BILL ANALYSIS                                                                                                                                                                                                              1





             SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                            DEBRA BOWEN, CHAIRWOMAN
          

          AB 2006 -  Nunez                                  Hearing  
          Date:  June 29, 2004                 A
          As Amended:         June 24, 2004            FISCAL       B

                                                                       
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                                   DESCRIPTION
           
           Existing law:
           
          1.Requires all charges demanded or received by any public  
            utility, including investor-owned electric utilities  
            (IOUs), to be just and reasonable and assigns  
            responsibility for ensuring the reasonableness of such  
            charges to the California Public Utilities Commission  
            (CPUC).

          2.Requires every public utility, including IOUs, to furnish  
            and maintain such adequate, efficient, just, and  
            reasonable service, instrumentalities, equipment, and  
            facilities necessary to promote the safety, health,  
            comfort, and convenience of its patrons, employees, and  
            the public.

          3.For IOU-owned electricity generation plants:

             a.   Requires the CPUC to certify the public convenience  
               and necessity require a plant before an IOU may begin  
               construction (Certificate of Public Convenience and  
               Necessity, or CPCN).  For a plant subject to licensing  
               by the California Energy Commission (CEC) pursuant to  
               the Warren-Alquist Act, the CEC license is required  
               prior to a CPCN.  The CPUC is required, under certain  











               circumstances, to appoint a construction project board  
               of consultants to evaluate the design, construction,  
               project management, and economic soundness of a  
               proposed plant.

             b.   Requires the CPUC, in the case of an IOU's plant  
               estimated to cost more than $50 million, to specify in  
               the CPCN the maximum cost determined to be reasonable  
               and prudent.  The CPUC is required to deny recovery of  
               additional costs unless it determines the cost has in  
               fact increased and the public convenience and  
               necessity require construction of the plant at the  
               increased cost.
               (AB 179 (Sher), Chapter 926, Statutes of 1985)

             c.   Requires the CPUC to disallow expenses related to  
               the planning, construction, or operation of a plant if  
               the expenses result from any unreasonable error or  
               omission regarding any portion of the plant which  
               costs, or is estimated to cost, more than $50 million  
               or if the expenses are not supported by records  
               sufficient to enable the CPUC to completely evaluate  
               any relevant or potentially relevant issue related to  
               their reasonableness and prudence.
               (AB 1776 (Sher), Chapter 1212, Statutes of 1985)

             d.   Authorizes the CPUC to remove from an IOU's rate  
               base a plant which has been out of service for nine or  
               more consecutive months, and disallow expenses related  
               to that plant.
               (AB 2378 (Hauser), Chapter 139, Statutes of 1986)

          1.For IOU electricity procurement via wholesale purchases:

             a.   Requires each IOU to file - and the CPUC to review  
               and accept, modify, or reject - a procurement plan  
               enabling the IOU to fulfill its obligation to serve  
               its customers at just and reasonable rates,  
               eliminating the need for "after-the-fact"  
               reasonableness reviews (with specified exceptions),  
               and ensuring timely recovery of prospective  
               procurement costs.

             b.   Requires the procurement plan to be based on one or  










               more of the following reasonableness standards: 

                     An approved competitive bid-based procurement  
                 process. 
                     A performance-based incentive mechanism that  
                 shares procurement risks and rewards between an IOU  
                 and its customers.  
                     Objective standards and review to determine the  
                 recoverability of procurement transactions prior to  
                 their execution.
                       (AB 57 (Wright), Chapter 835, Statutes of  
            2002)

          1.Requires IOUs and certain other retail sellers to  
            increase their existing level of renewable resources by  
            one percent of sales per year, establishes a deadline of  
            2017 to achieve a 20 percent renewable portfolio, and  
            establishes a detailed process and standards for  
            renewable procurement (the Renewable Portfolio Standard  
            (RPS)).
            (SB 1078 (Sher), Chapter 516, Statutes of 2002)

