BILL ANALYSIS AB 808 Page 1 Date of Hearing: May 21, 2003 ASSEMBLY COMMITTEE ON APPROPRIATIONS Darrell Steinberg, Chair AB 808 (Canciamilla) - As Amended: April 30, 2003 Policy Committee: UtilitiesVote:11-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill establishes a state Energy Agency and requires the governor to submit a reorganization plan for the agency. 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 to the Little Hoover Commission a plan for reorganization of the state's energy regulatory activities, and requires that a reorganization plan be transmitted to the Legislature by July 1, 2004. 3)Requires the reorganization plan to: a) Establish within the agency all major energy policy making functions. b) Merge the California Consumer Power and Conservation Financing Authority (Power Authority) and the California Energy Commission (CEC) into the new agency. c) Eliminate the Electricity Oversight Board and the Power Exchange. d) Transfer to the agency all energy policy-making functions currently performed by the Public Utilities Commission (PUC). e) Transfer to the agency all energy conservation programs and oversight currently performed by PUC. f) Establish a single board responsible for siting electrical generation and transmission facilities and AB 808 Page 2 natural gas transmission facilities to coordinate with agencies with environmental protection responsibilities. 4)Declares that the Energy Agency is responsible for planning, developing and implementing all major aspects of state energy policy to ensure an adequate, reasonably priced supply of electricity and natural gas. FISCAL EFFECT 1)One-time costs in the range of $200,000 for the Governor's Office to prepare the reorganization plan. 2)Ongoing costs of around $1.5 million (General Fund and special funds) for the agency level operations. 3)The net fiscal impact of reorganizing several state entities under a new agency is unknown, but, to the extent it provides consolidation and better coordination of current functions, it should result in cost savings. COMMENTS 1)Purpose . 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. 2)What Others Have Said . 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 (PPIC) noted that state energy policy has lost its coherence because the interrelated facets of energy policy are addressed in so many separate forums. PPIC 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. In it's Analysis of the 2002-03 Budget, Perspectives and Issues, the Legislative Analyst's Office suggests that, given the state's multiplicity of energy-related entities, and evidence of certain duplicative activities and other problems, it is time for the state to assess how these entities are organized AB 808 Page 3 and how they interact with one another. 3)Reorganization Process . Under existing law, the governor may propose an executive branch reorganization plan, which 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. Current law contemplates enactment, in the following year, of statutory language giving effect to the reorganization, but the reorganization is effective regardless of whether any follow-up statutes are enacted. 4)Prior Efforts . In 1995, Governor Wilson proposed a energy reorganization plan similar to that contained in this bill. That plan was defeated in the Senate by adoption of SR 30 (Alquist.) AB 2062 (Pescetti, 2002), which would have established an Energy Agency that included the regulatory powers and jurisdiction of the PUC, and AB 2383 (Diaz, 2002), which directed the Little Hoover Commission to study the consolidation of existing energy-related agencies into a cabinet-level department died in the Senate Energy Utilities and Commerce Committee. 5)Energy Action Plan . The PUC, CEC, and Power Authority, in an attempt to better coordinate the state's energy policy, have recently developed an Energy Action Plan, the goal of which is to, "Ensure that adequate, reliable, and reasonably-priced electrical power and natural gas supplies, including prudent reserves, are achieved and provided through policies, strategies, and actions that are cost-effective and environmentally sound for California's consumers and taxpayers." In their draft plan, the three agencies commit to active and continued cooperation in discussing critical energy issues jointly, sharing information and analysis, and bringing joint policy recommendations to the Legislature and the governor. AB 808 Page 4 6)Opposition . The California Municipal Utilities Association believes that AB 808 puts the cart before the horse, maintaining that the state should first "come to grips" with its fundamental energy policy issues before addressing organizational concerns. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081