BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           1157 (Canciamilla)
          
          Hearing Date:  8/04/04          Amended: 6/30/04       
          Consultant:  Lisa Matocq            Policy Vote: E. U. & C.  
          5-1                      
          ____________________________________________________________ 
          ___
          BILL SUMMARY:  AB 1157 eliminates the Public Utilities  
          Commission's (PUC) authority, regarding an application for  
          a general rate increase by a water utility with more than  
          10,000 service connections, to (1) issue a lesser increase  
          in interim rates if the commission finds the rates to be in  
          the public interest, and (2) require a different effective  
          date for the interim rates in cases where the commission's  
          decision is delayed due to actions by the water utility.   
          The bill also makes related changes.   
          ____________________________________________________________ 
          __
                          Fiscal Impact (in thousands)
           Major Provisions                    2004-05             2005-06   
                     2006-07            Fund
           ORA                    Unknown costs, if any.  See comments  
                   Special*
                                 below.  Any increased costs should  
          be 
                                 offset by increased fee revenues. 
          PUC                         Unknown costs or savings         
                           Special*

          *Public Utilities' Reimbursement Account (PURA)
          ____________________________________________________________ 
          ___

          STAFF COMMENTS:   AB 2838 (Canciamilla, Ch. 1147, St. of  
          2002) required the PUC to (1) establish a schedule to  
          review the rates of water utilities, with greater than  
          10,000 service connections, every three years, and (2)  
          issue a decision on a water utility's application for a  
          general rate increase within a certain time period.  It  
          also provided that if the PUC fails to issue a timely  
          decision, the applicant may be granted interim rates.  
          Interim rates are based on the current rate, plus  
          inflation, and adjusted upward or downward, consistent with  
          the final rate, back to the effective date of the interim  










          rates. This bill also extends (2) above to all pending  
          general rate case applications, including those that were  
          filed prior to passage of AB 2838, and states that this is  
          declaratory of the legislative intent of AB 2838.  There  
          may be a few pending applications that could be impacted by  
          this provision.  

          The Office of Ratepayer Advocate (ORA), within the PUC, has  
          expressed concern that removing existing incentives for  
          water utilities to act, and respond to the PUC,  
          expeditiously (for example, eliminating the PUC's authority  
          to change the effective date of interim rates under certain  
          circumstances) could adversely impact ORA staffing, work  
          flow, and the timely processing of applications, and result  
          in increased staff costs of $160,000 to $240,000 annually.   
          Staff notes, however, that this estimate assumes that water  
          utilities will cause delays in the future. Any additional  
          costs or savings to the PUC are unknown.  However, PURA  
          revenues are derived from an annual fee imposed on public  
          utilities.  Therefore, any increased costs to the PUC,  
          including the ORA, should be offset by increased fee  
          revenues.