BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 67
                                                                  Page  1

          Date of Hearing:   August 20, 2003

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                     SB 67 (Bowen) - As Amended:  July 16, 2003 

          Policy Committee:                              UtilitiesVote:9-4
                        Natural Resources                     8-3

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill adds an additional condition by which the Public  
          Utilities Commission (PUC) must require an investor-owned  
          utility (IOU) to procure renewable energy in order to fulfill  
          the state's renewables portfolio standard (RPS) requirements.   
          Specifically, this bill:

          1)Requires the PUC to require fulfillment of the RPS if the IOU  
            is able to buy renewable resources on reasonable terms, can  
            finance such purchases if necessary, and the procurement will  
            not impair the restoration of an IOU's credit-worthiness.

          2)Delays applicability of (1) until after April 1, 2004 for any  
            IOU that, as of June 30, 2003, was in federal bankruptcy  
            court.  (This provision applies to PG&E.)

          3)Allows the PUC to consider renewable energy purchased by an  
            IOU, from a facility located outside the state and meeting  
            specified requirements, as meeting the RPS.

           FISCAL EFFECT  

          Minor absorbable special fund costs to the PUC.

           COMMENTS  

           1)Background  .  SB 1078 (Sher)-Chapter 516/Statutes of 2002  
            created the RPS, which requires the IOUs to buy renewable  
            resources with the goal of increasing their existing level of  
            renewable resources by one percent per year until a twenty  
            percent renewable resources portfolio is achieved.  The PUC is  








                                                                  SB 67
                                                                  Page  2

            prohibited from requiring an IOU to buy renewable resources to  
            fulfill the RPS until the IOU has attained an investment grade  
            credit rating as determined by at least two major rating  
            agencies.  Pacific Gas & Electric (PG&E) and Southern  
            California Edison (SCE) currently do not meet this condition. 

           2)Purpose  .  According to the author's office, renewable  
            procurement should be dependent on the unrelated decisions of  
            credit rating agencies.  Instead, IOUs should be able to buy  
            renewable power even when their credit ratings are not  
            investment grade.  Because IOU portfolio costs are guaranteed  
            to be recovered in rates and IOUs will have to procure power  
            regardless, their credit worthiness should not be an obstacle  
            to fulfilling the RPS. 

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081