BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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                              UNFINISHED BUSINESS


          Bill No:  SB 659
          Author:   Soto (D)
          Amended:  8/23/04
          Vote:     21

           
          PRIOR SENATE VOTES NOT RELEVANT

           ASSEMBLY FLOOR  :  78-0, 8/24/04 - See last page for vote


           SUBJECT  :    Public Utilities Commission:  rehearings and  
          judicial review

           SOURCE  :     The Utility Reform Network


           DIGEST  :    This bill repeals provisions in existing law  
          that require an expedited rehearing and expedited judicial  
          review of any Public Utilities Commission (PUC) decisions  
          arising out of the implementation of AB 1X (Keeley),  
          Chapter 4, Statutes of 2001.

           Assembly amendments  delete the prior version.  As it left  
          the Senate, the bill made permanent the law which required  
          all residential electricity charges to be based on volume  
          of usage and prohibited the investor-owned utilities from  
          imposing fixed charges.

           ANALYSIS  :    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  
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             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 AB  
             1X 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  
              California Supreme Court of any CPUC decision  
             implementing AB 1X. 

          This bill:

          1. Repeals a provision that prohibits a cause of action  
             arising out of any decision of CPUC implementing the  
             provisions of AB 1X unless an application for a  
             rehearing has been filed with CPUC within 10 days after  
             the date the decision has been issued.  Instead, this  
             bill only prohibits a cause of action from arising if an  
             application for rehearing is not filed within 10 for  
             matters relating to the State Department of Water  
             Resources' (DWR) power purchase revenue requirement or  
             which DWR determines will impact the credit rating on  
             any bonds DWR issued under its power purchase  
             obligations.

          2. Provides that matters relating to DWR' power purchase  
             revenue requirement or which DWR determines will impact  
             the credit rating on any bonds DWR issued under its  
             power purchase obligations are subject to direct and  
             expedited judicial review by the California Supreme  
             Court. 

           Comments
           
          During the energy crisis, the Legislature approved and  
          Governor Davis signed AB 1X, which allowed the State  







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          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 AB 1X 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, SB 31X (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 AB 1X, include  
          provisions not directly related to the issuance of bonds. 

          Since the passage of AB 1X, 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 AB 1X including the allocation of  
          DWR's power procurement costs, the 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. 







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          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. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

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

           SUPPORT  :   (Verified  8/9/04)

          The Utility Reform Network (source)

           ASSEMBLY FLOOR :
          AYES:  Aghazarian, Bates, Benoit, Berg, Bermudez, Bogh,  
            Calderon, Campbell, Canciamilla, Chan, Chavez, Chu,  
            Cogdill, Cohn, Corbett, Correa, Cox, Daucher, Diaz,  
            Dutra, Dutton, Dymally, Firebaugh, Frommer, Garcia,  
            Goldberg, Hancock, Harman, Haynes, Jerome Horton, Shirley  
            Horton, Houston, Jackson, Keene, Kehoe, La Malfa, La  
            Suer, Laird, Leno, Leslie, Levine, Lieber, Liu,  
            Longville, Lowenthal, Maddox, Maldonado, Matthews, Maze,  
            McCarthy, Montanez, Mountjoy, Mullin, Nakanishi, Nakano,  
            Nation, Negrete McLeod, Oropeza, Pacheco, Parra, Plescia,  
            Reyes, Richman, Ridley-Thomas, Runner, Salinas,  
            Samuelian, Simitian, Spitzer, Steinberg, Strickland,  
            Vargas, Wesson, Wiggins, Wolk, Wyland, Yee, Nunez
          NO VOTE RECORDED:  Koretz, Pavley


          NC:sl  8/25/04   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE








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