BILL ANALYSIS
AB 2509
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2509 (Nakanishi)
As Amended July 8, 2004
Majority vote
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|ASSEMBLY: |63-3 |(May 17, 2004) |SENATE: |34-1 |(August 9, |
| | | | | |2004) |
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Original Committee Reference: U. & C.
SUMMARY : States legislative intent that the California Public
Utilities Commission (PUC) consider the costs imposed on a
microutility in participating in a PUC proceeding before naming
the microutility as a respondent in a hearing generally
applicable to electrical corporations.
The Senate amendments make technical clarifying changes to the
definition of electric microutility, including other technical
nonsubstantive changes that are consistent with the intent of
this bill as passed by the Assembly.
AS PASSED BY THE ASSEMBLY , this bill:
1)Defined "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)Stated the intent of the Legislature that PUC recognize the
legal, administrative, and operational costs that an electric
microutility faces when named as a respondent in a PUC
hearing. The limited resources of a microutility are
disproportionately strained by the costs of response.
3)Urged PUC to consider the costs imposed on a microutility in
participating in a PUC proceeding before naming the
microutility as a respondent in a hearing generally applicable
to electrical corporations.
FISCAL EFFECT : Unknown
COMMENTS : Each year PUC conducts a number of proceedings that
affect most, if not all, electric utilities across the state.
AB 2509
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Recently these proceedings have included investigations and
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 PUC 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 divisions
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 PUC 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 PUC proceedings is ultimately borne by its
ratepayers.
This bill is aimed at reducing the burden on MU by urging PUC to
consider the impacted costs of participating in PUC proceedings
have on a microutility's limited resources.
Procedure already in place: When PUC 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; Second
Extraordinary Session); 2) adjustments to residential baseline
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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. Arguably each of these proceeding would impact all
utility ratepayers no matter the size of the utility and PUC
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 PUC found that the proceeding did
not apply to MU's situation. In the fourth proceeding, MU was
not specifically excused, but PUC 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
2,000 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.
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083
FN: 0007104