BILL ANALYSIS
SB 659
Page 1
Date of Hearing: June 14, 2004
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
SB 659 (Soto) - As Amended: June 1, 2004
SENATE VOTE : Senate vote not relevant.
SUBJECT : Public Utilities Commission: Rehearings and judicial
review.
SUMMARY : Repeals provisions in existing law that require an
expedited rehearing and expedited judicial review of California
Public Utilities Commission (CPUC) decisions arising out of the
implementation of ABX1 1 (Keeley), Chapter 4, Statutes of 2001.
Specifically, this bill :
1)Repeals a provision that prohibits a cause of action arising
out of any decision of CPUC implementing the provisions of
ABX1 1 unless an application for a rehearing has been filed
with CPUC within 10 days after the date the decision has been
issued.
2)Repeals a provision creating a direct and expedited judicial
review by the California Supreme Court of any CPUC decision of
ABX1 1.
EXISTING LAW :
1)Provides that after any order or decision has been made by
CPUC, any party to the action or proceeding may apply for a
rehearing in respect to any matters determined in the action
or proceeding and specified in the application for rehearing.
2)Specifically prohibits a cause of action arising out of any
decision of CPUC implementing the provisions of ABX1 1 unless
an application for a rehearing has been filed with CPUC within
10 days after the date the decision has been issued.
3)Provides that any aggrieved party may petition for a writ of
review to a court of appeal or the California Supreme Court
for the purpose of having the lawfulness of a CPUC decision or
order determined.
4)Allows for a direct and expedited judicial review by the
SB 659
Page 2
California Supreme Court of any CPUC decision implementing
ABX1 1.
FISCAL EFFECT : Unknown.
COMMENTS : During the energy crisis, the Legislature approved
and Governor Davis signed ABX1 1, which allowed the Department
of Water Resources (DWR) to purchase electricity on behalf of
the state's Investor Owned Utilities (IOUs) and to recover its
procurement costs through the sale of revenue bonds which would
ultimately be repaid by IOU's ratepayers. Additionally, the
bill:
1)Required CPUC to set electricity rates to cover DWR's power
purchasing costs.
2)Prohibited any future rate increased for residential customers
for usage under 130 percent of baseline quantities.
3)Prohibited DWR from entering into any power procurement
contracts after January 1, 2003.
After ABX1 1 was signed into law, concerns were raised that
revenue bonds could not be issued until proceedings at CPUC were
final and no longer subject to rehearing or judicial review.
The normal rehearing and judicial review procedures could have
resulted in delays in issuing the bonds. To address these
concerns, SBX1 31, (Burton) Chapter 9, Statutes of 2001, was
enacted with provisions that called for an expedited rehearing
and judicial review process for all issues relating to ABX1 1,
include provisions not directly related to the issuance of
bonds.
Since the passage of ABX1 1, the bonds have been issued, DWR is
no longer entering into new contracts to purchase power, the
contracts DWR did enter into have been allocated to IOUs and
CPUC has made several decisions relating to the allocation of
DWR's power purchase costs.
The sponsors of this bill believe that since the purpose of the
expedited review procedures was to allow the revenue bonds to be
sold quickly and the bond sales are now complete, there is no
need for a continued expedited review. They believe that any
review of decisions relating to other provision in ABX1 1
including the allocation of DWR's power procurement costs, the
SB 659
Page 3
prohibition on rate increase for residential customers using
less than 130 percent of base line, and the suspension of direct
access should be handled under the regular rehearing and
judicial review process.
Under the expedited review process, several decisions have been
appealed to the California Supreme Court. In each case, the
court denied a writ of review, leaving CPUC decision in place.
Many observers believe that because of the complexity of most
CPUC decisions and the limited number of cases the Supreme Court
can take in a year, the court is hesitant to take direct appeals
of CPUC decisions. Generally, the courts of appeal have been
more likely to hear appeals of CPUC decisions. Consequently,
leaving the direct appeal process in place may limit the number
of decisions that the courts will review.
Are all issues relating to the bonds resolved?
While the bonds have been sold, there are still costs associated
with the bonds that DWR must pay that could be increased if the
bond's credit ratings are down graded. By changing the judicial
review process, this bill may create uncertainty with investors
that would negatively impact the recovery bonds and increase
DWR's total procurement costs. To assure that this legislation
does not negatively impact the revenue bonds, the committee may
wish to consider amending the bill to leave the expedited review
process in place for issues relating to the issuance of the
bonds or costs recovery of DWR's procurement costs, but allows
for a return to the normal review process for all other issues
addressed in ABX1 1.
Will this bill impact current proceedings?
Currently, there are a number of open and final decisions at
CPUC that relate to the implementation in ABX1 1. As drafted
this bill does not address what potential impact it will have on
open proceedings or recently issued decisions. In order to
avoid retroactively changing CPUC procedures the committee may
wish to consider amendments to state that this bill will only
apply to decisions that are issued after January 1, 2005.
REGISTERED SUPPORT / OPPOSITION :
SB 659
Page 4
Support
TURN (Sponsor)
Opposition
None on file.
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083