          2.Authorizes, and requires the CPUC to facilitate, retail  
            competition (direct access) within the service areas of  
            the IOUs.
            (AB 1890 (Brulte), Chapter 856, Statutes of 1996)

          3.Requires the CPUC to suspend the right of IOU customers  
            to acquire direct access service under AB 1890 until the  
            Department of Water Resources (DWR) no longer supplies  
            power to IOU customers. 
            (AB 1X (Keeley), Chapter 4, Statutes of 2001)

          4.Declares the intent of the Legislature that all customers  
            taking service from an IOU after the enactment of AB 1X  
            bear a fair share of specified DWR costs and that any  
            cost shifting between customers be prevented.
            (AB 117 (Migden), Chapter 838, Statutes of 2002)
           
          This bill  enacts the "Reliable Electric Service Act of  
          2004."  Specifically,  this bill  :

          1.Findings and Declarations:











            Sets forth findings and declarations related to each of  
            the provisions below.

          2.Obligation to Serve:

            Restates and further specifies the IOUs' obligation to  
            plan for and provide to its customers reliable electric  
            service, as defined.  Provides IOUs have no obligation to  
            buy electricity or meet resource adequacy requirements  
            for a direct access customer.  Prohibits the recovery  
            from bundled customers of costs incurred on behalf of  
            direct access customers.

          3.Cost Recovery:

             a.   Requires the CPUC to approve  and maintain  rates  
               sufficient to ensure an IOU fully recovers the initial  
               capital investment in resources necessary to provide  
               reliable service.  An IOU must have a reasonable  
               opportunity to recover a return on the investment over  
               the life of the resource, in addition to costs  
               incurred to operate and maintain the resource, on a  
               timely basis.  All costs must be found reasonable by  
               the CPUC.

             b.   Requires the CPUC, in determining an IOU's full  
               costs of contracting for generation resources with  
               another entity, to include collateral requirements and  
               debt equivalence associated with the contract.

             c.   Provides this bill doesn't alter the requirements  
               of existing law regarding cost recovery described  
               above.

             d.   Declares the Legislature's intent to reaffirm  
               California's traditional regulatory compact, as  
               described.

          1.Long-Term Planning:

             a.   Requires each IOU to prepare a long-term integrated  
               resource plan (IRP) to achieve a diversified portfolio  
               of resources to serve its customers.  The IRP must  
               include 5, 10 and 15-year forecasts and identify  










               needed resources.  The CPUC must review and approve  
               the IRP, and may make revisions it determines  
               necessary.

             b.   Requires the IRP to provide for investments in  
               energy efficiency and load management resources that  
               compare favorably to supply alternatives in terms of  
               costs, environmental improvements and reliability.

             c.   Requires the IRP to provide for investments in  
               necessary generation resources, including contracts  
               for existing, new, re-powered or co-generation  
               projects.

             d.   Authorizes the IRP to provide for investments in  
               distributed generation resources under specified  
               conditions related to improving reliability and  
               deferring traditional distribution investments.

             e.   Requires an IOU, through its IRP, to meet resource  
               adequacy requirements for the electric load of its  
               customers through a portfolio of contracted-for  
               generation and IOU-owned generation, combining the  
               potential benefits of a competitive wholesale market,  
               including operating efficiencies and lower prices,  
               with the stability of cost-of-service generation  
               resources, to achieve the "best value" for ratepayers  
               at just and reasonable rates.

          1.Transmission:

            Requires the CPUC to prepare a plan to streamline the  
            siting process for transmission projects and submit it to  
            the Governor and Legislature by July 1, 2005.

