BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           2499 (Horton)
          
          Hearing Date:  8/04/04          Amended: 7/2/04        
          Consultant:  Lisa Matocq            Policy Vote: E, U & C  
          7-2                      
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          BILL SUMMARY: 
          
          AB 2499 requires every new local publicly owned electric  
          utility to meet resource adequacy requirements equivalent  
          to those established by the Public Utilities Commission  
          (PUC) for electrical corporations, as specified.  It also  
          requires the local public utility to adopt related findings  
          in a public hearing.  
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                          Fiscal Impact (in thousands)

           Major Provisions                    2004-05             2005-06   
                      2006-07            Fund

           Local publicly owned       Unknown, probably not  
          substantial,               Local electric utilities          
                 mandated, potentially reimbursable, costs
                                 for hearings.  Unknown costs for  
          complying
                                 with resource adequacy requirements  
          - see
                                 comments below.
          PUC                                No increased costs        
                  Special*

          *Public Utilities' Reimbursement Account
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          STAFF COMMENTS:  
          
          There are unknown mandated, potentially reimbursable, costs  
          for the hearing provisions of the bill.  Over the past two  
          years, approximately 20 cities have considered establishing  
          a new publicly owned electric utility; only two are  
          actually providing service.  Assuming, for example, that  










          the costs of conducting a hearing and adopting specified  
          findings are $5,000 per hearing, increased costs could be  
          $50,000 per year.  It is unknown to what extent such costs  
          could be recovered through the rates of new public  
          utilities.  
           
          Increased costs to new publicly owned electric utilities to  
          meet the resource requirements are unknown.  Presumably,  
          such costs would be recovered through rates.  

          There are no increased costs to the PUC. 

          Staff notes that there are over $2 billion in unpaid  
          mandate claims.  The Governor's Budget originally proposed  
          to repeal 29 mandates, suspend operation of 19 mandates,  
          and defer payment of 82 mandates.