BILL NUMBER: AB 653	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JANUARY 7, 2004
	AMENDED IN SENATE  SEPTEMBER 12, 2003
	AMENDED IN SENATE  SEPTEMBER 8, 2003
	AMENDED IN SENATE  AUGUST 18, 2003
	AMENDED IN SENATE  JULY 9, 2003
	AMENDED IN ASSEMBLY  MARCH 24, 2003

INTRODUCED BY   Assembly Member Nunez
   (Coauthors:  Assembly Members Calderon, Chu, Correa, Montanez,
Ridley-Thomas, and Strickland)
   (Coauthors:  Senators Cedillo and Murray)

                        FEBRUARY 19, 2003

    An act to add Section 454.6 to the Public Utilities Code,
relating to energy.   An act to amend Section 15814.15
of the Government Code, relating to energy efficiency. 


	LEGISLATIVE COUNSEL'S DIGEST


   AB 653, as amended, Nunez.  Energy  efficiency  :
 electricity generation facilities:  rates  
public buildings  . 
   Existing law authorizes the State Public Works Board, until
January 1, 2005, to issue revenue bonds, notes, and bond anticipation
notes to finance the cost of cogeneration equipment, alternative
energy equipment, and conservation measures in public buildings.
   This bill would delete the repeal date of these provisions, thus
making this authority permanent and would make projects that combine
conservation measures and alternative energy equipment eligible for
funding under these provisions.  The bill would also require the
board, in determining whether to authorize funding for projects
pursuant to these provisions, to evaluate each project in its
entirety and analyze the costs and the financial and energy savings
over the full life of the project.  It would authorize the board,
when analyzing a project, to consider any additional value added by
product warranties associated with the project.   
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations,
and authorizes the commission to fix just and reasonable rates and
charges.  Under existing law, a public utility has a duty to serve,
including furnishing and maintaining such adequate, efficient, just
and reasonable service, instrumentalities, equipment, and facilities
as are necessary to promote the safety, health, comfort, and
convenience of its patrons and the public.
   This bill would require the commission, upon application by an
electrical corporation, and subject to public hearing, to approve and
maintain rates that ensure that the reasonable costs of owning or
operating, or of contracting for the output of, facilities for the
generation of electricity, that meet certain criteria, are fully
recovered for the depreciable life of the facility or the term of the
contract.
   The bill would make these provisions applicable to an application
filed by an electrical corporation on or before December 31, 2006.

   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  
  SECTION 1.  Section 454.6 is added to the Public Utilities
 
  SECTION 1.  Section 15814.15 of the Government Code is amended to
read: 
   15814.15.  (a) The board may issue revenue bonds, notes, including
commercial paper notes and other forms of negotiable short-term
indebtedness, and bond anticipation notes pursuant to Chapter 5
(commencing with Section 15830) to finance the cost of cogeneration
equipment, alternative energy equipment,  projects that combine
conservation measures and alternative energy equipment,  and
conservation measures constituting the public buildings authorized by
this chapter.  The total amount of revenue bonds, notes, including
commercial paper notes and other forms of negotiable short-term
indebtedness, and bond anticipation notes authorized to be issued
pursuant to this section in each of the 10 fiscal years beginning
with the 1982-83 fiscal year is fifty million dollars ($50,000,000),
for a total of five hundred million dollars ($500,000,000).  Any
portion of the authorization not used in any fiscal year may be used
in any future fiscal year.  
   (b) This section shall remain in effect only until January 1,
2005, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2005, deletes or extends
that date.  
   (b) (1) The board, in determining whether to authorize funding
pursuant to subdivision (a) for projects proposed by the Department
of General Services, shall do both of the following:
   (A) Evaluate each project in its entirety.
   (B) Analyze the costs and the financial and energy savings over
the full life of the project.
   (2) In analyzing a project, the board may also consider any
additional value added by product warranties associated with the
project.    Code, to read:
   454.6.  (a) The Legislature finds and declares all of the
following:
   (1) Investment in new or repowered efficient and cost-effective
facilities for the generation of electricity that meet all applicable
environmental requirements is necessary and essential to ensure that
adequate generating capacity is available to reliably meet the needs
of California consumers.
   (2) Investment in new or repowered efficient and cost-effective
facilities for the generation of electricity, dedicated to the
benefit of California consumers, for the life of the facility, or if
under contract, the term of the contract, at just and reasonable
rates, is in the public interest.
   (3) Investment in repowered electric generation facilities is
beneficial to California consumers and necessary to replace our aging
fleet of electric generation facilities with more efficient and
cost-effective facilities that improve environmental quality, reduce
costs to consumers, and continue to provide economic benefits to the
communities in which they are located.
   (4) It is the intent of the Legislature to facilitate investment
in the construction and operation of new and repowered facilities for
the generation of electricity, licensed by the State Energy
Resources Conservation and Development Commission, that meet the
long-term resource needs of public utilities and are dedicated to the
benefit of California consumers for the life of the facility, or if
under contract, the term of the contract, on a cost-of-service basis.