          2.Direct Access:

             a.   Repeals provisions of AB 1890 requiring the CPUC to  
               authorize and facilitate direct access.

             b.   Authorizes the CPUC to permit the resumption of  
               direct access on or after January 1, 2006 pursuant to  
               a "core/non-core" model whereby core customers receive  
               traditional regulated service from an IOU and non-core  










               customers are permitted to choose to purchase  
               electricity in the market, assuming full price risk.

             c.   Requires the CPUC to adopt regulations to achieve  
               the following standards prior to implementing  
               core/non-core:

                     Non-core customers are limited to those having  
                 a meter with a yet-to-be-specified demand, plus  
                 associated customers on contiguous property under  
                 the same ownership (only customers of a certain size  
                 are eligible for direct access).

                     Non-core customers forgo benefits and  
                 future-incurred costs of bundled service (direct  
                 access customers assume market risk).

                     Core customers are served by the IOU's resource  
                 portfolio, which is to be managed for the benefit of  
                 core customers (direct access doesn't disrupt  
                 bundled service).

                     Costs incurred to serve departing customers are  
                 fully and timely recovered (no cost shifting).

                     An election process determines which eligible  
                 customers choose to become non-core.  The election  
                 process occurs in phases over five years, with  
                 annual limits corresponding to the amount of  
                 available "net short" - i.e. load growth, plus DWR  
                 contract expirations (measured transition).

                     Direct access electric service providers (ESPs)  
                 must comply with resource adequacy requirements,  
                 first acquire all available energy efficiency and  
                 demand reduction resources, and comply with the RPS  
                 (uniform application of state resource planning  
                 policies).

                     A "provider of last resort" is provided for  
                 non-core customers via competitive bid.  The ability  
                 of non-core customers to return to IOU service is  
                 restricted to circumstances of retail market  
                 failure.  Then, IOU service must be provided at a  










                 fully compensatory rate and is subject to  
                 contractual conditions to prevent cost shifting  
                 (decision to leave bundled service is binding).

                     The CPUC demonstrates that a core/non-core  
                 model will support, and not be detrimental to,  
                 system reliability, future investments in  
                 electricity infrastructure and the objective of  
                 acquiring all cost-effective energy efficiency and  
                 demand reduction resources.

                     Existing direct customers, large and small, are  
                 permitted to remain on direct access, but otherwise  
                 are subject to core/non-core regulations.

             a.   Requires the CPUC to report annually regarding the  
               status of the non-core retail market.  Requires an  
               independent auditor to review the CPUC's report and  
               report any impacts on the price, availability or  
               reliability of electricity for core customers.   
               Requires the CPUC to consider the auditor's report and  
               take actions necessary to protect core customers,  
               including deferring phase-in of the non-core market  
               until new generating capacity is built to serve it.

          1.Resource Adequacy:

             a.   Requires all load-serving entities (e.g., ESPs and  
               community choice aggregators), except municipal  
               utilities and customer generation, to meet the same  
               requirements for resource adequacy, resource diversity  
               and the RPS applicable to IOUs.

             b.   Requires the CPUC to establish, implement and  
               enforce resource adequacy requirements as specified.   
               Requires the cost of meeting resource adequacy  
               requirements to be equitably recovered from all  
               customers through CPUC-approved rates.
















                                    BACKGROUND
           
           Resource Investment
           
          Existing law requires rates charged by public utilities to  
          be just and reasonable and assigns responsibility for  
          ensuring the reasonableness of rates to the CPUC.  This  
          authority is a foundation of utility regulation, dating  
          back to the establishment of the CPUC's predecessor, the  
          Railroad Commission, in 1909.  The power to review expenses  
          that are recoverable from utility ratepayers was judged  
          necessary to protect the public from the exercise of public  
          utilities' monopoly powers.  Indeed, the purpose of the  
          CPUC is to determine the reasonable expenses of utility  
          service (cost of service) and provide for equitable  
          recovery of these costs from customers (rate-making).

          In an effort to facilitate both wholesale and retail  
          competition, CPUC decisions implementing electric industry  
          restructuring compelled the IOUs to sell off power plants  
          needed to serve their own customers, then required the IOUs  
          to buy and sell all their power through spot markets.  At  
          the same time, long-term resource planning and investment  
          was abandoned in favor of a laissez faire, "reliability  
          through markets" approach.

