BILL ANALYSIS
AB 2767
Page 1
ASSEMBLY THIRD READING
AB 2767 (Richman)
As Introduced February 20, 2003
Majority vote
UTILITIES AND COMMERCE 10-0
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|Ayes:|Reyes, Campbell, Bogh, | | |
| |Calderon, Canciamilla, | | |
| |Diaz, La Malfa, Levine, | | |
| |Maddox, Correa | | |
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SUMMARY : Clarifies existing law to authorize the Department of
Water Resources (DWR) to re-negotiate contractual agreements
pertaining to electricity purchase contracts. Specifically,
this bill :
1)Finds and declares that DWR authority, under this subdivision,
is declaratory of existing law.
2)Clarifies that DWR has the authority to re-negotiate, novate,
or amend electricity purchase contracts to include any
contractual term necessary, appropriate or convenient to
further the purposes of the program.
FISCAL EFFECT : None
COMMENTS : According to the sponsor, DWR, existing law should be
made clearer regarding DWR's authority to include certain rights
to re-negotiate long-term energy contracts. The sponsor
believes, and the Attorney General has opined, that DWR's
authority to administer long-term energy contracts includes
certain rights to renegotiate these contracts. However, the
sponsor points out that this authority is not explicit and the
absence of explicit authority has hampered some re-negotiation
efforts.
Background: DWR began purchasing power for the state after the
investor-owned utilities (IOUs) became unable to purchase
wholesale electricity for their customers due to the
deterioration of their creditworthiness as a result of paying
for overpriced power through the now defunct Power Exchange.
The contracts DWR entered into on behalf of IOUs resulted in an
AB 2767
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estimated cost of $43 billion to ratepayers and the terms
extending out to 2012. To date DWR has successfully
renegotiated 33 long-term contracts with 18 counter parties for
a savings of approximately $6.3 billion.
Analysis Prepared by : Daniel Kim / U. & C. / (916) 319-2083
FN: 0005146