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