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
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               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  








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            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.









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           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