BILL NUMBER: SB 888 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 28, 2003
AMENDED IN SENATE APRIL 10, 2003
AMENDED IN SENATE APRIL 8, 2003
INTRODUCED BY Senators Dunn, Bowen, and Burton
(Coauthors: Senators Alpert, Escutia, Karnette, Kuehl, Murray,
Ortiz, Perata, and Romero)
(Coauthors: Assembly Members Leno, Matthews, Oropeza, and
Steinberg)
FEBRUARY 21, 2003
An act to amend Sections 335, 352, 364, 367, 377, 379, 392, and
9604 of, to amend and renumber Section 454.1 of, to add Sections
330.1, 330.2, 330.4, 330.6, 367.5, 393.1, 393.2, 454.55,
454.10, and 761.7 to, to repeal Sections 334, 338, 341.1, 341.5, 346,
348, 350, 355, 356, 359, 360, 361, 365, 365.5, 366.5, 367.7, 370,
373, 376, 378, 389, 391, 397, 9600, 9601, 9602, 9603, and 9605 of,
and to repeal and add Sections 330 and 366 of, the Public Utilities
Code, relating to public utilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 888, as amended, Dunn. Public utilities: electrical
restructuring.
(1) The California Constitution establishes the Public Utilities
Commission, with jurisdiction over all public utilities. Private
corporations and persons that own, operate, control, or manage a
line, plant, or system for the production, generation, transmission,
or furnishing of heat, light, or power, directly or indirectly ,
to or for the public, are public utilities subject to control
by the Legislature. The Constitution grants the commission certain
general powers over all public utilities, including the power to fix
rates and establish rules, and authorizes the Legislature, unlimited
by the other provisions of the Constitution, to confer additional
authority and jurisdiction upon the commission, that is cognate and
germane to the regulation of public utilities. The Public Utilities
Act authorizes the commission to supervise and regulate every public
utility in the state, including electrical, gas, and heat
corporations, subject to provisions restructuring the electrical
industry.
The existing restructuring of the electrical services industry
provides for the authorization of direct transactions between an
electric service provider, as defined, and retail end-use customers
of an electrical corporation and allows end-use customers to
aggregate their loads to facilitate direct transactions. The
existing restructuring of the electrical industry within the Public
Utilities Act provides for the establishment of an Independent System
Operator (ISO) and a Power Exchange as separately incorporated
public benefit nonprofit corporations. An Electricity Oversight
Board (Oversight Board) is also established to oversee the ISO and
the Power Exchange in order to ensure the success of electric
industry restructuring and to ensure a reliable supply of electricity
in the transition to a new market structure. The ISO is required by
existing law to participate in all relevant proceedings of the
Federal Energy Regulatory Commission (FERC). Pursuant to an order of
the FERC, the Power Exchange has ceased to function. The Oversight
Board is granted various powers including, but not limited to,
requiring the revision of the bylaws of the ISO and the approval of
the entry of the ISO into a multistate entity or a regional
organization. Existing law requires the ISO to adopt certain
inspection, maintenance, repair, and replacement standards for the
transmission facilities under its control and to make a related
report to the Oversight Board. Existing law authorizes the ISO and
the Power Exchange to enter into a regional compact or other
comparable agreement to become western states regional organizations.
This bill would enact the Repeal of Electricity Deregulation Act
of 2003. The bill would provide that the obligation of
electrical and gas corporations to provide
adequate service have an obligation to serve retail
customers with reliable service at just and reasonable rates
, . The bill would provide that this
obligation includes a duty of care, a duty of loyalty, a duty
of disclosure, and a duty to use best efforts by the corporation's
management, to maintain safe, healthful, reliable, and
affordable basic service for end-use customers,
consistent with the statutes of the state and the rules, regulations,
decisions, and orders of the commission. The bill would
provide that this obligation to serve also includes the obligation to
plan for and provide sufficient cost-effective resources, including
utility owned and procured generation resources, transmission
resources, and distribution resources. The bill would require
the commission to ensure that public utility employees and
investors are the electrical corporation is
afforded the means to carry out these obligations, specifically
including reasonable compensation for employees and fair
sharing of risks and rewards for investors a
reasonable opportunity to recover from all customers, reasonable
investments in electric plants, including a reasonable return of such
investments, reasonable costs to operate, and procurement costs
. The bill would require the commission to ensure that
generation assets remain dedicated for the benefit of the electrical
corporation's bundled customers, and establishes standards for the
recovery of costs and return on investment. The bill requires
the commission to establish and oversee a long-term, comprehensive
integrated resource planning process that results in a balanced,
reliable, environmentally responsible portfolio of supply and
demand-reduction resources, and to ensure that the electrical
corporation's procurement plan is consistent with the long-term
resource plan, to the extent feasible. The bill would
authorize the commission to require electrical corporations to make
investments in electric generation plants that are
dedicated to serve customers connected to the electrical corporation'
s distribution system or grid, or to contract for such investment
with any entity, including the California Consumer Power
and Conservation Financing Authority.
