73-0)
Assembly Appropriations Committee (24-0)
Assembly Utilities and Commerce Committee
(14-0)
POSITIONS
Sponsor:
PacifiCorp
Sierra Pacific Power Company
Support:
California Public Utilities Commission (if amended)
Oppose:
None on file
Lawrence Lingbloom
AB 583 Analysis
Hearing Date: June 10, 2003
377.2. Notwithstanding Section 377, a facility for the
generation of electricity, or an interest in a facility for the
generation of electricity, that is located outside of this
state, is owned by a public utility that serves 60,000 or fewer
customer accounts in this state, and is not necessary to serve
that public utility's customers in this state, may be disposed
of upon approval of the commission.