          As a result of market conditions during the energy crisis,  
          long-term, bilateral contracts were viewed as an attractive  
          way to stabilize volatile and high prices.  However, review  
          of the reasonableness of these contracts by the CPUC was  
          viewed by IOUs as a deterrent to entering such contracts,  
          when spot market purchases were not subject to review.

          CPUC review of contracts presented the possibility that  
          recovery of certain contract expenses would be disallowed  
          if the contract was judged to be an unreasonable deal (e.g.  
          unjust price or inappropriate conduct).  On the other hand,  
          if the contract was a great deal, the IOU got no reward  
          beyond the ability to recover its costs.  The IOUs  
          complained these circumstances placed all the downside risk  
          on them and created a disincentive to enter into long-term  
          contracts.  The competing argument was if IOUs were  
          permitted to pass their power purchase costs on to their  
          customers unconditionally, they had little incentive to  










          negotiate the best deal.

          To pave the way for IOUs to resume their procurement duties  
          in 2003, AB 57 addressed the procurement review issue by  
          establishing a process under which an IOU can be assured  
          its electricity procurement expenses will be recoverable in  
          rates, if that procurement is conducted consistent with a  
          CPUC-approved procurement plan.  AB 57 relates  only  to  
          wholesale procurement from third parties.  It  does not   
          address cost recovery for other IOU expenses, such as  
          investments in IOU-owned generation.

          Since the electricity crisis, major new power plants, or  
          re-powering of existing plants, are financed only to the  
          extent the recovery of their capital costs can be assured  
          via contracts approved by the CPUC.  Thus, whether power  
          plants are developed by regulated utilities or non-utility  
          generators, the CPUC must provide for rate recovery to  
          assure they get built - with ratepayers providing the  
          ultimate credit support.


































           Retail Competition
           
          The "core/non-core" approach to utility service is derived  
          from natural gas service, where customers are divided into  
          core and non-core classes according to consumption.  Gas  
          utilities are required to procure and deliver a portfolio  
          of gas supplies sufficient to serve their core (residential  
          and small commercial) customers.  Non-core customers must  
          arrange for procurement and transportation of their own gas  
          supplies, and are not eligible for core service.

          As part of the restructuring of the electric industry, AB  
          1890 authorized direct access.  While customers were  
          allowed to choose alternate providers of energy, the IOUs'  
          obligation to serve all customers remained and customers  
          large and small were entitled to remain with, or return to,  
          bundled IOU service at any time.  Historically, IOU  
          electric customers have been entitled to the portfolio of  
          supplies procured to serve them without regard to their  
          size.

          To avoid the dysfunctional spot market that financially  
          decimated the IOUs and threatened catastrophic rate  
          increases, AB 1X established a structure to permit DWR to  
          buy needed electricity for IOU customers under long-term  
          contracts.  To ensure the predictable revenue stream  
          necessary for long-term contracts, the issuance of  
          ratepayer-backed revenue bonds, and prevent cost-shifting  
          from direct access to bundled service customers, the CPUC  
          was directed to suspend direct access to prevent additional  
          migration of IOU customers.  After a seven-month delay, the  
          CPUC suspended direct access on September 20, 2001.

          Between January and June 2001, the vast majority of  
          customers previously served by direct access providers  
          returned to IOU service, benefiting from retail rates which  
          were lower and more stable than market prices.  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.  During the  
          July 1 to September 20 period, direct access increased from  
          approximately 2% to approximately 13% of the total IOU  
          load.  Direct access load has grown since that time due to  










          the CPUC's liberal interpretation of the Legislature's  
          direction to suspend direct access, including allowing  
          customers to begin direct access service after the  
          suspension date and switch between bundled service and  
          direct access service.