This bill would delete the authorization of direct transactions,
including aggregation of loads and other provisions to facilitate
direct transactions, between an electric service provider and retail
end-use customers of an electrical corporation, on a prospective
basis. The bill would require all metering of customer usage of
electricity and customer billing to be performed by the electrical
corporation and would prohibit residential and small commercial
customers being required to take service under a time-differentiated
rate without prior consent.
This bill would delete those provisions establishing the Power
Exchange and would make conforming changes repealing those provisions
granting powers to the Oversight Board relative to the Power
Exchange. The bill would delete provisions relative to the ISO
participation in FERC activities. The bill would require the
Legislature to approve the entry of the ISO into a multistate or
regional transmission organization, and would repeal that provision
regarding the adoption of standards for transmission facilities by
the ISO. The bill would require the commission to periodically
review and update inspection, maintenance, repair, and replacement
standards for the distribution and transmission systems of
investor-owned electric utilities. The bill would repeal the
regional compact provision. The bill would make other conforming
changes. Because any violation of the Public Utilities Act is a
crime, the bill would impose a state-mandated local program by
changing the definition of a crime.
This bill would establish a Ratepayer Refund Account for each
electrical corporation, into which would be paid any funds recovered
by electrical corporations resulting from litigation or agreement
relative to the charging of excessive costs for wholesale electricity
by electrical generators. All funds would be held in trust
on behalf for the benefit of ratepayers.
(2) The existing Public Utilities Act, prohibits any person or
corporation from acquiring or controlling, directly or indirectly,
any public utility organized and doing business in this state,
including electrical corporations and gas corporations, without first
securing authorization to do so from the commission.
Existing law requires the commission, before authorizing the
acquisition or control of an electric, gas, or telephone utility
having revenues in excess of a specified amount, to consider, among
other things, that the proposal provides short-term and long-term
economic benefits to ratepayers, and equitably allocates the
short-term and long-term forecasted economic benefits of the proposed
merger, acquisition, or control, as determined by the commission,
between shareholders and ratepayers, where the commission has
ratemaking authority.
Pursuant to the act, the commission has authorized the formation
of holding companies holding a controlling interest in certain
electrical corporations and gas corporations. The commission has
conditioned authorization upon the capital requirements of the
electrical corporation or gas corporation being given first priority
by the board of directors of the parent holding company, as
determined by the commission as being necessary to meet the
obligation to serve the electrical corporation or gas corporation.
This bill would provide that a holding company , as
defined, or other entity that owns, controls, operates, or manages a
public utility, is subject to the continuing jurisdiction and power
of the commission for the limited purpose of monitoring and enforcing
conditions in certain decisions of the commission authorizing the
formation of holding companies. Because a violation of the Public
Utilities Act or an order of the commission is a crime under existing
law, the bill would impose a state-mandated local program by
creating a new crime.
(3) This bill would delete provisions relative to the
restructuring of electrical service provided by publicly owned
electrical utilities.
(4) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement. This bill would provide that no reimbursement is
required by this act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 330 of the Public Utilities Code is repealed.
SEC. 2. Section 330 is added to the Public Utilities Code, to
read:
330. The act adding this section shall be known and may be
cited as the Repeal of Electricity Deregulation Act of 2003.
SEC. 3. Section 330.1 is added to the Public Utilities Code, to
read:
330.1. The Legislature finds and declares all of the following:
(a) Electricity is a unique good in modern society, not a simple
commodity. Access to safe, reliable and affordable electrical
service is indispensable to the health, comfort, and well-being of
every person and business, and should be regarded as a right.
(b) Unlike other commodities, electricity must be manufactured at
the same instant it is consumed, it cannot be effectively stored, and
adequate generating and transmission capacity must be available at
all times to meet any level of demand at any location. Shortages,
even for only a few minutes, cause blackouts. This combination of
circumstances creates unparalleled opportunities for discrimination
and market manipulation.
(c) Reliable electrical service is of utmost importance to the
safety, health, and welfare of the state's citizenry and economy. It
is the intent of the Legislature that regulation of the electrical
industry should ensure the reliability of electrical service to end
users, including the reliability of the interconnected regional
transmission systems, and provide strong coordination and enforceable
protocols for all users of the electricity grid.
