BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2918
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 2918 (Laird)
          As Amended July 12, 2004
          Majority vote
           
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          |ASSEMBLY:  |46-31|(May 20, 2004)  |SENATE: |31-2 |(August 16,    |
          |           |     |                |        |     |2004)          |
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                    (vote not relevant)

          Original Committee Reference:   W., P. & W.  

           SUMMARY  :  Seeks to lower the cost of desalination by finding  
          ways to lower the cost of electricity to the desalination  
          plants.

           The Senate amendments  delete the Assembly version of the bill,  
          and instead direct the Public Utilities Commission (PUC) to  
          evaluate the interrelationship between its electricity policy  
          and water policy as it relates to desalination of water and  
          report to the Governor and Legislature by January 1, 2006.

           EXISTING LAW  establishes PUC and gives it the authority to set  
          rates for the sale or purchase of electricity by regulated  
          utilities.

           AS PASSED BY THE ASSEMBLY  , this bill:

          1)Required PUC 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.

          2)Required PUC to determine the costs and benefits associated  
            with exempting a desalination facility operated by a public  
            agency or a regulated utility from costs of electricity  
            procured through the Department of Water Resources as a result  
            of the recent energy crisis, or through any historical  
            procurement costs associated with deregulation.

          3)Required that PUC take the above actions before July 1, 2005  
            by initiating either a rulemaking or a quasi-legislative  
            proceeding, or through the next general rate case.









                                                                  AB 2918
                                                                  Page  2

          4)States that PUC should not shift costs as a result of its  
            decision based on the above actions.

           FISCAL EFFECT  :  Some cost to PUC of conducting an evaluation and  
          repairing a report.

           COMMENTS  :  Although the bill was substantially amended in the  
          Senate and the Assembly-approved provisions of the bill were  
          deleted, this bill, as amended in the Senate, is consistent with  
          Assembly actions.


           Analysis Prepared by  :    Jeffrey Volberg / W., P. & W. / (916)  
          319-2096

                                                               FN: 0007477