BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 888|
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THIRD READING
Bill No: SB 888
Author: Dunn (D), et al
Amended: 5/20/03
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 5-3, 5/6/03
AYES: Bowen, Alarcon, Dunn, Murray, Vasconcellos
NOES: Morrow, Battin, McClintock
SENATE APPROPRIATIONS COMMITTEE : 7-5, 6/4/03
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Murray,
Speier
NOES: Battin, Aanestad, Ashburn, Johnson, Poochigian
SUBJECT : Public utilities: electrical restructuring
SOURCE : Author
DIGEST : This bill enacts the Repeal of Electricity
Deregulation Act of 2003.
ANALYSIS : Current law establishes the PUC to have
jurisdiction over all public utilities, including
electrical.
AB 1890 (Brulte), Chapter 856, Statutes of 1996, enacted
the Electrical Restructuring Act of 1996. AB 1X (Keeley),
Chapter 4, Statutes of 2001-02, First Extraordinary
Session, among other things, directed the State Public
Utilities Commission (PUC) to suspend direct access in
order to ensure a sufficient revenue stream to satisfy the
CONTINUED
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State Department of Water Resources costs for electricity
procurement. The PUC suspended new direct access
transactions in 2001, with certain exceptions.
This bill enacts the "Repeal of Electricity Deregulation
Act of 2003," which repeals or modifies specified
"deregulation" policies established by AB 1890 (Brulte),
Chapter 856, Statutes of 1996, confirms and expands upon
certain recently-enacted "regulation" policies, and spells
out the rights and obligations of utilities, ratepayers and
the State Public Utilities Commission (PUC) in the
state-regulated aspects of electricity service.
Specifically, this bill:
1.Repeals AB 1890's extensive legislative findings
supporting electricity deregulation and instead
establishes extensive new findings citing the failures of
deregulation and supporting state regulation of
electricity service. Requires PUC actions to be
consistent with the bill's findings.
2.States legislative intent to achieve effective regulation
of public utilities and achieve specified policy goals.
3.Imposes numerous regulatory responsibilities on the PUC.
4.Phases out direct access, except as otherwise specified,
by January 1, 2005, or the expiration of current
contracts, whichever is later.
5.Requires the PUC to submit to the Legislature, by June 1,
2004, a plan for implementation of a "core/noncore"
model, as specified, and states legislative intent that
no new direct access transactions be authorized until the
PUC approves a plan.
6.Requires the PUC to establish special bundled service
rates for public school facilities that reflect our
unique peak usage.
7.Makes related changes.
NOTE: For an extensive and informative discussion of the
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historical context, the electricity deregulation
legislation and its consequences, and a detailed
comparison of major features of proposed
legislation, please refer to the Senate Energy,
Utilities and Communications Committee analysis.
Support/Opposition . This bill is supported by consumer
groups, labor groups and municipal utilities. It is
opposed by electricity generators and marketers, IOUs, and
direct access customers. Supporters and opponents make
some similar observations, but reach different conclusions.
In general, supporters argue that the state lacks a
coherent energy policy direction, which has contributed to
the delay in necessary infrastructure investments. Phase
out of direct access is vital because direct access
discourages long-term planning and investment by IOUs.
Supporter state that cost shifting and bundled customers is
inevitable under direct access, as demonstrated by recent
PUC decisions, and that direct access is anathema to
restoring the obligation to serve. The bill builds on
recent progress in the wake of the energy crisis.
Opponents, in general, argue just the opposite. Opponents
believe that this bill interferes with recent progress,
destabilizes the electricity market, creates uncertainty,
and discourages investment. Regulation is inefficient and
costly, better to assign investment risks (and rewards) to
the private sector. Direct access providers and customers
argue for the preservation of direct access and argue the
PUC is dealing effectively with cost shifting.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
Fiscal Impact (in thousands)
Major Provisions 2003-04 2004-05
2005-06 Fund
PUC Unknown, potentially $1,700
annually,
should be offset by fee
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revenues Special*
Direct access phase- Unknown, potentially
$17,000-$31,700/
out year beginning 2004/05,
for potential
increased energy costs
to UC, CSU,
community colleges
General**
School facilities rate Potentially significant energy
cost General**
savings
*Utilities Reimbursement Account
**$7 million could count toward meeting the minimum funding
guarantee
SUPPORT : (Per Sen. EU&C Committee analysis)
California Labor Federation, AFL-CIO
California Municipal Utilities Association
City of Roseville
Coalition of California Utility Employees
Congress of California Seniors
Consumer Federation of California
Consumers Union
Foundation for Taxpayer and Consumer Rights
Northern California Power Agency
Southern California Edison (if amended)
Southern California Public Power Authority
The Utility Reform Network
Utility Consumers' Action Network
61 individuals
OPPOSITION : (Per EUC&C Committee analysis)
AES Pacific
Alliance for Retail Energy Markets
APS Energy Services
Automated Power Exchange
Caithness Energy
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California Biomass Energy Alliance
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Independent Petroleum Association
California Manufacturers and Technology Association
California Retailers Association
California Wind Energy Association
Callaway Golf Company
Calpine Corporation
City of Corona
Clean Power Campaign
Covanta Energy
Dynegy
Enpower Corporation
Heraeus Metal Processing, Inc.
Independent Energy Producers
Los Angeles Unified School District (unless amended)
Minnesota Methane
National Energy Marketers Association
NRG Energy, Inc.
Pacific Gas and Electric Company
Public Buildings Service of the U.S. General Services
Administration
Qualcomm
School Project for Utility Rate Reduction
Sempra Energy
Silicon Valley Manufacturing Group
Strategic Energy
Sweetwater Union High School District
Ultra-Tool International, Inc.
USAA Realty Company
Verizon
Western Power Trading Forum
Western States Petroleum Association
Whitewater Energy Corporation
Wintec Energy
NC:cm 6/4/03 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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