BILL NUMBER: SB 173	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 20, 2003
	AMENDED IN SENATE  MAY 6, 2003
	AMENDED IN SENATE  APRIL 22, 2003
	AMENDED IN SENATE  APRIL 3, 2003

INTRODUCED BY   Senator Dunn

                        FEBRUARY 12, 2003

   An act to add Section 17206.7 to the Business and Professions
Code, and to  add Section 391.1 to   amend
Section 390.1 of, and to add Section 391.1 to,  the Public
Utilities Code, relating to energy.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 173, as amended, Dunn.  Energy.
   (1)  Existing law prohibits unfair competition, including any
unlawful, unfair, or fraudulent business act or practices. In an
action brought in the name of the people by the Attorney General or
any district attorney, and in specified instances by a county
counsel, city prosecutor, or city attorney, existing law provides
that any person who engages, has engaged, or proposes to engage in
unfair competition, is liable for a civil penalty not to exceed
$2,500 for each violation.
   This bill would provide that any person knowingly making a false
statement or report for use in a gas index price, commits a
fraudulent business act constituting unfair competition and is liable
for a civil penalty not to exceed $25,000 for each violation.
   (2)  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. Existing  law authorizes any
nonutility power generator using renewable fuels that has entered
into a contract with an electrical corporation prior to December 31,
2001, specifying fixed energy prices for 5 years of output to
negotiate a contract for an additional 5 years of fixed energy
payments upon expiration of the initial 5-year term, at a price to be
determined by the commission.
   This bill would instead authorize such an entity to elect an
additional 5 years of fixed energy payments upon expiration of the
initial 5-year term, at a price to be determined by the commission.
   (3) Existing  law provides for a short-run avoided cost
methodology for the price paid by a public utility electrical
corporation for electricity generated by a nonutility, qualifying
small power production or qualifying cogeneration facility (QF), as
defined.  This methodology includes adjustments to prices based upon
gas index prices.
   This bill would restrict the commission to the use of gas price
indexes determined by the commission to be reliable and verified, and
meeting listed requirements, and would require the commission to
establish standards for reliability and verification for gas price
indexes used to establish or adjust prices paid to QFs by a public
utility electrical corporation.  The bill would also restrict the
commission, if it establishes a price benchmark used to determine the
reasonability of utility natural gas purchases for the purpose of
determining a utility bonus payment, to the use of index prices that
meet those listed requirements.  The bill would further provide that
if the commission determines that no reliable and verifiable gas
price index exists meeting the standards adopted by the commission,
the commission is required to establish and adjust the prices paid to
QFs by a public utility electrical corporation in a manner that is
just and reasonable, in the public interest, and without
discrimination against nonutility generators, consistent with the
requirements of the federal Public Utility Regulatory Policies Act of
1978.  
   (2) Existing law prohibits unfair competition, including any
unlawful, unfair, or fraudulent business act or practices.  In an
action brought in the name of the people by the Attorney General or
any district attorney, and in specified instances by a county
counsel, city prosecutor, or city attorney, existing law provides
that any person who engages, has engaged, or proposes to engage in
unfair competition, is liable for a civil penalty not to exceed
$2,500 for each violation.
   This bill would provide that any person knowingly making a false
statement or report for use in a gas index price, commits a
fraudulent business act constituting unfair competition and is liable
for a civil penalty not to exceed $25,000 for each violation.

   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.   Section 17206.7 is added to the Business and
Professions Code, to read:
   17206.7.  (a) Knowingly making a false statement or report for use
in an energy price index is a fraudulent business act constituting
unfair competition.
   (b) Notwithstanding the maximum civil penalty in Section 17206,
any person who knowingly makes a false statement or report for use in
a gas price index pursuant to Section 390 of the Public Utilities
Code, shall be liable for a civil penalty not to exceed twenty-five
thousand dollars ($25,000) for each violation.
  SEC. 2.  Section 390.1 of the Public Utilities Code is amended to
read: 
   390.1.  Any nonutility power generator using renewable fuels that
has entered into a contract with an electrical corporation prior to
December 31, 2001, specifying fixed energy prices for five years of
output may  negotiate a contract for   elect
 an additional five years of fixed energy payments upon
expiration of the initial five-year term, at a price to be determined
by the commission.   
  SEC. 3.   Section 391.1 is added to the Public Utilities Code,
to read:
   391.1.  (a) Any gas price index used to establish or adjust prices
for electricity paid to a nonutility generator by a public utility
electrical corporation, pursuant to Section 390, must be reliable and
verified, as determined by the commission.
   (b) The commission may determine that a gas price index is
reliable and verified only if the gas price index meets all of the
following characteristics:
   (1) All transactions that comprise the gas price index price
calculations are transacted on an organized exchange subject to
regulation by the federal Commodity Futures Trading Commission.
   (2) The Commodity Futures Trading Commission requires the
organized exchange to maintain and enforce an internal auditing
mechanism and to maintain records of trading activity for the
transactions, so that a clear audit trail is possible.
   (3) The Commodity Futures Trading Commission requires the
organized exchange to conduct market surveillance and trade
surveillance of transactions, with oversight by the Commodity Futures
Trading Commission, to prevent market manipulation and other
anticompetitive activity.
   (4) The transactions that comprise the published index price are
reported to the organized exchange and time-stamped within one minute
of the transaction.
   (5) The transactions reported to the organized exchange include
all of the following information:
   (A) Price.
   (B) Volume.
   (C) Delivery point.
   (D) Duration.
   (E) Date and time of transaction.
   (F) Whether the transaction is a purchase or a sale.
   (G) Counterparty.
   (c) If the commission establishes a gas price benchmark, based on
a single gas price index or a combination of gas indexes, and this
benchmark is used to determine the reasonableness of natural gas
purchases by a gas corporation for the purposes of determining a gas
corporation shareholder award, the commission may use only gas index
prices that meet the requirements of subdivision (b).
   (d) Notwithstanding Section 390, if the commission determines that
no reliable and verifiable gas price index exists meeting the
standards adopted pursuant to this section, the commission shall
establish and adjust the prices for electricity paid to nonutility
generators by a public utility electrical corporation in a manner
that is just and reasonable, in the public interest, and without
discrimination against nonutility generators, consistent with the
federal Public Utility Regulatory Policies Act of 1978 (Public Law
95-617), any amendments to that act, and the regulations adopted
under that act by the Federal Energy Regulatory Commission.  

  SEC. 2.  Section 17206.7 is added to the Business and Professions
Code, to read:
   17206.7.  (a)  Knowingly making a false statement or report for
use in an energy price index is a fraudulent business act
constituting unfair competition.
   (b) Notwithstanding the maximum civil penalty in Section 17206,
any person who knowingly makes a false statement or report for use in
a gas price index pursuant to Section 390 of the Public Utilities
Code, shall be liable for a civil penalty not to exceed twenty-five
thousand dollars ($25,000) for each violation.
  SEC. 3.   
  SEC. 4.   (a) Subdivision (a) of Section 17206.7 of the
Business and Professions Code does not constitute a change in, but is
declaratory of, existing law.
   (b) It is the intention of the Legislature in adding subdivision
(b) of Section 17206.7 of the Business and Professions Code, to
change existing law by providing for civil penalties in an amount
higher than would be available pursuant to Section 17206.