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
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            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
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          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 


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