BILL NUMBER: SB 888 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 9, 2004
AMENDED IN ASSEMBLY JULY 8, 2003
AMENDED IN ASSEMBLY JULY 1, 2003
AMENDED IN SENATE JUNE 4, 2003
AMENDED IN SENATE MAY 20, 2003
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 Cedillo, Escutia, Karnette, Kuehl, Murray,
Ortiz, Perata, and Romero)
(Coauthors: Assembly Members Leno, Matthews, Oropeza, and
Steinberg)
FEBRUARY 21, 2003
An act to amend Sections 348, 352, 364, 377, 379, and 392
of, to amend and renumber Section 454.1 of, to add Sections 330.1,
330.2, 330.4, 330.6, 364.5, 367.5, 393.2, 454.51, 454.55, and 454.10
to, to repeal Sections 334, 338, 341.1, 341.5, 346, 350, 355, 356,
359, 360, 361, 367.7, 370, 373, 376, 378, 389, 391, 397, 9600, 9601,
9602, 9603, and 9605 of, and to repeal and add Section 330 of, the
Public Utilities Code, relating to public utilities.
An act to add Part 5 (commencing with Section 1450) to Division 2 of
the Labor Code, relating to employment.
LEGISLATIVE COUNSEL'S DIGEST
SB 888, as amended, Dunn. Public utilities: electrical
restructuring Employment: homeland security .
Existing law, by executive order of the Governor, establishes the
Office of Homeland Security.
This bill would prohibit the performance of any work involving
information that is essential to homeland security, as defined, at a
worksite located outside of the United States unless expertise or
materials necessary to perform the work is not available in the
United States.
(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 authorizes the ISO and the Power
Exchange to enter into a regional compact or other comparable
agreement to become western states regional organizations.
Existing law requires the commission to adopt and periodically
review and update maintenance, repair, and replacement standards for
the distribution systems of investor-owned electric utilities, and
adopt performance or prescriptive standards, or both, to provide for
high quality, safe and reliable service. The commission is required
to conduct a review to determine whether the standards have been met
and if not, to order appropriate sanctions. Existing law requires
the ISO to adopt inspection, maintenance, repair, and replacement
performance or prescriptive standards, or both, for transmission
facilities under its control, to provide for high quality, safe and
reliable service, and to make a related report to the Oversight
Board.
This bill would enact the Repeal of Electricity Deregulation Act
of 2003. The bill would provide that electrical and gas corporations
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 to furnish and maintain adequate,
efficient, just, and reasonable service, and to employ those
instrumentalities, equipment, and facilities that are necessary to
promote the safety, health, comfort, and convenience of utility
customers, employees, and the public, while promoting a sustainable
environment, 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, affordable, and
reliable resources, including utility owned and procured generation
resources, renewable generation resources, transmission and
distribution resources, and cost-effective energy efficiency
resources. The bill would require the commission to ensure that the
electrical corporation is afforded the means to carry out these
obligations, specifically including a reasonable opportunity to fully
recover from all customers, reasonable costs to operate and maintain
those resources, reasonable compensation for employees, a return of
and a reasonable return on reasonable investments in utility owned
generation, transmission, and distribution resources necessary to
meet the above obligations, and reasonable costs for procured
generation resources. 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 implement 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, and to require an electrical
corporation first acquire certain cost-effective energy efficiency
resources. 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. The commission
would be required to approve rates that provide 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 electric generation plants, while protecting the
interests of consumers by ensuring that electricity is provided in
the most cost-effective and efficient manner.
This bill would require the commission to adopt and periodically
review and update maintenance, repair, and replacement standards for
the distribution systems of investor-owned electric utilities, to
provide for high quality, safe and reliable service. This bill would
require the ISO, in consultation with the commission, to adopt and
periodically review and update inspection, maintenance, repair, and
replacement standards for transmission facilities under the control
of the ISO, to provide for high quality, safe and reliable service,
and to adopt standards for reliability and safety during periods of
emergency and disaster. The commission is required to conduct a
review to determine whether the standards adopted by the commission
for public utility distribution systems, and the standards adopted by
the ISO for transmission facilities under its control, have been met
and if not, to order appropriate sanctions. The review would be
required after every major electrical outage. Because the bill would
subject all transmission facilities, including those of entities that
are not public utilities, to the jurisdiction of the commission, and
because a violation of an order of the commission is a crime, the
bill would impose a state-mandated local program by expanding the
definition of a crime.
This 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. 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. 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 in a manner and
amount authorized by the commission, and dispersed for the benefit of
ratepayers, any funds recovered by electrical corporations resulting
from litigation or agreement relative to the charging of excessive
costs for wholesale electricity by electrical generators.
(2) Existing law requires the commission to continue to regulate
the facilities for the generation of electricity owned by any public
utility prior to January 1, 1997, and prohibits a facility for the
generation of electricity owned by a public utility from being
disposed of prior to January 1, 2006. Existing law requires the
commission to ensure that public utility assets remain dedicated to
service for the benefit of the public.