   (b) In order to ensure that adequate generating capacity is
available to meet the electricity needs of California consumers in a
reliable, efficient, and cost-effective manner, the commission may
authorize an electrical corporation to recover in rates pursuant to
subdivision (c), investments in, or the costs of contracting for, the
output of, new or repowered facilities for the generation of
electricity, that meet all of the following criteria at the time the
investments are proposed to the commission:
   (1) The electricity generated by the facility is dedicated to
serving ratepayers of the electrical corporation for the  useful life
of the facility or the term of the contract on a cost-of-service
basis.
   (2) The electricity generated by the facility meets the long-term
resource adequacy needs of the electrical corporation.
   (3) The electricity generated by the facility is fully
dispatchable by the electrical corporation for the benefit of the
ratepayers of the electrical corporation.
   (4) The facility is licensed by the State Energy Resources
Conservation and Development Commission and meets all currently
applicable environmental and transmission interconnection
requirements.
   (5) The investment in the facility and the ratemaking treatment is
in the public interest.
   (c) In order to ensure that adequate investment in electricity
generating capacity is made as expeditiously as possible, upon
application by the electrical corporation, and subject to public
hearing, the commission shall approve and maintain rates that ensure
that the reasonable costs of owning and operating, or contracting for
the output of, new  or repowered electricity generation facilities
that meet the criteria of subdivision (b), including a return of, and
on, reasonable investment in new  or repowered electricity
generating facilities,  are fully recovered for the depreciable life
of the facility or the term of the contract.  This cost recovery
assurance for new or repowered electricity generation facilities
shall apply on a nondiscriminatory basis to either of the following:

   (1) Investments by the electrical corporation.
   (2) The electrical corporation's full cost of contracting with an
unaffiliated or unrelated entity for the portion of electricity
produced by a facility that is owned and operated by another entity,
that meets the criteria of subdivision  (b).
   (d) The commission shall, in approving rates pursuant to
subdivision (c) for an electrical corporation's full cost of
contracting with another entity for electricity generated by a
facility that meets the criteria in subdivision (b), grant initial
consideration to approving rates for an electrical corporation's full
cost of contracting with another entity for electricity generated by
a repowered facility, if the contract terms offered by the repowered
facility are at least as favorable to ratepayers as a facility that
meets the criteria in subdivision (b) and has not been repowered.
   (e) An electrical corporation may submit an application for the
cost recovery assurance described in paragraph (2) of subdivision (c)
for any facility for which an application for a license from the
State Energy Resources Conservation and Development Commission has
been submitted, but which has not been approved at the time the
electrical corporation submits the application pursuant to this
subdivision.
   (f) As used in this section, the term "repowered" means a facility
that undergoes "repowering," as defined in Section 25550.5 of the
Public Resources Code, as that section existed on January 1, 2003.
   (g) This section applies to an application filed by an electrical
corporation on or before December 31,  2006.