(d) Accordingly, the electrical industry must be comprehensively
regulated, by state and federal agencies for investor-owned
utilities, or by customer-controlled structures for public and
cooperative utilities. The people of California expect effective
government and utility action to ensure reliable service at
reasonable rates.
(e) Electrical service in California was restructured, or
deregulated, by orders of the California Public Utilities Commission
(CPUC) and the Federal Energy Regulatory Commission (FERC), and
actions of the California Independent System Operator pursuant to
FERC authorization, which ordered separation of the transmission and
generation elements of electrical service resulting in: (1)
divestiture of powerplants that had been built and dedicated to serve
California consumers at just and reasonable regulated rates; (2) the
separation of wholesale and retail transmission service by the
utility owners of the transmission facilities; (3) uses of the
transmission grid designed to enable sellers to undermine grid
reliability in the pursuit of high prices through the exercise of
market power.
(f) The California Legislature confirmed the CPUC orders in some
respects through the enactment of Assembly Bill 1890 (Chapter 854 of
the Statutes of 1996), and in so doing, codified the basic tenants of
deregulation of electrical service in California.
(g) As the direct result of deregulation of the electrical
industry, electricity markets in California have been grossly
dysfunctional for the past several years, characterized by
manipulation and abuse of seller market power in wholesale
electricity markets, withholding of vital energy supplies and other
illegal conduct that resulted in unjust and unreasonable wholesale
prices for electricity, causing elevated retail rates and repeated
actual and threatened interruptions of electrical service.
(h) As the direct result of the deregulation of the wholesale
electrical market and the dysfunctional service arrangements,
residential and business consumers have endured the single largest
retail rate increase in the state's history, the state's largest
electrical corporation filed for bankruptcy, a second electrical
corporation was on the verge of insolvency, and reliable electrical
service was repeatedly jeopardized. It will take many years for the
economic effects of these calamities to be overcome.
(i) During the period from May 2000 through June 2001, California
was beset by actual and threatened blackouts due to supply
withholding by wholesale generators and electricity traders, using
both direct and indirect means to make electricity unavailable to the
people of California.
(j) As the direct result of deregulation of the electrical supply
market, California was forced to rely entirely on unregulated private
investment decisions to provide sufficient electrical generation to
satisfy the demand for electricity. As a direct result of
deregulation of the electrical supply market, California has
experienced the boom and bust cycle in the construction of new
electrical powerplants that characterizes any unregulated market.
The wholesale electricity generation sector, subject only to
ineffective or nonexistant nonexistent
regulation by FERC, is now failing to invest in new generation needed
by California.
(k) As the direct result of deregulation of the electrical
industry, California's traditional commitments to renewable energy
sources and investments in improved energy efficiency were weakened.
In order to fulfill the mandates of Senate Bill 1078 (Chapter 516 of
the Statutes of 2002), which is necessary to protect California's
environment, public utilities must be able to implement the
California Renewables Portfolio Standard Program.
(l) California electricity consumers will inevitably provide the
ultimate credit support for any new investment in facilities for the
provision of electrical service in the future either through
rate-based utility investments or through long-term contracts with
other suppliers. Protecting the interests of consumers by ensuring
that investment is prudent and cost-effective should be the highest
priority of California regulatory policy and action.
(m) It is in the state's interest to have functional creditworthy
public utilities providing essential electrical service to California
consumers at just and reasonable rates and to limit the exposure of
California consumers to dysfunctional deregulated wholesale
electricity markets.
(n) Fully empowering public utilities and state entities and
agencies, including the CPUC, the California Consumer Power and
Conservation Financing Authority, the Independent System Operator,
and the Department of Water Resources to mitigate the exercise of
market power by sellers of electricity, reduce prices for
electricity, and restore electrical grid reliability, is in the
public interest. To the extent that unbundling the elements of
electrical service, including transmission of electricity provided to
retail consumers, weakens the ability of California to protect its
people, such unbundling should be reconsidered and reversed.
(o) Direct transactions, popularly termed direct access, as a
means for obtaining retail electrical service, has
have resulted in massive subsidies of some retail
customers by others. Direct access has resulted in increased costs
for bundled service customers of electrical corporations, while
failing to provide justifiable reduced costs for direct access
customers. Direct access undermines the ability of public utilities
to plan and invest to meet their obligation to serve, by making
uncertain the amount of customer demand that must be met. Direct
access is a part of electrical industry deregulation that should end
as soon as existing direct transaction contracts expire.
