BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 659
                                                                  Page  1

          Date of Hearing:   August 4, 2004

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                      SB 659 (Soto) - As Amended:  June 1, 2004 

          Policy Committee:                               
          UtilitiesVote:12-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill repeals provisions in existing law that require an  
          expedited rehearing and expedited judicial review of any  
          challenges to Public Utilities Commission (PUC) decisions  
          arising out of the implementation of ABX1 1 (Keeley)--Chapter  
          4/Statutes of 2001. 

           FISCAL EFFECT  

          Any additional costs to the PUC for additional rehearings and/or  
          judicial reviews would be minor and absorbable.

           COMMENTS  

           Background and Purpose  . During the energy crisis, the enactment  
          of ABX1 1 allowed the Department of Water Resources (DWR) to  
          purchase electricity on behalf of the state's Investor Owned  
          Utilities (IOUs) and to recover its costs through the sale of  
          revenue bonds to be repaid by IOU's ratepayers. That bill also:  
          (1) required the PUC to set electricity rates to cover DWR's  
          power purchasing costs, (2) prohibited any future rate increase  
          for residential customers for usage under 130 percent of  
          baseline quantities, and (3) prohibited DWR from entering into  
          any power procurement contracts after January 1, 2003. 

          After ABX1 1 was enacted, concerns were raised that the revenue  
          bonds could not be issued until proceedings at the PUC were  
          final and no longer subject to rehearing or judicial review.  
          (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 provided  








                                                                  SB 659
                                                                  Page  2

          for an expedited rehearing and judicial review process for all  
          issues relating to ABX1 1, including provisions not directly  
          related to the issuance of bonds. The revenue bonds have since  
          been issued, DWR is no longer entering into new power purchase  
          contracts, the DWR contracts have been assigned to the IOUs,   
          and the PUC has made several decisions relating to the  
          allocation of DWR's power purchase costs. 

          The sponsors of this bill--The Utility Reform Network (TURN)--  
          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 authorization for expedited review. They believe that  
          any review of decisions relating to other provision in ABX1 1  
          should be handled under the regular rehearing and judicial  
          review process. 

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