BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 659| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED SB 659 Page 2 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 SB 659 Page 3 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. SB 659 Page 4 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 SB 659 Page 5 **** END ****