BILL ANALYSIS
AB 2509
Page 1
Date of Hearing: May 3, 2004
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
AB 2509 (Nakanishi) - As Amended: April 27, 2004
SUBJECT : Electric microutilities.
SUMMARY : Urges the California Public Utilities Commission
(CPUC) to consider the costs imposed on a microutility in
participating in a CPUC proceeding before naming the
microutility as a respondent in a hearing generally applicable
to electrical corporations. Specifically, this bill :
1)Defines a microutility as any private corporation organized
for the purpose of providing sole-source generation,
distribution, and sale of electricity exclusively to a
customer base of fewer than 5,000 customers.
2)States the intent of the Legislature that CPUC recognize the
legal, administrative, and operational costs that an electric
microutility faces when named as a respondent in CPUC hearing.
The limited resources of a microutility are
disproportionately strained by the costs of response.
3)Urges CPUC to consider the costs imposed on a microutility in
participating in a CPUC proceeding before naming the
microutility as a respondent in a hearing generally applicable
to electrical corporations
EXISTING LAW :
1)Grants CPUC regulatory authority over public utilities,
including authority over ratemaking, certain financial
transactions, and the disposal or encumbrance of property.
2)Allows public utilities to recover the reasonable cost of
participating in CPUC proceedings as operating costs through
rates.
FISCAL EFFECT : Unknown.
COMMENTS : Each year CPUC conducts a number of proceedings that
affect most, if not all, electric utilities across the state.
Recently these proceedings have included investigations and
AB 2509
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rulemakings effecting transmission capacity, utility
construction practices, allocation of low income assistance
funds, and energy efficiency programs. In order to assure that
the interest of all utilities and all ratepayers are
incorporated into any decision CPUC can and does require most
utilities to participate in the proceedings.
While the three biggest electric companies in the state serve
hundreds of thousands of customer each and have entire division
dedicated to regulatory compliance, there are a number of
smaller companies that serve a limited number of customers and
have very limited staffs. California is home to six electric
companies that serve less than 40,000 residential customers
each. The smallest, Mountain Utility (MU) serves less than 500
total customers.
As the sponsor of this bill, MU argues that there are a number
of cases at CPUC in which they were included as respondents, but
the proceeding has little or no relevance to MU's ratepayers.
MU believes that, as a small utility with a small staff, they do
not have the resources to participate in these proceedings. The
high proportional costs imposed on MU's small staff when MU
participates in CPUC proceedings is ultimately borne by its
ratepayers.
AB 2509 is aimed at reducing the burden on MU by urging CPUC to
consider the impacted the costs of participating in CPUC
proceedings have on a microutility's limited resources.
Procedure already in place
When CPUC opens a new proceeding, an order is issued outlining
the purposes of the proceeding and the parties that will be
expected to participate. The matter is then assigned to a
Commissioner and an Administrative Law Judge who prepare a
scoping memo, outline timelines and procedures for the
proceeding. At any time after the proceeding is assigned to a
Commissioner a respondent can move to be excused from the
proceeding if they feel participation is inappropriate.
MU has cited four proceedings in which it believes it was
inappropriately named as a respondent. Those cases involved: 1)
the allocation of low income assistance funds appropriated in
SB X2 2 (Alacron), Chapter 11, Statutes of 2001-2002; 2)
adjustments to residential baseline allowances; 3) an
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investigation of construction bidding practices of all
utilities; and 4) public policy issues relating to the
implementation of a public goods charge on natural gas.
Arguably each of these proceeding would impact all utility
ratepayers no matter the size of the utility and CPUC would
benefit from the input of all electric utilities. Even so,
after being named as a respondent in the four cited proceedings,
MU was excused from three of the proceedings after making a
single filing because CPUC found that the proceeding did not
apply to MU situation. In the fourth proceeding, MU was not
specifically excused, but CPUC found that they were not required
to actively participate in the hearing.
What is a microutility?
This bill defines a microutility as a private corporation that
provides electricity to fewer than 5,000 customers. It appears
that MU is the only utility in the state that would qualify as a
microutility.
MU is a subsidiary company of Kirkwood Ski Resort (KSI) and was
originally created to provide electricity to the ski resort. MU
then began providing power to the small number of residents and
businesses near the resort. Today, KSI, MU's parent company, is
also MU's largest customer, using over 70% of MU's load.
REGISTERED SUPPORT / OPPOSITION :
Support
Mountain Utilities (Sponsor)
Opposition
None on file.
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083