(p) The expectations and assumption that deregulation of the
electrical industry would provide consumer benefits, enhanced
reliability, lower rates and technological innovation, have proven
illusory. Instead, consumers have been and will be forced to pay for
massive costs incurred as a result of deregulation, and have
suffered from unprecedented degradation in the reliability of
electricity supply. Public utilities have been forced to near
financial ruin or to seek bankruptcy protection. Certain merchant
generators and marketers are in severe financial distress.
(q) It is in the public interest to repudiate the failed policies
of electrical industry deregulation, and to assure the people of
California that electrical service will be reliable and affordable in
the future through effective regulation.
SEC. 4. Section 330.2 is added to the Public Utilities Code, to
read:
330.2. It is the intent of the Legislature to achieve effective
regulation of California's public utilities and to pursue the
following policy goals:
(a) Restore and affirm the public utility's obligation to serve
all of its customers with electric generation supply,
transmission, and distribution .
(b) Eliminate opportunities for market manipulation by stopping
electric plant divestiture and authorizing cost-of-service
construction of new electric plants and public utility
wholesale electricity procurement, while providing a fair
plant, while providing a reasonable opportunity for
reasonable returns on prudent investment
return on prudent investment, and appropriate rules for public
utility wholesale electricity procurement .
(c) Ensure electricity supply reliability and deter market
manipulation by establishing and enforcing effective standards for
maintenance and operation of electric plants that serve California.
(d) Provide for cost-effective construction, operation and
maintenance of the electrical transmission grid and distribution
system in the public interest, while providing a fair opportunity for
reasonable returns on prudent investment.
(e) Protect consumers from slamming, cramming and fraud by
requiring metering, billing, collection, and customer service to be
provided by public utilities, under regulation by the CPUC.
(f) Preserve and renew the skilled public utility workforce by
ending employee layoffs, providing reasonable wages and working
conditions, and ensuring that the public utilities have an adequately
sized and trained workforce.
(g) Establish a comprehensive integrated resource planning
process under regulation, in order to ensure resource
adequacy, including investing in cost-effective energy efficiency and
conservation programs, and increasing the proportion of electricity
provided from cost-effective renewable resources.
(h) process under regulation that results in a
balanced, reliable, environmentally responsible portfolio of supply
and demand reduction resources, and is consistent with Sections 701.1
and 454.5, Article 16 (commencing with Section 399.11), and Chapter
4 (commencing with Section 25300) of Division 15 of the Public
Resources Code.
(h) Offer first consideration, when providing for resource
adequacy, to available energy efficiency resources and renewable
resources that are cost-effective compared to other available
resource options.
(i) Simplify corporate ownership of electrical corporations
by requiring transparent forms of corporate ownership of public
utilities, by improving accountability for holding company
requirements in state law and by seeking enforcement of the Public
Utilities Holding Company Act of 1935 (Ch. 2C (commencing with Sec.
79), Title 15, U.S.C.).
(i)
(j) Provide for fair cost allocation among customers in just
and reasonable rates fixed through open public processes, not
discriminatory retail choice or direct access transactions.
(j)
(k) Restore consumer and investor confidence in electrical
corporation financial soundness and pricing fairness by making costs
transparent and establishing and enforcing accounting standards.
(k)
(l) Assure universal service by assuring affordable rates
and, among other measures, providing low-income discounts with
effective enrollment programs.
(l)
(m) Provide an open regulatory forum where all persons
affected by public utility service and rates , can
observe and participate in the decisionmaking process.
SEC. 5. Section 330.4 is added to the Public Utilities Code, to
read:
330.4. The actions of the commission pursuant to this part, as
they affect electrical service, shall be consistent with the findings
and declarations contained in this article.
SEC. 6. Section 330.6 is added to the Public Utilities Code, to
read:
330.6. (a) Electrical Because of their
status as public utilities pursuant to Article XII of the California
Constitution, and consistent with Sections 399.2 and 451, electrical
corporations and gas corporations that serve retail customers
, because of their status as public utilities under the
California Constitution, have an obligation to provide those
customers with adequate have an obligation to serve
those customers with reliable service at just and reasonable
rates.
(b) The obligation of electrical corporations and gas
corporations, to provide adequate service at just and reasonable
rates,
(b) This obligation to serve includes a duty of care, a duty
of loyalty, a duty of disclosure, and a duty to use best efforts by
the corporation's management, to maintain safe, healthful,
and affordable basic reliable, and affordable
service for end-use customers, consistent with the statutes of the
state and the rules, regulations, decisions, and orders of the
commission. This obligation to serve includes the obligation to
plan for, and provide sufficient, cost-effective resources, including
utility owned and procured generation resources, transmission
resources, and distribution resources.