          Meanwhile, the CPUC has dedicated a share of bundled  
          customer rates to a loan program to defer direct access  
          customers' payment of DWR and IOU procurement costs.  In a  
          decision issued in November 2002 (Decision 02-11-022), the  
          CPUC capped the payment for these costs applicable to  
          direct access customers at 2.7 cents per kilowatt hour.   
          The CPUC majority reasoned such a cap was necessary to  
          maintain the viability of existing direct access contracts.

          The 2.7 cent charge doesn't cover what direct access  
          customers owe for DWR power already delivered, or for DWR  
          operating costs in the next few years, so a revenue  
          shortfall or "under-collection" results.  Since payment of  
          DWR's costs (bond payment and ongoing revenue requirement)  
          can't be postponed, the CPUC decision shifts the obligation  
          to pay any shortfall from direct access customers to each  
          IOU's bundled customers.

          According to DWR, the current direct access  
          under-collection is about $750 million.  The shortfall is  
          expected to continue to grow in 2004.  Over time, as DWR  
          costs decline, direct access customers' payments are  
          projected to catch up and pay off this under-collection.   
          DWR estimates the under-collection will be paid off in 2005  
          in SDG&E territory, 2011 in PG&E territory, and 2014 in SCE  
          territory.  In the meantime, IOU customer rates will have  
          to maintained at a level high enough to support this  
          "forced loan" to direct access customers.

                                     COMMENTS
           
           1.Relationship between this bill's long-term "integrated  
            resource plan" and AB 57's "procurement plan" is unclear.   
             

            This bill requires IOUs to prepare an IRP, which would  
            include the full range of supply and demand resources -  
            including IOU-owned and non-utility generation - each of  










            which is governed by its own specific provisions of  
            existing law.  While resources procured pursuant to AB 57  
            (wholesale contracts) and the RPS (renewables) should be  
            ingredients in the IRP, this bill says the IRP must be  
            prepared "in accordance with" AB 57 and the RPS (Section  
            400.10).  The effect of this statement is unclear,  
            because the IRP will necessarily include resources which  
            neither AB 57 nor the RPS addresses.

            The bill also seems to confuse the IRP it establishes  
            with the procurement plan for wholesale contracts  
            established by AB 57 (Section 400.15).  The CPUC's  
            procurement proceeding, originally initiated to implement  
            AB 57, has contributed to the confusion between  
            "procurement planning" and more comprehensive "resource  
            planning" because the CPUC has expanded the scope of its  
            proceeding beyond the purpose of AB 57 into areas where  
            there's little statutory guidance, such as resource  
            adequacy.  If this bill is to provide statutory guidance  
            for resource planning broadly,  the author and the  
            committee may wish to consider  clearly indicating the  
            IRP's scope is the full range of resources, with  
            wholesale procurement pursuant to AB 57 and the RPS being  
            key, but subordinate, elements.

           2.Additional cost recovery assurance for IOU generation  
            investments should be limited to capital costs specified  
            up front.  

            The logic of AB 57's cost recovery policy for contracts  
            is the costs of a contract are fixed up front, so the  
            regulatory treatment should be fixed up front, too.  This  
            isn't really true - under most energy contracts,  
            ratepayers are subject to significant, unpredictable  
            variable costs, such as the cost of natural gas.   
            However, the ratepayer risk is probably less than the  
            risk associated with an IOU-owned power plant, at least  
            to the extent contract costs end when the contract ends.

            It's difficult to equate cost recovery for contracts with  
            cost recovery for regulated IOU investments.  The  
            question presented by this bill is what assurance of cost  
            recovery is necessary to support regulated investments,  
                                                                  while maintaining appropriate protections for ratepayers.











            To put regulated investments on par with contracts, in  
            terms of balancing risk between an IOU and its customers,  
             the author and the committee may wish to consider  whether  
            the line should be drawn at  initial capital costs  .

