BILL NUMBER: AB 2918	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 12, 2004
	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   and water corporations.  Existing law
 authorizes the commission to fix just and reasonable rates and
charges for all public utilities.  
   The existing Cobey-Porter Saline Water Conversion Law authorizes
the Department of Water Resources, either independently or in
cooperation with public or private entities, to conduct a program of
investigation, study, and evaluation in the field of saline water
conversion, to provide assistance to persons or entities seeking to
construct desalination facilities, and after submission of a written
report and upon appropriation from the Legislature, to finance,
construct, and operate saline water conversion facilities. 
   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   require the commission to evaluate the
interrelationship between the commission's electricity policies and
water policies as they relate to saline water conversion through
ocean desalination, and to report to the Governor and the
Legislature, on or before January 1, 2006, on the balance between
electricity ratepayers and water ratepayers. The commission would be
required to invite the Department of Water Resources, the State Water
Resources Control Board, the Department of Fish and Game, the State
Energy Resources Conservation and Development Commission, and the
California Coastal Commission, to participate in the evaluation 
.
   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 

  SECTION 1.  The Public Utilities Commission shall evaluate the
interrelationship between the commission's electricity policy and
water policy as it relates to saline water conversion through ocean
desalination and shall report to the Governor and the Legislature by
January 1, 2006, on the balance between the interests of electricity
and water ratepayers.  The commission shall invite the Department of
Water Resources, the State Water Resources Control Board, the
Department of Fish and Game, the State Energy Resources Conservation
and Development Commission, and the California Coastal Commission, to
participate in the evaluation.   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 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) 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 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.