BILL ANALYSIS SB 659 Page 1 SENATE THIRD READING SB 659 (Soto) As Amended June 1, 2004 Majority vote SENATE VOTE :(vote not relevant) UTILITIES AND COMMERCE 12-0 APPROPRIATIONS 21-0 ----------------------------------------------------------------- |Ayes:|Reyes, Aghazarian, Bogh, |Ayes:|Chu, Runner, Bates, | | |Calderon, Canciamilla, | |Laird, Calderon, Corbett, | | |Diaz, Jerome Horton, La | |Correa, Daucher, | | |Malfa, Levine, Maddox, | |Firebaugh, Goldberg, | | |Ridley-Thomas, Wesson | |Haynes, Keene, Leno, | | | | |Nation, Negrete McLeod, | | | | |Oropeza, Pavley, Levine, | | | | |Steinberg, Wiggins, Yee | ----------------------------------------------------------------- SUMMARY : Repeals provisions in existing law that require an expedited rehearing and expedited judicial review of California Public Utilities Commission (PUC) decisions arising out of the implementation of AB X1 1 (Keeley), Chapter 4, Statutes of 2001-02, First Extraordinary Session. Specifically, this bill : 1)Repeals a provision that prohibits a cause of action arising out of any decision of PUC implementing the provisions of AB X1 1 unless an application for a rehearing has been filed with PUC 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 PUC decision of AB X1 1. EXISTING LAW : 1)Provides that after any order or decision has been made by PUC, 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)Provides that any aggrieved party may petition for a writ of review to a court of appeal or the California Supreme Court SB 659 Page 2 for the purpose of having the lawfulness of a PUC decision or order determined. 3)Allows for a direct and expedited judicial review by the California Supreme Court of any PUC decision implementing AB X1 1. FISCAL EFFECT : Unknown COMMENTS : During the energy crisis, the Legislature approved and Governor Davis signed AB X1 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, this bill: 1)Required PUC to set electricity rates to cover DWR's power purchasing costs. 2)Prohibited any future rate increased for residential customers for usage under 130% of baseline quantities. 3)Prohibited DWR from entering into any power procurement contracts after January 1, 2003. After AB X1 1 was signed into law, concerns were raised that revenue bonds could not be issued until proceedings at PUC 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, SB X1 31, (Burton) Chapter 9, Statutes of 2001-02, First Extraordinary Session, was enacted with provisions that called for an expedited rehearing and judicial review process for all issues relating to AB X1 1, include provisions not directly related to the issuance of bonds. Since the passage of AB X1 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 PUC 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 SB 659 Page 3 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 AB X1 1 including the allocation of DWR's power procurement costs, the prohibition on rate increase for residential customers using less than 130% of base line, and the suspension of direct access should be handled under the regular rehearing and judicial review process. DWR claims that the removal of the expedited rehearing and judicial review process would lead to an increase and the number of and duration of judicial appeals of PUC decision relating to AB X1 1. They are additionally concerned that while the bonds already been sold, a return to the expedited review could jeopardized the creditworthiness of the DWR bonds. Any downgrade in the credit ratings of the bonds will increase certain ongoing expenses DWR must pay in relation to the bonds and consequently increase ratepayer costs. 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 PUC decision in place. Many observers believe that because of the complexity of most PUC decisions and the limited number of cases the Supreme Court can take in a year, the court is hesitant to take direct appeals of PUC decisions. Generally, the courts of appeal have been more likely to hear appeals of PUC decisions. Consequently, leaving the direct appeal process in place may limit the number of decisions that the courts will review. Analysis Prepared by : Edward Randolph / U. & C. / (916) 319-2083 FN: 0007726