BILL ANALYSIS
Bill No: AB
808
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Edward Vincent, Chair
2003-2004 Regular Session
Staff Analysis
AB 808 Author: Canciamilla
As Amended: June 25, 2003
Hearing Date: July 1, 2003
Consultant: Steve Hardy
SUBJECT
Energy Agency Consolidation
DESCRIPTION
AB 808 would establish a State Energy Agency and reorganize
the state's energy regulatory framework as follows:
1)Contains findings and declarations relative to
California's existing regulatory system, which has
resulted in significant fragmentation, duplication,
overlap, and confusion in the formulation and execution
of the state's energy related functions. Also, that
having a single agency responsible for the siting of
generation, transmission, and natural gas infrastructure
will increase the efficiency and effectiveness of the
siting process.
2)Requires the Governor to transmit a plan for the
reorganization of the energy regulatory activities of
California to the Legislature on or before July 1, 2004,
as specified.
3)Establishes the Energy Agency (Agency), with a
cabinet-level Secretary of Energy appointed by the
Governor and confirmed by the Senate.
4)Requires the Governor's reorganization plan to include
all of the following:
AB 808 (Canciamilla) continued
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a) Establish within the Agency all major policy making
functions with respect to the state's energy policy.
b) Eliminate the California consumer Power and
Conservation Financing Authority and transfer its
authority to the Energy Agency.
c) Merge the State Energy Resources Conservation and
Development Commission into the Agency.
d) Eliminate the Electricity Oversight Board and
transfer its functions for monitoring and
investigating wholesale energy markets to the Agency.
e) Transfer all policy making functions with respect
to energy matters currently performed by the Public
Utilities Commission (PUC), and establish review
mechanisms to ensure that the regulatory activities of
the PUC are consistent with the State's energy policy
to the Agency as specified.
f) Transfer all energy conservation programs and
oversight currently performed by the PUC, to the
Agency as described.
g) Establish a single board in the Agency, with
responsibility for state approval for the siting of
energy production, storage, and transmission
facilities, including both electric and gas plants as
specified. The decisions of the board on any
application for certification of a site and related
facility will be subject to judicial review by the
Supreme Court of California.
h) Establish the Secretary of Energy, or his/her
designee, as the sole authorized representative of the
state before the Federal Energy Commission.
i) Require the Independent System Operator (ISO) to
report any filings or appearances before the Federal
Energy Regulatory Commission to the Secretary of the
Agency.
j) Provide for public oversight of the ISO by the
Agency, to the extent permitted under federal law.
aa) Establish a mechanism for the PUC to timely advise
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the board responsible for siting energy facilities and
the Secretary to avoid unexpected rate impacts.
bb) Establish a mechanism for adequate solicitation and
consideration of public comments before described
final decisions are made by the Secretary which will
protect the public as specified
5)Allows the Director of Finance to direct the transfer of
unexpired and unencumbered balances of other funds
available for use in connection with any function related
to this reorganization as specified.
6)Contains a number of definitions and declarations
relevant to this act. In addition, AB 808 clearly
describes the duties and responsibilities of the
Secretary, and further provides that the agency can do
"any and all things necessary to carry out the purposes
of this act."
7)Requires the Agency to maintain its headquarters in
Sacramento and describes the handling and availability of
both public and confidential records, and the
establishment of a Legal Affairs Department as specified.
8)Declares that the 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 gas.
9)Requires agencies, departments, and commissions as
described, to coordinate their activities with the Agency
with respect to energy programs they retain powers and
authority over.
10)Requires the Secretary, in consultation with ISO, to
determine appropriate reserve levels needed to maintain
the reliability and stability of the electrical
transmission and distribution grid.
11)Provides that the PUC will ensure that electrical
corporations meet the reserve levels determined to be
appropriate by the Secretary.
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12)Requires the Secretary to establish goals for energy
conservation and resource efficiency as described. The
Secretary will be responsible for coordinating these
programs, and consolidating them where desirable.
13)Requires the Secretary to report to the Legislature
regarding liquefied natural gas, natural gas
conservation measures, and other options to improve the
supply and distribution of a reliable natural gas
supply in California as described, within 90 days
following his/her confirmation.
PRIOR LEGISLATION
Governor's Reorganization Plan No. 2, 1995 Session. Energy
reorganization plan similar to this, which would have
eliminated the California Energy Commission (CEC) and the
Department of Conservation. (Approval rejected by the
Senate)
AB 2062 (Pescetti) 2001-2002 Session. Would have created
an Energy Agency eliminating all PUC regulatory authority
and jurisdiction relating to energy. (Held in Senate
Committee on Energy, Utilities and Communications)
AB 2383 (Diaz) 2001-2002 Session. Directed the Little
Hoover Commission to study the consolidation of existing
energy-related agencies into a cabinet-level department.
(Held in Senate Committee on Energy, Utilities and
Communications)
EXISTING LAW
1.Provides for regulation of public utilities, including
gas and electrical corporations, by PUC.
2.Provides for regulation by California Energy Commission
(CEC) of energy conservation, renewable electricity
generation and siting of electric power plants.
3.Authorizes the Consumer Power and Conservation Financing
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.
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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.
BACKGROUND
The authors believe 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.
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.
In its analysis of the 2002-03 Budget, the Legislative
Analyst's Office (LAO) 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,
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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 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.
Supporters believe that California's recent energy crisis
made obvious the need for regulatory restructuring. The
regulatory response to the energy crisis lacked
coordination and cooperation amongst the numerous agencies
and commissions with jurisdiction over the energy market.
Supporters believe that California lacked a cohesive energy
policy, and that crisis management became the basis of the
state's energy policy, and further that better coordination
and control of energy issues will be necessary to manage
future crises.
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.
SUPPORT: California Chamber of Commerce
Pacific Gas and Electric Company
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CH2M Hill
OPPOSE: California Municipal Utilities Association
DUAL REFERRAL: Energy, Utilities and Communications
FISCAL COMMITTEE: Senate Appropriations
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