(c) The commission, on behalf of end-use customers, shall ensure
that public utility employees and investors are
the electrical corporation is afforded the means to carry
out this obligation to serve, specifically including reasonable
compensation for employees and fair sharing of risks and
rewards for investors a reasonable opportunity to
recover from all customers, in a manner determined by the commission
pursuant to this code, reasonable investments in electric plant,
including a reasonable return on such investments, reasonable costs
to operate the electric plant, and procurement costs in accordance
with Section 454.5 .
SEC. 7. Section 334 of the Public Utilities Code is repealed.
SEC. 8. Section 335 of the Public Utilities Code is amended to
read:
335. In order to ensure that the interests of the people of
California are served, a five-member Electricity Oversight Board is
hereby created as provided in Section 336. For purposes of this
chapter, any reference to the Oversight Board shall mean the
Electricity Oversight Board. Its functions shall be all of the
following:
(a) To oversee the Independent System Operator.
(b) To serve as an appeal board for majority decisions of the
Independent System Operator governing board, as they relate to
matters subject to exclusive state jurisdiction, as specified in
Section 339.
(c) To investigate any matter related to the wholesale market for
electricity to ensure that the interests of California's citizens and
consumers are served, protected, and represented in relation to the
availability of electrical transmission and generation and related
costs, during periods of peak demand.
SEC. 9. Section 338 of the Public Utilities Code is repealed.
SEC. 10. Section 341.1 of the Public Utilities Code is repealed.
SEC. 11. Section 341.5 of the Public Utilities Code is repealed.
SEC. 12. Section 346 of the Public Utilities Code is repealed.
SEC. 13. Section 348 of the Public Utilities Code is repealed.
SEC. 14. Section 350 of the Public Utilities Code is repealed.
SEC. 15. Section 352 of the Public Utilities Code is amended to
read:
352. The Independent System Operator may not enter into a
multistate regional transmission organization unless that entry is
approved by the Oversight Board and the Legislature by concurrent
resolution.
SEC. 16. Section 355 of the Public Utilities Code is repealed.
SEC. 17. Section 356 of the Public Utilities Code is repealed.
SEC. 18. Section 359 of the Public Utilities Code is repealed.
SEC. 19. Section 360 of the Public Utilities Code is repealed.
SEC. 20. Section 361 of the Public Utilities Code is repealed.
SEC. 21. Section 364 of the Public Utilities Code is amended to
read:
364. (a) The commission shall adopt and periodically review and
update inspection, maintenance, repair, and replacement standards for
the distribution and transmission systems of investor-owned electric
utilities. The standards for each substantial type of distribution
and transmission equipment or facility , shall
provide for high quality, safe and reliable service.
(b) In setting its standards, the commission shall consider:
cost, local geography and weather, applicable codes, national
electric industry practices, sound engineering judgment, and
experience. The commission shall also adopt standards for operation,
reliability, and safety during periods of emergency and disaster.
The commission shall require each utility to report annually on its
compliance with the standards. That report shall be made available
to the public.
(c) The commission shall conduct a review to determine whether the
standards prescribed in this section have been met. If the
commission finds that the standards have not been met, the commission
may order appropriate sanctions, including penalties in the form of
rate reductions or monetary fines. The review shall be performed
after every major outage. Any money collected pursuant to this
subdivision shall be used to offset funding for the California
Alternative Rates for Energy Program.
SEC. 22. Section 365 of the Public Utilities Code is repealed.
SEC. 23. Section 365.5 of the Public Utilities Code is repealed.
SEC. 24. Section 366 of the Public Utilities Code is repealed.
SEC. 25. Section 366 is added to the Public Utilities Code, to
read:
366. (a) It is the intention of the Legislature to terminate
direct transactions.
(b) Each customer within the geographical distribution area of an
electrical corporation , that purchases electricity at
retail, shall be served by shall receive any retail
electricity service from the electrical corporation or its
successor in interest, except as provided in Sections 366.1 and
366.2. For purposes of this section, retail electricity service
does not include self-provision of electricity from customer-owned
generation resources and does not include a corporation or person
employing cogeneration technology or producing power from other than
a conventional power source for the generation of electricity solely
for any one or more of the following purposes:
(1) Its own use or the use of its tenants.
(2) The use of or sale to not more than two other corporations or
persons solely for use on the real property on which the electricity
is generated or on real property immediately adjacent thereto, unless
there is an intervening public street constituting the boundary
between the real property on which the electricity is generated and
the immediately adjacent property and one or more of the following
applies:
(A) The real property on which the electricity is generated and
the immediately adjacent real property is not under common ownership
or control, or that common ownership or control was gained solely for
purposes of sale of the electricity so generated and not for other
business purposes.