            That is, this bill's additional cost recovery assurance  
            for regulated investments (Section 400.5) would be  
            limited to the initial capital costs of the project  
            specified at the time of application.  In this case, the  
            proposed budget would be presented up front, then  
            reviewed and approved by the CPUC.  The costs to be  
            recovered would be known, and any construction cost  
            overruns, as well operation and maintenance costs, would  
            be subject to existing regulatory treatment, i.e. once  
            incurred, the IOU would have to show they are reasonable  
            to recover them.  This would seem to give an IOU the  
            certainty required to finance construction.

           3.Process and approval standards for IRP needed.   

            While this bill requires an IOU to prepare an IRP, and  
            the CPUC to review it (Section 400.10), it doesn't  
            indicate how the process will work or what standards  
            would permit CPUC approval.   The author and the committee  
            may wish to consider  whether this bill should specify the  
            details of the IRP process, such as initial filing date,  
            interval, public review, consultation with CEC, etc.   The  
            author and the committee may wish to consider  whether  
            this bill should also specify standards for the CPUC's  
            approval of an IRP beyond the implicit "just and  
            reasonable."

           4.Customers should be required to declare intent relative  
            to core/non-core up front to size up the market and limit  
            uncertainty regarding who's serving whom.   

            This bill requires the CPUC to provide for an election  
            process over five years (e.g. 2006-2010) to determine  
            which eligible customers want to depart bundled service  
            and become non-core (Section 400.21(a)(7)).  Since  
            experience shows some eligible customers will not be  
            interested in direct access,  the author and the committee  
            may wish to consider  requiring eligible customers to  










            declare in year one if and when they intend to depart and  
            developing an appropriate penalty for customers who don't  
            abide by their declaration.  This would give IOUs and  
            ESPs a better idea what their future loads will be and  
            improve the ability of both to plan.

           5.Fewer customers to carry forced loan.   

            This bill doesn't clearly address the burden on bundled  
            customers resulting from the CPUC's current direct access  
            program.  Section 400.21(a)(6) speaks to the issue by  
            requiring the CPUC's core/non-core rules to "(p)rovide  
            for the full recovery of existing direct access  
            customers' energy cost obligations on a schedule  
            comparable to the recovery of comparable costs from core  
            customers," but it's not 100 percent clear this would  
            apply to cost obligations predating the bill.

            If this bill leaves the forced loan in place, and permits  
            additional customers to move from bundled service to  
            direct access, the per customer share of the forced loan  
            will increase.  To avoid increasing the burden of direct  
            access customer costs on bundled customers,  the author  
            and the committee may wish to consider  postponing  
            additional direct access until the forced loan is repaid.  

           
          6.Is core/non-core compatible with existing and proposed  
            resource planning policies?  

            AB 57 requires IOU procurement plans to "enable the (IOU)  
            to fulfill its obligation to serve at just and reasonable  
            rates."  The IOUs are currently expected to meet load  
            growth and replace the DWR contracts over the next  
            several years via the procurement process initiated by  
            the CPUC pursuant to AB 57.  The CPUC has recently  
            approved contracts for new power plants to serve IOU  
            customers which will be completed in the next few years.   
            The IOUs are required to buy additional renewable power  
            under long-term contracts pursuant to the RPS.  The  
            Governor, the energy agencies and pending legislation (SB  
            1478 (Sher)) have endorsed accelerating the RPS schedule.  
             Under the recent CPUC long-term procurement decision  
            (Decision 04-01-050), IOUs will be obligated to build or  










            buy resources to meet a 15-17 percent reserve margin by  
            2008.  The Governor has asked the CPUC to accelerate  
            achievement of the reserve margin to 2006.  The energy  
            agencies have adopted a goal of decreasing per capita  
            energy consumption.  This bill proposes to organize IOU  
            resource planning and selection into a formal IRP process  
            and provide additional cost recovery assurance for IOU  
            investments.

            The IOUs, and their customers, are the primary vehicle to  
            deliver all of the above.  These initiatives, on top of  
            existing obligations for utility generation, qualifying  
            facilities, and DWR contracts, will make the IOUs'  
            portfolios  stable  , but also fairly  inflexible  .

