BILL NUMBER: AB 2918	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 17, 2004
	AMENDED IN ASSEMBLY  MAY 17, 2004
	AMENDED IN ASSEMBLY  APRIL 27, 2004
	AMENDED IN ASSEMBLY  APRIL 15, 2004
	AMENDED IN ASSEMBLY  APRIL 12, 2004

INTRODUCED BY   Assembly Member Laird

                        FEBRUARY 20, 2004

   An act to add Section 747 to the Public Utilities Code, relating
to desalination facilities.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2918, as amended, Laird.  Desalination facilities:  electricity
rates.
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations,
and authorizes the commission to fix just and reasonable rates and
charges for all public utilities.
   This bill would, for any electrical corporation serving more than
1,000,000 customers, require that by July 1, 2005, the commission
initiate either a quasi-legislative or ratesetting proceeding to
determine the feasibility of establishing a separate rate class for
desalination plants operated by public agencies or by regulated
utilities, which are placed in service after January 1, 2006.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) The state has serious water supply problems which will be
difficult to solve without additional supplies of clean fresh water.

   (b) Some methods for addressing fresh water shortages raise very
controversial issues, including the environmental effects of new dams
used to store additional supplies, purchasing water from
agricultural interests, and shipping water from one part of the state
to another.
   (c) Desalination has recently become more cost effective as a
result of recent technological improvements, although desalination is
not free of difficult policy and environmental issues.
   (d) Fresh water provided by desalination will remain costly,
partly because  of  the cost of electricity used in
the desalination process  can be as much as 75 percent of the
cost of water from a desalination plant  .  
   (e) The Public Utilities Commission should not shift costs as a
result of the enactment of this act.  
   (e) It is the intent of the Legislature that any special rate
class established by the Public Utilities Commission pursuant to this
act for desalination plants not result in shifting costs to other
electricity users and that the rates for other electricity users not
shift costs to desalination plants. 
  SEC. 2.  Section 747 is added to the Public Utilities Code, to
read:
   747.  The commission shall, by July 1, 2005, for any electrical
corporation serving more than 1,000,000 customers, initiate either a
quasi-legislative or ratesetting proceeding to determine the
feasibility of establishing a separate rate class for desalination
plants operated by public agencies or by regulated utilities, which
are placed in service after January 1, 2006.  The commission may make
the determination in the utility's next general rate case.  
In the proceeding, the commission shall determine the costs and
benefits associated with exempting a desalination facility operated
by a public agency or regulated utility from costs of electricity
procured through the Department of Water Resources pursuant to
Division 27 (commencing with Section 80000) of the Water Code, or
through any historical procurement costs associated with
restructuring of the electrical industry, including any utility
undercollections or insolvency or bankruptcy related charges, both
during and after the energy crises of 2000-01.   In the
proceeding, the commission shall  additionally 
consider whether a desalination facility employs programs to shift
electricity consumption to offpeak electricity demand periods,
including interruptible or curtailable service programs, and use of
real time metering.