BILL ANALYSIS
AB 583
Page A
CONCURRENCE IN SENATE AMENDMENTS
AB 583 (Leslie)
As Amended June 19, 2003
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |73-0 |(April 24, |SENATE: |37-0 |(July 7, 2003) |
| | |2003) | | | |
-----------------------------------------------------------------
Original Committee Reference: U. & C.
SUMMARY : Exempts the sale of specified electric generation
facilities by public utilities from a temporary ban imposed by
law.
The Senate amendments further narrow the scope of the exemption
by providing that an electric generation facility located
outside the state may be disposed of if, among other things, it
is not necessary to serve that utility's customers 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.
AS PASSED BY THE ASSEMBLY , this bill authorized the sale,
transfer or other disposition of an interest in an electric
generation facility that is located outside of California, and
is owned exclusively by a public utility that serves 60,000 or
fewer connections in California.
FISCAL EFFECT : Minor absorbable special fund costs for PUC to
provide orders authorizing the sale on any generating
facilities.
AB 583
Page B
COMMENTS : Among other things, the electricity restructuring
law, AB 1890 (Brulte), Chapter 854, Statutes of 1996, separates
the major functions of electric service (i.e., generation,
transmission, and distribution) in order to create a competitive
generation market.
Decisions of PUC, D.95-12-063, modified in D.96-01-009, required
the investor-owned utilities (IOUs) to divest at least 50% of
their fossil-fuel electric generating assets. 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 2000-01, the Legislature enacted AB X1 6
(Dutra), Chapter 2, Statutes of the 2001-02 First Extraordinary
Session, 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. 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.
AB 583 exempts the companies from the moratorium, but they would
AB 583
Page C
continue to be required to obtain an order from PUC<1>
authorizing the sale of the asset before consummating the sale.
Previous legislation: AB 1235 (Leslie), Chapter 840, Statutes
of 2002, provides an exemption for the divestiture of several
specified out of state assets owned by PacifiCorp and Sierra
Pacific. AB 583 simply exempts any out of state generation
facility owned by these entities from the moratorium.
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083
FN: 0002154
---------------------------
<1> 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. Public Utilities Code Section 853 also allows
the PUC to exempt a public utility from the laws governing
utilities if the public interest so requires.