            Against this backdrop, this bill includes the seemingly  
            incompatible goal of permitting the IOU customers who  
            would support all these initiatives to leave for direct  
            access during the same time period the initiatives are to  
            be implemented.   The author and the committee may wish to  
            consider  how an expansion of direct access can be  
            reconciled with other policy goals embodied in AB 57, SB  
            1078, the Energy Action Plan, and this bill.

           7.Transmission plan should be reconciled with SB 1565  
            (Bowen).  

            This bill requires the CPUC to prepare a plan to  
            streamline the siting process for transmission projects.   
            SB 1565, pending in the Assembly Appropriations  
            Committee, requires the CEC to adopt a strategic plan for  
            investments in the state's electric transmission grid.   
            The SB 1565 plan is to identify and recommend "actions"  
            required to implement investments needed to ensure  
            reliability, relieve congestion, and meet future growth  
            in load and generation, which are expect to include  
            revisions to the transmission siting process.

            To avoid duplication and inconsistency,  the author and  
            the committee may wish to consider  reconciling these two  
            plans and assigning the task to the CEC or the CPUC, but  
            not both.

           8.Current CPUC resource planning and selection process  










            seems arbitrary.   

            Many recent CPUC actions are notable for their detachment  
            from statutory foundation and public scrutiny.  As  
            indicated in Comment 1, the CPUC's procurement proceeding  
            has drifted beyond the purpose of AB 57 into areas where  
            there's little statutory guidance.  For example, the CPUC  
            has approved a number of contracts in the past two years  
            through an ad hoc process lacking clear rules or  
            consistency with the statutory scheme of the RPS or AB  
            57.

            In large part, the CPUC has relied on "procurement review  
            groups" - non-market participant parties who agree to  
            sign strict confidentiality agreements - as a substitute  
            for public review of proposed resource investments.   
            Public access to the nuts and bolts of IOU resource  
            proposals has been curtailed severely.

            The level of confidentiality afforded to IOUs'  
            procurement-related filings is unprecedented and, in some  
            cases, clearly unwarranted.     The current process  
            frustrates meaningful public review and participation,  
            making it difficult to judge the performance of the IOUs,  
            or even understand the policy objectives pursued by the  
            CPUC.
             
             In uncodified findings, this bill calls for "an open  
            regulatory forum where all persons affected by public  
            utility service and rates can observe and participate in  
            the decisionmaking process," but there are no operative  
            provisions to activate that statement.   The author and  
            the committee may wish to consider  whether this bill  
            adequately addresses the process shortcomings of the  
            CPUC, or exacerbates those shortcomings by giving the  
            CPUC significant additional responsibilities without  
            addressing its ability to carry them out in a way that  
            provides fair, open, record-based decisions.

           9.A new chapter? - Policy conflicts with AB 1890 need to be  
            reconciled.   

            Existing law enacted by AB 1890 includes a variety of  
            provisions diametrically opposed to the principles  










            embodied in this bill.  For example, the main provisions  
            of this bill would be codified in the same "electrical  
            restructuring" chapter enacted by AB 1890, which requires  
            CPUC actions to be consistent with Section 330.  Section  
            330 contains assumptions about the benefits of  
            deregulation which turned out to be mistaken.   The author  
            and the committee may wish to consider  whether provisions  
            of AB 1890 which are either obsolete or conflict with  
            this bill, should be repealed, and whether this bill  
            should be enacted as a new chapter, separate from the  
            chapter enacted by AB 1890.

