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.