This bill would require the commission to continue to regulate the
facilities for the generation of electricity owned by any public
utility and would require the commission to ensure that public
utility assets remain dedicated to service for the benefit of the
electrical corporation's bundled ratepayers.
(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 no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 330 of the Public Utilities Code is
SECTION 1. Part 5 (commencing with Section 1450) is added to
Division 2 of the Labor Code, to read:
PART 5. HOMELAND SECURITY
1450. (a) Except as otherwise provided in subdivision (b), no
work involving information that is essential to homeland security
shall be performed at a worksite outside of the United States.
(b) Subdivision (a) shall not apply if the expertise or materials
necessary to perform the work is unavailable in the United States.
1451. For purposes of this part, "information essential to
homeland security" means either of the following:
(a) Information necessary to enhance the capability of state and
local jurisdictions to prepare for and respond to terrorist acts,
including, but not limited to, acts of terrorism involving weapons of
mass destruction and nuclear, radiological, incendiary, chemical,
and explosive devices.
(b) Information relating to physical and information
infrastructures, including, but not limited to, the
telecommunications, energy, financial services, water, and
transportation sectors. 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, clean, efficient, and
affordable electrical service is indispensable to the health,
comfort, and well-being of every person and business in California.
(b) It is in the public interest to repudiate the failed policies
of electrical industry deregulation and instead achieve effective
state regulation of California's electrical corporations in order to
protect ratepayers, ensure adequate, safe, and efficient electrical
service, and to protect public health and the environment.
(c) In carrying out its duties under this code, the commission
shall assure the provision of reliable service at the lowest
reasonable cost.
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
state regulation of California's public utilities in order to protect
ratepayers and ensure adequate and efficient electrical service, to
protect public health and the environment, and to pursue the
following policy goals:
(a) Ensure the commission's first priority in carrying out its
duties to protect consumers.
(b) Restore and affirm the public utility's obligation to serve.
(c) Protect public health and the environment.
(d) Establish a comprehensive integrated resource planning process
under regulation that results in a balanced, reliable,
environmentally responsible portfolio, consisting of a cost-effective
mix of customer owned, utility-owned, and nonutility supply and
demand reduction resources, and is consistent with Sections 454.5 and
701.1 and Article 16 (commencing with Section 399.11) of this code
and Chapter 4 (commencing with Section 25300) of Division 15 of the
Public Resources Code.
(e) 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, declarations, and policy goals contained in this article.
SEC. 6. Section 330.6 is added to the Public Utilities Code, to
read:
330.6. (a) 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 have an obligation to serve those
customers with reliable service at just and reasonable rates.
(b) This obligation to serve includes a duty to furnish and
maintain adequate, efficient, just, and reasonable service, and to
employ those instrumentalities, equipment, and facilities that are
necessary to promote the safety, health, comfort, and convenience of
utility customers, employees, and the public, while promoting a
sustainable environment, consistent with the statutes of the state
and the rules, regulations, decisions, and orders of the commission.
The obligation to serve includes the obligation to plan for, and
provide, sufficient, affordable, and reliable resources, including
utility owned and procured generation resources, renewable generation
resources, transmission and distribution resources, and
cost-effective energy efficiency resources.
(c) The commission, on behalf of end-use customers, shall ensure
that the electrical corporation is afforded the means to carry out
this obligation to serve, specifically including a reasonable
opportunity to fully recover from all customers, in a manner
determined by the commission pursuant to this code, reasonable costs
to operate and maintain those resources, reasonable compensation for
employees, a return of and a reasonable return on reasonable
investments in utility owned generation, transmission, and
distribution resources necessary to meet the obligations pursuant to
subdivision (b), and reasonable costs for procured generation
resources in accordance with Section 454.5.
SEC. 7. Section 334 of the Public Utilities Code is repealed.
SEC. 8. Section 338 of the Public Utilities Code is repealed.
SEC. 9. Section 341.1 of the Public Utilities Code is repealed.
SEC. 10. Section 341.5 of the Public Utilities Code is repealed.
SEC. 11. Section 346 of the Public Utilities Code is repealed.
SEC. 12. Section 348 of the Public Utilities Code is amended to
read:
348. (a) The Independent System Operator, in consultation with
the commission, shall adopt and periodically review and update
inspection, maintenance, repair, and replacement standards for the
transmission facilities under its control. The standards for each
substantial type of transmission equipment or facility, shall provide
for high quality, safe, and reliable service.
(b) In adopting its standards, the Independent System Operator
shall consider all of the following:
(1) Cost.
(2) Local geography and weather.
(3) Applicable codes.
(4) National electric industry practices.
(5) Sound engineering judgment.
(6) Experience.
(c) The Independent System Operator shall also adopt standards for
reliability, and safety during periods of emergency and disaster.
(d) The Independent System Operator shall require each
transmission facility owner or operator to report annually on its
compliance with the standards. That report shall be made available
to the public.
SEC. 13. Section 350 of the Public Utilities Code is repealed.
SEC. 14. 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. 15. Section 355 of the Public Utilities Code is repealed.
SEC. 16. Section 356 of the Public Utilities Code is repealed.
SEC. 17. Section 359 of the Public Utilities Code is repealed.
