BILL ANALYSIS 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 2509 - Nakanishi Hearing
Date: June 22, 2004 A
As Amended: June 15, 2004 Non-FISCAL
B
2
5
0
9
DESCRIPTION
This bill expresses the intent of the Legislature that the
California Public Utilities Commission (CPUC) recognize the
costs an "electric microutility" (a privately-owned, vertically
integrated electric utility with fewer than 5,000 customers)
faces if required to respond to CPUC proceedings generally
applicable to electric utilities and consider these costs before
naming an electric micro-utility as a respondent.
BACKGROUND
As defined in this bill, the term "electric micro-utility"
applies only to Mountain Utilities (MU), a tiny, vertically
integrated utility owned by Kirkwood Mountain Resort in Alpine
County and serving the ski area and the immediate vicinity. MU
has approximately 500 customers, many of whom are seasonal
residents, and a service area less than two square miles.
According to MU, the closest transmission lines are over 30
miles away. MU is not part of the grid managed by the
Independent System Operator and its generation portfolio
consists of six diesel engines with a capacity of 4,800
kilowatts.
According to MU, the CPUC, in its decisions and through its
staff in the Energy Division and Office of Ratepayer Advocates,
has informed MU that it must apply mandated programs uniformly
to each regulated utility, unless the law allows some
discretion. Examples of statutory programs electric utilities
are generally subject to include the California Alternative
Rates for Energy (CARE) low-income program and the Renewable
Portfolio Standard program.
According to MU, even though the CPUC recognizes the disparity
between the capabilities of large and very small utilities, the
CPUC cannot relieve small utilities from programs intended for
large ones without statutory authority.
When CPUC opens a new proceeding, it issues an order outlining
the purposes of the proceeding and the parties expected to
participate. The matter is then assigned to a Commissioner and
an Administrative Law Judge who establish the scope, timelines
and procedures for the case. 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 (Alarcon), Chapter 11, Statutes of 2001; 2) adjustments to
residential baseline allowances; 3) an 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. MU was excused from three of the
proceedings after making a single filing because the CPUC found
that the proceeding did not apply to MU's situation. In the
fourth proceeding, MU was not specifically excused, but the CPUC
found it was not required to actively participate in the
hearing.
COMMENTS
1.What is this bill saying? This bill doesn't override any
statutes generally applicable to electrical corporations,
including MU. An expression of the Legislature's intent that
the CPUC recognize and consider MU's regulatory burden will do
nothing to excuse the CPUC from its obligations under existing
laws to regulate electrical corporations, including MU. It
may only give some direction to the CPUC in cases where it
already has discretion to exclude MU from cases applicable to
electrical corporations - equivalent in effect to a persuasive
letter, or perhaps a resolution. This bill seems to be an
equivocal suggestion that MU should not be regulated by the
CPUC because the costs exceed the benefits. If MU has made
the case that it is facing an unjustified regulatory burden
under current law, the author and the committee may wish to
consider whether the bill should actually relieve MU from CPUC
regulation. At a minimum, the bill should be drafted as
operative language, rather than intent.
2.Should the customer threshold be lower? While MU has only 500
customers, the threshold in this bill is 5,000 customers.
This effectively limits application of the bill to MU, as the
next largest electrical corporation, Bear Valley Electric
Company, has about 20,000 customers. However, the author and
the committee may wish to consider whether the threshold could
be set lower (1,000 or 2,000) and still accommodate the
anticipated growth in the MU service territory.
PRIOR VOTES
Assembly Floor (63-3)
Assembly Utilities and Commerce Committee (8-0)
POSITIONS
Sponsor:
Mountain Utilities
Support:
None on file
Oppose:
None on file
Lawrence Lingbloom
AB 2509 Analysis
Hearing Date: June 22, 2004