(B) The useful thermal output of the facility generating the
electricity is not used on the immediately adjacent property for
petroleum production or refining.
(C) The electricity furnished to the immediately adjacent property
is not utilized by a subsidiary or affiliate of the corporation or
person generating the electricity.
(3) Sale or transmission to an electrical corporation or state or
local public agency, but not for sale or transmission to others,
unless the corporation or person is otherwise an electrical
corporation.
(c) If a customer was served by an electric service provider on
April 1, 2003, the customer shall continue to be served by that
electric service provider until the expiration of the customer's
current contract, without extension. Thereafter, the customer shall
be served by receive any retail electricity
service from the electrical corporation that provides
distribution service.
(d) A customer that elects to continue purchasing electricity from
an electric service provider pursuant to subdivision (c), shall
supply the commission with a confidential copy of its current direct
transaction contract.
(e) Any customer that the commission has determined in Decision
02-11-022, is responsible to pay a cost recovery surcharge as a
condition for purchasing electricity pursuant to a direct
transaction, shall continue to pay the cost recovery surcharge until
full collection is achieved.
(f) The commission shall report to the Legislature by July 1,
2004, all of the following:
(1) Each customer electing to continue purchasing electricity from
an electric service provider pursuant to subdivision (c), identified
numerically.
(2) The electrical load serviced under each direct transaction
contract.
(3) The expiration date of each direct transaction contract.
(g) The commission shall, within 30 days after the expiration of
all direct transaction contracts, report to the Legislature
confirming that direct transactions have terminated.
SEC. 26. Section 366.5 of the Public Utilities Code is repealed.
SEC. 27. Section 367 of the Public Utilities Code is amended to
read:
367. The commission shall identify and determine those costs and
categories of costs for generation-related assets and obligations,
consisting of generation facilities, generation-related regulatory
assets, nuclear settlements, and power purchase contracts, including,
but not limited to, restructurings, renegotiations or terminations
thereof approved by the commission, that were being collected in
commission-approved rates on December 20, 1995, and that may become
uneconomic as a result of a competitive generation market, in that
these costs may not be recoverable in market prices in a competitive
market, and appropriate costs incurred after December 20, 1995, for
capital additions to generating facilities existing as of December
20, 1995, that the commission determines are reasonable and should be
recovered, provided that these additions are necessary to maintain
the facilities through December 31, 2001. These uneconomic costs
shall include transition costs as defined in subdivision (f) of
Section 840, and shall be recovered from all customers or in the case
of fixed transition amounts, from the customers specified in
subdivision (a) of Section 841, on a nonbypassable basis and shall:
(a) Be amortized over a reasonable time period, including
collection on an accelerated basis, consistent with not increasing
rates for any rate schedule, contract, or tariff option above the
levels in effect on June 10, 1996, provided that, the recovery shall
not extend beyond December 31, 2001, except as follows:
(1) Costs associated with employee-related transition costs as set
forth in subdivision (b) of Section 375 shall continue until fully
collected; provided, however, that the cost collection shall not
extend beyond December 31, 2006.
(2) Power purchase contract obligations shall continue for the
duration of the contract. Costs associated with any buyout, buydown,
or renegotiation of the contracts shall continue to be collected for
the duration of any agreement governing the buyout, buydown, or
renegotiated contract; provided, however, no power purchase contract
shall be extended as a result of the buy-out, buy-down, or
renegotiation.
(3) Nuclear incremental cost incentive plans for the San Onofre
nuclear generating station shall continue for the full term as
authorized by the commission in Decision 96-01-011 and Decision
96-04-059; provided that the recovery shall not extend beyond
December 31, 2003.
(4) Fixed transition amounts, as defined in subdivision (d) of
Section 840, may be recovered from the customers specified in
subdivision (a) of Section 841 until all rate reduction bonds
associated with the fixed transition amounts have been paid in full
by the financing entity.
(b) (1) There shall be a firewall segregating the recovery of the
costs of competition transition charge exemptions such that the
costs of competition transition charge exemptions granted to members
of the combined class of residential and small commercial customers
shall be recovered only from these customers, and the costs of
competition transition charge exemptions granted to members of the
combined class of customers, other than residential and small
commercial customers, shall be recovered only from these customers.
(2) The commission shall retain existing cost allocation
authority, provided the firewall and rate freeze principles are not
violated.