SEC. 18. Section 360 of the Public Utilities Code is repealed.
SEC. 19. Section 361 of the Public Utilities Code is repealed.
SEC. 20. 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 systems of investor-owned electric utilities. The
standards for each substantial type of distribution 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.
(c) The commission shall require each utility to report annually
on its compliance with the standards. That report shall be made
available to the public.
SEC. 21. Section 364.5 is added to the Public Utilities Code, to
read:
364.5. The commission shall conduct a review to determine whether
the standards prescribed in Sections 348 and 364 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 reduction or monetary fines. The review shall be
performed after every major outage. Any money collected pursuant to
this section shall be used to offset funding for the California
Alternative Rates for Energy Program.
SEC. 22. Section 367.5 is added to the Public Utilities Code, to
read:
367.5. The commission shall establish a Ratepayer Refund Account
for each electrical corporation. All refunds, net of litigation
costs as authorized by the commission, 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 in an amount and
manner authorized by the commission and dispersed for the benefit of
ratepayers.
SEC. 23. Section 367.7 of the Public Utilities Code is repealed.
SEC. 24. Section 370 of the Public Utilities Code is repealed.
SEC. 25. Section 373 of the Public Utilities Code is repealed.
SEC. 26. Section 376 of the Public Utilities Code is repealed.
SEC. 27. 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 pursuant to
subdivision (b) of Section 454.10. Notwithstanding any other
provision of law, no facility 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 corporation's
bundled customers.
SEC. 28. Section 378 of the Public Utilities Code is repealed.
SEC. 29. 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. 30. Section 389 of the Public Utilities Code is repealed.
SEC. 31. Section 391 of the Public Utilities Code is repealed.
SEC. 32. 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. 33. 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 with average usage
of less than 1,000 kilowatthours per month may be required to take
service under a time-differentiated rate.
(c) Nothing in this article limits the commission's power or
authority with respect to the contents or nature of 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. 34. Section 397 of the Public Utilities Code is repealed.
SEC. 35. Section 454.51 is added to the Public Utilities Code, to
appear immediately following Section 454.5, to read:
454.51. (a) An incentive mechanism established pursuant to
paragraph (2) of subdivision (c) of Section 454.5 for energy supply
resources shall provide comparable performance standard incentives
for demand reduction resources.
(b) The commission shall ensure timely recovery of the reasonable
costs of all cost-effective energy efficiency and other demand
reduction programs incurred pursuant to the electrical corporation's
procurement plan authorized pursuant to Section 454.5 that exceed the
funding provided through the corporation's system benefits change
established pursuant to Section 399.8.
SEC. 36. Section 454.55 is added to the Public Utilities Code, to
appear immediately following Section 454.51, to read:
454.55. (a) The commission shall establish and implement 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 454.5 and 701.1, 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 all available
cost-effective energy efficiency resources that cost effectively meet
utility resources needs compared to other available long-term
resource options.
SEC. 37. 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
or other cost-effective transmission alternatives, including demand
side alternatives, that meet identified need, are in the public
interest and are deemed prudent if made for the purpose of providing
delivery of lower cost 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. 38. Section 454.10 is added to the Public Utilities Code, to
read:
454.10. (a) Consistent with Article 16 (commencing with Section
399.11), Sections 454.5, 701.1, and 762, and Chapter 4 (commencing
with Section 25300) of Division 15 of the Public Resources Code, and
in order to ensure that service provided by electrical corporations
is environmentally clean, efficient, cost-effective to ratepayers,
and adequate, the commission may require an electrical corporation
that provides distribution service to make direct investments in, or
contract with any entity, public or private, 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 that
provide 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, 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 generation plants jointly with any entity,
including, without limitation, the California Consumer Power and
Conservation Financing Authority, California municipalities,
cooperatives, and joint powers authorities.
(d) Direct investment in electric generation plants is not the
exclusive method for electrical corporations to fulfill their
obligation to serve retail customers at just and reasonable rates.
Consistent with Section 583, the commission shall implement this
section through a transparent process that achieves a balanced,
reliable, environmentally responsible and cost-effective resource
portfolio.
(e) This section does not limit or affect the requirements for
utilization of cost-effective energy conservation and renewable
resources established pursuant to this division.
(f) The commission shall protect the interests of consumers by
ensuring that investments made pursuant to this section, either
rate-based utility investments or long-term contracts with other
suppliers, result in the most cost-effective and efficient provision
of electricity to consumers.
SEC. 39. Section 9600 of the Public Utilities Code is repealed.
SEC. 40. Section 9601 of the Public Utilities Code is repealed.
SEC. 41. Section 9602 of the Public Utilities Code is repealed.
SEC. 42. Section 9603 of the Public Utilities Code is repealed.
SEC. 43. Section 9605 of the Public Utilities Code is repealed.
SEC. 44. 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. 45. It is the intent of the Legislature to reaffirm, without
requiring revision, California's doctrine, as reflected in regulatory
and judicial decisions, regarding electrical corporations'
reasonable opportunity to recover costs and investments and the
reasonable opportunity to attract capital for investment on
reasonable terms.
SEC. 46. 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.