BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2509|
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THIRD READING
Bill No: AB 2509
Author: Nakanishi (R)
Amended: 7/8/04 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 7-1, 6/22/04
AYES: Bowen, Morrow, Alarcon, Battin, Dunn, Murray, Sher
NOES: McClintock
NO VOTE RECORDED: Vasconcellos
ASSEMBLY FLOOR : 63-3, 5/17/04 - See last page for vote
SUBJECT : Electric microutilities
SOURCE : Mountain Utilities
DIGEST : This bill expresses the intent of the
Legislature that the State Public Utilities Commission
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 State Public Utilities Commission proceedings
generally applicable to electric utilities and consider
these costs before naming an electric microutility as a
respondent.
ANALYSIS :
Existing Law
1.Grants the State Public Utilities Commission (PUC)
CONTINUED
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regulatory authority over public utilities, including
authority over electrical corporations.
2.Allows public utilities to recover the reasonable cost of
participating in PUC proceedings as operating costs
through rates.
This bill:
1.Defines "microutility" as any electrical corporation that
is regulated by the PUC and organized for the purpose of
providing sole-source generation, distribution, and sale
of electricity exclusively to a customer base of fewer
than 2,000 customers.
2.States the intent of the Legislature that the PUC
consider the legal, administrative, and operational costs
that an electric microutility faces when names as a
respondent in a PUC hearing. The limited sources of a
microutility are disproportionately strained by the costs
of response.
3.States the intent of the Legislature that the PUC
consider the costs imposed on a microutility in
participating in a hearing generally applicable to
electrical corporations.
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 of less than two
square miles. According to MU, the closes 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 PUC, in its decisions and through its
staff in the Energy Division and Office of Ratepayer
Advocates, has informed MU that it must apply mandated
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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 Programs.
According to MU, even though the PUC recognizes the
disparity between the capabilities of large and very small
utilities, the PUC cannot relieve small utilities from
program intended for large ones without statutory
authority.
When PUC 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
anytime 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 believe it was
inappropriately names as a respondent. These cases
involved (1) the allocation of low income assistance funds
appropriated in SB 2XX (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 related 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 PUC found that the proceeding did
not apply to MU's situation. In the fourth proceeding, MU
was not specifically excused, but the PUC found it was not
required to actively participate in the hearing.
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 PUC recognize and consider MU's regulatory burden
will do nothing to excuse the PUC from its obligations
under existing laws to regulate electrical corporations,
including MU. It may only give some direction to the PUC
in cases where it already has discretion to exclude MU from
cases applicable to electrical corporations - equivalent in
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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 PUC because the costs exceed
the benefits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/7/04)
Mountain Utilities (source)
ASSEMBLY FLOOR :
AYES: Aghazarian, Bates, Benoit, Berg, Bermudez, Bogh,
Calderon, Campbell, Canciamilla, Chavez, Chu, Cogdill,
Cohn, Corbett, Cox, Daucher, Diaz, Dutra, Dutton, Garcia,
Harman, Haynes, Jerome Horton, Shirley Horton, Houston,
Keene, Kehoe, Koretz, La Malfa, La Suer, Laird, Leslie,
Longville, Lowenthal, Maddox, Maldonado, Matthews, Maze,
McCarthy, Montanez, Mountjoy, Mullin, Nakanishi, Nakano,
Nation, Oropeza, Pacheco, Pavley, Plescia, Richman,
Ridley-Thomas, Runner, Salinas, Samuelian, Simitian,
Spitzer, Strickland, Vargas, Wesson, Wiggins, Wolk,
Wyland, Nunez
NOES: Correa, Leno, Yee
NO VOTE RECORDED: Chan, Dymally, Firebaugh, Frommer,
Goldberg, Hancock, Jackson, Levine, Lieber, Liu, Negrete
McLeod, Parra, Reyes, Steinberg
NC:cmnl 7/8/04 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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