SEC. 28. Section 367.5 is added to the Public Utilities Code, to
read:
367.5. (a) The commission shall establish a Ratepayer Refund
Account for each electrical corporation. All refunds recovered by an
electrical corporation, either directly or indirectly ,
by way of offset against amounts otherwise owed by the electrical
corporation, resulting from any litigation or agreement relative to
the charging of excessive costs for wholesale electricity by
electrical generators, traders, and suppliers that have been
recovered, or are recoverable, from ratepayers in commission-approved
rates, shall be credited to the electrical corporation's Ratepayer
Refund Account.
(b) All funds held by an electrical corporation that are required
by this section to be credited to the Ratepayer Refund Account of the
corporation are the property of the ratepayers and
shall be held in trust on their behalf
for the benefit of ratepayers .
SEC. 29. Section 367.7 of the Public Utilities Code is repealed.
SEC. 30. Section 370 of the Public Utilities Code is repealed.
SEC. 31. Section 373 of the Public Utilities Code is repealed.
SEC. 32. Section 376 of the Public Utilities Code is repealed.
SEC. 33. Section 377 of the Public Utilities Code is amended to
read:
377. The commission shall regulate the facilities for the
generation of electricity owned by any public utility on a cost of
service basis. Notwithstanding any other provision of law, no
facility or site for the generation of electricity owned by a public
utility may be disposed of prior to January 1, 2010. The commission
shall ensure that public utility generation assets remain dedicated
for the benefit of the electrical corporations'
corporation's bundled customers.
SEC. 34. Section 378 of the Public Utilities Code is repealed.
SEC. 35. Section 379 of the Public Utilities Code is amended to
read:
379. Nuclear decommissioning costs shall be recovered as a
nonbypassable charge until the costs are fully recovered. Recovery
of decommissioning costs may be accelerated to the extent possible.
SEC. 36. Section 389 of the Public Utilities Code is repealed.
SEC. 37. Section 391 of the Public Utilities Code is repealed.
SEC. 38. Section 392 of the Public Utilities Code is amended to
read:
392. Electrical corporations shall disclose each component of the
electrical bill as directed by the commission.
SEC. 39. Section 393.1 is added to the Public Utilities Code, to
read:
393.1. The Legislature finds and declares all of the following:
(a) Metering customer usage of electricity is an integral part of
the electricity distribution system, and is the responsibility of the
electrical corporation.
(b) Accurately applying utility tariffs approved by the commission
and calculating a customer's bill is the responsibility of the
electrical corporation.
(c) If electricity metering is performed by entities other than
the electrical corporation, it can create customer confusion, and can
create serious safety hazards for customers and utility employees.
(d) Customers are entitled to have the electrical corporation
resolve all questions regarding the accuracy of bills, including the
accuracy of metering and correct application of approved utility
tariffs, subject to commission oversight.
(e) To protect customers from fraud and abuse, and to enable
customers to easily resolve disputes concerning metering or billing,
those functions should be performed only by an electrical corporation
subject to regulation by the commission.
SEC. 40. Section 393.2 is added to the Public Utilities Code, to
read:
393.2. (a) All metering of customer usage of electricity and
customer billing shall be performed by the electrical corporation.
(b) No residential or small commercial customer may be required to
take service under a time-differentiated rate without the customer's
prior consent.
(c) Nothing in this article limits the commission's power or
authority with respect to customer billing. The commission may
require an electrical corporation to aggregate a customer's multiple
accounts into a single bill, so long as the cost for that activity is
recoverable in rates.
SEC. 41. Section 397 of the Public Utilities Code is repealed.
SEC. 42. Section 454.55 is added to the Public Utilities
Code, to appear immediately following Section 454.5, to read:
454.55. (a) The commission shall establish and oversee a
long-term, comprehensive integrated resource planning process that
results in a balanced, reliable, environmentally responsible
portfolio of supply and demand-reduction resources, and is consistent
with Sections 701.1 and 454.5, Article 16 (commencing with Section
399.11), and Chapter 4 (commencing with Section 25300) of Division 15
of the Public Resources Code.
(b) The commission shall ensure that the implementation of an
electrical corporation's procurement plan is consistent with the
long-term resource plan, to the extent feasible.
(c) The commission shall require an electrical corporation, when
implementing its procurement plan, to first acquire available energy
efficiency resources that are cost-effective compared to other
available resource options.
