BILL ANALYSIS
AB 808
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Date of Hearing: May 8, 2003
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
AB 808 (Canciamilla) - As Amended: April 30, 2003
SUBJECT : Energy: agency consolidation.
SUMMARY : Establishes an Energy Agency and reorganizes the
state's energy regulatory framework. Specifically, this bill :
1)Establishes the Energy Agency, with a cabinet-level Secretary
of Energy who is appointed by the Governor and confirmed by
the Senate.
2)Requires the Governor, by May 1, 2004, to submit for study and
recommendation to the Little Hoover Commission, and requires
the Little Hoover Commission to transmit a plan for
reorganization of the energy regulatory activities of the
state by July 1, 2004.
3)Requires the reorganization plan to:
a) Establish within the Energy Agency all major policy
making functions with respect to the state's energy policy
b) Merge the California Consumer Power and Conservation
Financing Authority (Power Authority) and the California
Energy Commission (CEC) into the Energy Agency.
c) Eliminate the Electricity Oversight Board.
d) Eliminate the Power Exchange.
e) Transfer to the Energy Agency all policy-making
functions pertaining to energy matters currently performed
by the California Public Utilities Commission (PUC) and
establish review mechanisms to ensure that the regulatory
activities of PUC are consistent with the state's energy
policy.
f) Transfer to the Energy Agency all energy conservation
programs and oversight currently performed by PUC.
g) Establish a single board responsible for the siting of
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electrical generation and transmission facilities and
natural gas transmission facilities that will coordinate
with agencies having environmental protection
responsibilities.
4)Declares that the Energy Agency is responsible for planning,
developing and implementing all major aspects of the state
energy policy to ensure an adequate, reasonably priced supply
of electricity and natural gas.
5)Requires the secretary, in consultation with the Independent
System Operator (ISO), to determine appropriate reserve levels
needed to maintain the reliability and stability of the
electrical transmission and distribution grid.
6)Specifies that PUC will ensure that electrical corporations
meet the reserve levels determined to be appropriate by the
secretary.
7)Requires the Energy Agency to plan, develop and implement all
major aspects of the state energy policy. The state energy
policy will ensure an adequate, reasonably priced supply of
electricity and natural gas
8)Enacts an Energy Code containing basic structural provisions.
EXISTING LAW :
1)Provides for regulation of public utilities, including gas and
electrical corporations, by PUC.
2)Provides for regulation by CEC of energy conservation,
renewable electricity generation and siting of electric power
plants.
3)Authorizes the Power Authority to issue up to $5,000,000,000
of revenue bonds to augment electric generating facilities and
ensure a sufficient and reliable supply of electricity.
4)Authorizes the Governor to change the structure of Executive
Branch agencies to, among other things, promote better
execution of laws, reduce expenditures, increase efficiency,
and eliminate duplicative efforts.
FISCAL EFFECT : Unknown.
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COMMENTS :
The author believes that the state's recent experiences during
the energy crisis brought to light a lack of accountability by
regulators, and also revealed considerable inter-agency
competition and functional duplication that has tended to
degrade the operations of the state's energy regulatory
programs. Accordingly, the authors believe that the recent
energy crisis and the public focus on energy programs present a
unique opportunity to comprehensively reorganize the state's
energy agencies to achieve policy consistency, accountability,
efficiency and responsiveness.
The reorganization process
Under existing law, the Governor may propose an executive branch
reorganization plan. A reorganization plan becomes effective 60
days after it has been submitted to the Legislature unless
either the Senate or the Assembly adopts, by a majority vote, a
resolution rejecting the plan. The Little Hoover Commission has
30 days after the plan has been submitted to the Legislature to
report to the Governor and the Legislature its evaluation of the
reorganization and any recommendations for changes. The law
contemplates enactment in the following year of statutory
language to give effect to the reorganization, but the
reorganization is effective regardless of whether any follow-up
statutes are enacted.
Prior calls for energy reorganization
In 1995, Governor Pete Wilson proposed Governor's Reorganization
Plan No. 2 (GRP 2), an energy reorganization plan similar to
that which is contained in this bill. GRP 2 eliminated CEC and
the Department of Conservation, creating a new Department of
Energy and Conservation to perform the functions of CEC and
Department of Conservation. Like this bill , GRP 2 also set up a
separate Energy Facilities Siting Board to handle power plant
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review and permitting that is now performed by CEC.<1>
Last year, this Committee heard AB 2062 (Pescetti), which also
proposed to create an Energy Agency. The bill was held in
Committee for further review. That measure was somewhat more
ambitious, in that it was intended to vest with the Department
of Energy all regulatory powers and jurisdiction of PUC relating
to energy. This bill continues PUC jurisdiction and regulatory
power over electric and gas corporations.
This Committee last year also heard and passed AB 2383 (Diaz),
which directed the Little Hoover Commission to study the
consolidation of existing energy-related agencies into a
cabinet-level department. AB 2383 was held in the Senate Energy
and Telecommunications Committee.
In its analysis of the 2002-03 Budget, the LAO's Perspectives
and Issues feature examined whether California should
re-organize its energy-related activities. LAO noted that the
state has a number of different state departments, boards, and
commissions involved in implementing, overseeing, and managing
the state's various energy-related policies and
responsibilities. This multiplicity of agencies, and evidence
of certain duplicative activities and other problems, suggests
that it is time for the state to assess how its various
energy-related entities are organized and interacting with one
another. Given the number of these organizational changes and
the speed with which they have occurred, it is not surprising
that a number of potentially unnecessary duplications and
overlaps have come to light, according to LAO's report.
In a report issued earlier this year on the causes and policy
options presented by the California energy crisis, the Public
Policy Institute of California (PPI) observed that the
electricity sector restructuring, followed by an energy crisis,
has led to an ad hoc and confusing mix of state agencies and
departments. PPI observed that the existing structure of energy
policymaking institutions is an impediment to attaining the
basic goals of the electricity sector. PPI noted that state
energy policy has lost its coherence because the interrelated
facets of energy policy are addressed in so many separate
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<1> GRP 2 was defeated in the Senate on July 20, 1995 by
adoption of SR 30 (Alquist), which resolved that the Senate did
not favor the plan.
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forums. PPI suggested that a cabinet-level post be created in
order to coordinate policy and functions now that the worst of
the energy crisis has passed.
Opposition
The California Municipal Utilities Association (CMUA) opposes
this effort at this time in the belief that it is not now wise
to rearrange the energy agencies until the state has determined
what the electricity market structure ought to look like. In
particular, CMUA opposes a continuing role for ISO in ensuring
electric reliability.
REGISTERED SUPPORT / OPPOSITION :
Support
California Chamber of Commerce
California Business Roundtable
Pacific Gas & Electric
Opposition
California Municipal Utilities Association
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083