BILL ANALYSIS 1 1 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 5 8 3 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.