SEC. 43. Section 454.1 of the Public Utilities Code, as
added by Chapter 1040 of the Statutes of 2000, is amended and
renumbered to read:
454.6. (a) Reasonable expenditures by transmission owners that
are electrical corporations to plan, design, and engineer
reconfiguration, replacement, or expansion of transmission facilities
are in the public interest and are deemed prudent if made for the
purpose of providing lower cost delivery of electricity to
ratepayers, or maintaining or enhancing reliability, whether or not
these expenditures are for transmission facilities that become
operational.
(b) The commission and the Electricity Oversight Board shall
jointly facilitate the efforts of the state's transmission owning
electrical corporations to obtain authorization from the Federal
Energy Regulatory Commission to recover reasonable expenditures made
for the purposes stated in subdivision (a).
(c) Nothing in this section alters or affects the recovery of the
reasonable costs of other electric facilities in rates pursuant to
the commission's existing ratemaking authority under this code or
pursuant to the Federal Power Act ( Ch. 12 (commencing with Section
791a), Title 16, U.S.C.). The commission may periodically review and
adjust depreciation schedules and rates authorized for an electric
plant that is under the jurisdiction of the commission and owned by
electrical corporations and periodically review and adjust
depreciation schedules and rates authorized for a gas plant that is
under the jurisdiction of the commission and owned by gas
corporations, consistent with this code.
SEC. 43.
SEC. 44. Section 454.10 is added to the Public Utilities
Code, to read:
454.10. (a) In Consistent with Section
762, and in order to ensure that service provided by electrical
corporations is adequate, the commission may require an electrical
corporation that provides distribution service to make direct
investments in, or contract with any entity, including the
California Consumer Power and Conservation Financing Authority for,
electric generation plants that are dedicated to serve the
customers connected to the electrical corporation's distribution
system or grid, consistent with the plan approved by the commission
pursuant to Section 454.5.
(b) After a hearing, the commission shall approve rates sufficient
to afford the electrical corporation a reasonable opportunity to
recover its reasonable costs of operating, its reasonable investment
in, and a reasonable return on its investment in the electric
generation plants, in accordance with Sections 330.6, 377, 451,
and 1005.5.
(c) An electrical corporation may meet the obligations of this
section by contracting with or entering into projects for
construction of electric plants jointly with,
generation plants jointly with any entity, including, without
limitation, the California Consumer Power and Conservation Financing
Authority, California municipalities, cooperatives, and joint powers
authorities.
SEC. 44.
(d) Direct investment in electric generation plants is not the
exclusive method for electrical corporation's to fulfill their
obligation to serve retail customers at just and reasonable rates.
The commission shall implement this section consistent with other
applicable provisions of law, including Sections 701.1 and 454.5 and
Article 16 (commencing with Section 399.11), to achieve a transparent
process that achieves a balanced, reliable, environmentally
responsible and cost-effective resource portfolio.
SEC. 45. Section 761.7 is added to the Public Utilities
Code, to read:
761.7. An electrical corporation, holding company as defined in
Section 79b(a)(7)(A) of Title 15 of the United States Code, or other
entity that owns, controls, operates, or manages a public utility
shall be subject to the jurisdiction, control, and regulation of the
commission for the limited purpose of monitoring and enforcing
conditions in commission decisions D.88-01-063, D.96-11-017,
D.99-04-068, D.95-05-021, D.95-12-018, and D.98-03-07.
SEC. 45.
SEC. 46. Section 9600 of the Public Utilities Code is
repealed.
SEC. 46.
SEC. 47. Section 9601 of the Public Utilities Code is
repealed.
SEC. 47.
SEC. 48. Section 9602 of the Public Utilities Code is
repealed.
SEC. 48.
SEC. 49. Section 9603 of the Public Utilities Code is
repealed.
SEC. 49.
SEC. 50. Section 9604 of the Public Utilities Code is
amended to read:
9604. For purposes of this division, "local publicly owned
electric utility" as used in this division means a municipality or
municipal corporation operating as a "public utility" furnishing
electric service as provided in Section 10001, a municipal utility
district furnishing electric service formed pursuant to Division 6
(commencing with Section 11501), a public utility district furnishing
electric services formed pursuant to the Public Utility District Act
set forth in Division 7 (commencing with Section 15501), an
irrigation district furnishing electric services formed pursuant to
the Irrigation District Law set forth in Division 11 (commencing with
Section 20500) of the Water Code, or a joint powers authority that
includes one or more of these agencies and that owns generation or
transmission facilities, or furnishes electric services over its own
or its member's electric distribution system.
SEC. 50.
SEC. 51. Section 9605 of the Public Utilities Code is
repealed.
SEC. 51.
SEC. 52. The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
SEC. 52.
SEC. 53. No reimbursement is required by this act pursuant
to Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution. ____ CORRECTIONS Text
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