                                  ASSEMBLY VOTES
           
          Assembly Floor                     (50-28)
          Assembly Appropriations Committee  (16-4)
          Assembly Utilities and Commerce Committee    (9-3)

                                    POSITIONS
           
           Sponsor:
           
          Southern California Edison

           Support:

           African Village Weekend Cultural and Performing Arts
          Allergan
          Altadena Town Council
          AltaMed
          Antelope Valley Board of Trade
          Antelope Valley Chamber of Commerce
          Applied Business Computer Services
          Arcadia Chamber of Commerce
          Armijo Newspapers and Public Relations
          Artesia Chamber of Commerce
          Baldwin Park Chamber of Commerce
          Bell Chamber of Commerce
          Bell Gardens Association of Merchants and Commerce
          Building Industry Association of Tulare/Kings Counties
          Burbank Water and Power
          Californians for Reliable Electric Service
          California State Conference of the NAACP
          Casa Youth Shelter










          Central City Company
          Cerritos Chamber of Commerce
          CHARO Community Development Corporation
          City of Chino
          City of Costa Mesa
          City of Delano
          City of Fillmore
          City of Lancaster
          City of Newport Beach
          City of Thousand Oaks
          City of Tulare
          Claremont Chamber of Commerce
          Coalition of California Utility Employees
          College Bound
          Consumers Coalition of California
          Dickerson Employee Benefits
          Duarte Chamber of Commerce
          East Bay Municipal Utility District (if amended)
          El Monte/South El Monte Chamber of Commerce
          Environmental Health and Safety Resources
          Filipino-American Service Group
          Forensic Analytical Consultants
          Four Points Sheraton
          Future America
          Gateway Chamber Alliance
          GREKA Energy Corporation
          Greater Antelope Valley Economic Alliance
          Griffin Industries
          Harvey Mudd College
          Highland Area Chamber of Commerce
          Hispanic Market Link
          Human Services Association
          Inland Action
          Inland Valley News
          Irwindale Chamber of Commerce
          La Casa de San Gabriel Community Center
          La Casa Lopez Restaurant
          La Puente Valley Regional Occupational Program
          Lakewood Chamber of Commerce
          Latin Business Association
          League of California Cities
          Lockheed Martin Aeronautics Company
          Long Beach Museum of Art
          Los Angeles Urban League










          Los Cerritos YMCA
          Maywood Chamber of Commerce
          McIntosh Real-estate Construction
          Metal Center
          MELA Counseling Services Center
          Mexican American Opportunity Foundation
          North San Diego County NAACP
          Orange County Community Housing Corporation
          Palm Desert Chamber of Commerce
          People for People
          Project Amiga
          Quality Upholstering
          Rosemead Chamber of Commerce
          San Bernardino Area Chamber of Commerce
          San Bernardino Downtown Business Association
          San Gabriel Mountains Regional Conservancy
          San Gabriel Valley Economic Partnership
          Sempra Energy (if amended)
          Temple City Chamber of Commerce
          Three Valleys Municipal Water District
          Tulare Joint Union High School District
          Tulare Kings Hispanic Chamber of Commerce
          Turning Point
          Ty's Diesel Air and Electric
          Ventura County Economic Development Association
          West San Gabriel Valley Boys and Girls Club
          Westlake Village Homeowners Association
          7 individuals

           Oppose:
           
          AES Corporation
          Agricultural Energy Consumers Association (unless amended)
          Associated Builders and Contractors of California
          Burney Forest Power
          California Biomass Energy Alliance (unless amended)
          California Cogeneration Council
          California Manufacturers and Technology Association (unless  
          amended)
          California Wind Energy Association (unless amended)
          Calpine 
          City of Temecula
          Clean Power Campaign (unless amended)
          Colmac Energy










          Covanta Energy (unless amended)
          Community Renewable Energy Services
          Enpower Corporation
          Foundation for Taxpayer and Consumer Rights
          Global Power Company
          GWF Power Systems
          Independent Energy Producers
          Minnesota Methane
          Mt. Poso Congeration Company
          Natural Resources Defense Council (unless amended)
          Santa Ana Watershed Project Authority
          The Utility Reform Network (TURN) (unless amended)
          Wheelabrator Environmental Systems
          2 individuals


          

          Lawrence Lingbloom 
          AB 2006 Analysis
          Hearing Date:  June 29, 2004