BILL ANALYSIS
AB 1284
Page 1
(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB 1284 (Leslie)
As Amended July 16, 2003
2/3 vote. Urgency
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|ASSEMBLY: | |(May 22, 2003) |SENATE: |27-6 |(July 24, |
| | | | | |2003) |
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(vote not relevant)
Original Committee Reference: U. & C.
SUMMARY : Authorizes the California Public Utilities Commission
(PUC) to defer or waive a portion of the cost responsibility
surcharge or exit fees for qualifying direct access transaction
customers.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Authorize PUC, if it finds it is in the public interest and
there is no feasible alternative, to defer or waive the
collection of a portion of the cost responsibility surcharge
otherwise applicable to a qualifying direct transaction
customer, to the extent necessary to mitigate certain
conditions described in an application and declaration
submitted by the customer to PUC.
2)Require PUC to issue a decision on an application for waiver
of cost responsibility surcharges on or before September 4,
2003, and allows PUC to issue its decision in less than 30
days following filing and service of the proposed decision.
3)Add an urgency clause.
EXISTING LAW :
1)Suspends the right of retail end use customers to acquire
electricity from providers other than the investor-owned
electric utilities (IOUs) until the Department of Water
Resources (DWR) no longer supplies power that it purchased on
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behalf of IOUs during the energy crisis of 2000-2001.
2)Provides that various classes of customers who have purchased
electricity from a supplier other than an IOU are responsible
for a fair share of both the electricity purchase costs
incurred by DWR, and the purchase contract costs of IOUs from
which they are departing.
AS PASSED BY THE ASSEMBLY , this bill exempted specified plants
or facilities from cost responsibility surcharges that have been
imposed by PUC on direct access customers. To be exempt from
the fees, a business among other things must have had its direct
access contract involuntarily terminated by its electric service
provider (ESP) after February 1, 2001, but returned to direct
access within 90 days thereafter. The provisions of this bill
sunset on
January 1, 2009.
FISCAL EFFECT : Assembly Appropriations notes absorbable special
fund costs for PUC to amend a recent decision regarding direct
access cost responsibility surcharges.
COMMENTS : In early 2001, the Legislature passed AB X1 1
(Keeley), Chapter 4, Statutes of 2001. AB X1 1 suspended the
right of retail end use customers to acquire electric service
from providers other than IOUs until DWR no longer supplies
power in place of IOUs.
Between January and June 2001, the vast majority of customers
previously served by direct access providers returned to IOU
service. Many of these customers were returned without their
knowledge or consent by their providers as the direct access
market collapsed. However, between July 1, 2001 and September
20, 2001, thousands of predominantly large industrial customers,
who had taken service from the state at below-market rates,
departed for direct access as market conditions improved.
In a decision issued in November 2002, PUC determined direct
access customers' obligation for payment of DWR and IOU
procurement costs, but capped the payment for these costs at 2.7
cents per kilowatt-hour. PUC majority reasoned such a cap was
necessary to maintain the viability of existing direct access
contracts.
Continuous direct access customers that remained on direct
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access both before and after February 1, 2001 are excluded from
the charges.
Enron, Inc. was a major ESP provider for California entities and
in 2001, it subjected its direct access customers to
unauthorized and involuntary switching to bundled service
without advance notice. Many remained on utility bundled
service only briefly. In recent PUC proceedings to determine
the amount of exit fee responsibility, these entities
unsuccessfully argued that they should be treated as if they
were continuously on direct access service, which would thereby
exempt them from any exit fee responsibility.
Because it was returned to PG&E bundled service by its
then-provider, Enron, and later returned to a different direct
access provider, Sierra Pine, the sponsor of this bill, has been
subject to the 2.7 cent cost responsibility surcharge (CRS)
under the PUC decision. PG&E has collected over $1 million in
CRS charges from Sierra Pine since January 2001. Although most
of CRS is intended to cover DWR's costs, PG&E has not yet
remitted any of its CRS revenues to DWR. This bill relieves
Sierra Pine of an estimated $2 million annually in electricity
costs.
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083
FN: 0002448