BILL NUMBER: SB 920 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 26, 2004
PASSED THE ASSEMBLY AUGUST 25, 2004
AMENDED IN ASSEMBLY AUGUST 18, 2003
AMENDED IN ASSEMBLY JULY 3, 2003
AMENDED IN ASSEMBLY JUNE 26, 2003
INTRODUCED BY Senator Bowen
FEBRUARY 21, 2003
An act to amend Sections 352 and 372 of, to add Section 345.3 to,
to repeal Section 350 of, to repeal Article 4 (commencing with
Section 355) and Article 5 (commencing with Section 359) of, and to
repeal and add Article 2 (commencing with Section 334) of Chapter 2.3
of Part 1 of, the Public Utilities Code, relating to public
utilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 920, Bowen. Electricity Oversight Board: Independent System
Operator: Power Exchange.
(1) The existing restructuring of the electrical services 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. Pursuant to
an order of the Federal Energy Regulatory Commission, 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 repeal those provisions establishing, and granting
powers to, the Oversight Board, would transfer the existing
nonlitigation powers and responsibilities of the Oversight Board to a
successor agency designated by the Governor. The bill would assign
any litigation of the Oversight Board to the Attorney General and
would authorize the Attorney General to initiate, pursue, or settle
any claim of the Oversight Board, except where the Attorney General
has a conflict. The bill would require the Governor to assign a
litigation claim of the Oversight Board where the Attorney General
has a conflict to a successor agency, including a specified claim
pending before the Federal Energy Regulatory Commission. The bill
would make certain conforming changes to existing law. The bill
would require the ISO to revise its own bylaws, would require the
Legislature to approve by concurrent resolution the entry of the ISO
into a multistate regional transmission organization, and would
provide that the corporate powers of directors of the ISO under state
law, may only be exercised by members of the independent governing
board appointed under state law. Because any violation of the Public
Utilities Act is a crime, the bill, by establishing new duties for
the ISO, would impose a state-mandated local program by changing the
definition of a crime. The bill would repeal certain provisions
relating to the Power Exchange. The bill would repeal the regional
compact provision.
(2) 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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 2 (commencing with Section 334) of Chapter 2.3
of Part 1 of the Public Utilities Code is repealed.
SEC. 2. Article 2 (commencing with Section 334) is added to
Chapter 2.3 of Part 1 of the Public Utilities Code, to read:
Article 2. Transfer of Oversight Board Responsibilities and
Powers
334. (a) It is the intent of the Legislature to abolish the
Electricity Oversight Board as an agency of the state and to preserve
the state's interest in any litigation where the Electricity
Oversight Board is a party, by assigning litigation claims to the
Attorney General.
(b) Notwithstanding any other provision of law, the Attorney
General succeeds to, and may exercise, all rights, claims, powers or
entitlements of the Electricity Oversight Board in any litigation.
The Attorney General may initiate, pursue to final conclusion or
settle any claim of the Electricity Oversight Board.
(c) The Governor shall designate a successor for the Electricity
Oversight Board's nonlitigation duties, including monitoring and
investigating wholesale electricity markets, and for any litigation
claim where the Attorney General has a conflict, including California
Electricity Oversight Board v. Sellers of Energy and Capacity under
Long-term Contracts with the California Department of Water
Resources, Federal Energy Regulatory Commission Docket Nos.
EL02-62-000 and EL02-62-003.
335. This article shall be liberally construed to preserve any
claims and jurisdiction of the state and to carry out the intent of
this article.
SEC. 3. Section 345.3 is added to the Public Utilities Code, to
read:
345.3. (a) The Independent System Operator governing board shall
be composed of a five-member independent governing board of directors
appointed by the Governor and subject to confirmation by the Senate.
Any reference in this chapter or in any other provision of law to
the Independent System Operator governing board means the independent
governing board appointed under this subdivision.
(b) A member of the independent governing board appointed under
subdivision (a) may not be affiliated with any actual or potential
participant in any market administered by the Independent System
Operator.
(c) (1) All appointments shall be for three-year terms.
(2) There is no limit on the number of terms that may be served by
any member.
(d) The Independent System Operator shall revise its articles of
incorporation and bylaws in accordance with this section, and shall
make filings with the Federal Energy Regulatory Commission as it
determines to be necessary.
(e) For the purposes of the initial appointments to the
Independent System Operator governing board, as provided in
subdivision (a), the Governor shall appoint one member to a one-year
term, two members to a two-year term, and two members to a three-year
term.
(f) The corporate powers of directors of the Independent System
Operator under the Corporations Code, may only be exercised by
members of the independent governing board appointed pursuant to this
section.
SEC. 4. Section 350 of the Public Utilities Code is repealed.
SEC. 5. 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 Legislature by concurrent resolution.
SEC. 6. Article 4 (commencing with Section 355) of Chapter 2.3 of
Part 1 of the Public Utilities Code is repealed.
SEC. 7. Article 5 (commencing with Section 359), of Chapter 2.3 of
Part 1 of the Public Utilities Code is repealed.
SEC. 8. Section 372 of the Public Utilities Code is amended to
read:
372. (a) It is the policy of the state to encourage and support
the development of cogeneration as an efficient, environmentally
beneficial, competitive energy resource that will enhance the
reliability of local generation supply, and promote local business
growth. Subject to the specific conditions provided in this section,
the commission shall determine the applicability to customers of
uneconomic costs as specified in Sections 367, 368, 375, and 376.
Consistent with this state policy, the commission shall provide that
these costs shall not apply to any of the following:
(1) To load served onsite or under an over the fence arrangement
by a nonmobile self-cogeneration or cogeneration facility that was
operational on or before December 20, 1995, or by increases in the
capacity of such a facility to the extent that the increased capacity
was constructed by an entity holding an ownership interest in or
operating the facility and does not exceed 120 percent of the
installed capacity as of December 20, 1995, provided that prior to
June 30, 2000, the costs shall apply to over the fence arrangements
entered into after December 20, 1995, between unaffiliated parties.
For the purposes of this subdivision, "affiliated" means any person
or entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, another specified entity. "Control" means either of
the following:
(A) The possession, directly or indirectly, of the power to direct
or to cause the direction of the management or policies of a person
or entity, whether through an ownership, beneficial, contractual, or
equitable interest.
(B) Direct or indirect ownership of at least 25 percent of an
entity, whether through an ownership, beneficial or equitable
interest.
(2) To load served by onsite or under an over the fence
arrangement by a nonmobile self-cogeneration or cogeneration facility
for which the customer was committed to construction as of December
20, 1995, provided that the facility was substantially operational on
or before January 1, 1998, or by increases in the capacity of the
facility to the extent that the increased capacity was constructed by
an entity holding an ownership interest in or operating the facility
and does not exceed 120 percent of the installed capacity as of
January 1, 1998, provided that prior to June 30, 2000, the costs
shall apply to over the fence arrangements entered into after
December 20, 1995, between unaffiliated parties.
(3) To load served by existing, new, or portable emergency
generation equipment used to serve the customer's load requirements
during periods when utility service is unavailable, provided that
emergency generation is not operated in parallel with the integrated
electric grid, except on a momentary parallel basis.
(4) After June 30, 2000, to any load served onsite or under an
over the fence arrangement by any nonmobile self-cogeneration or
cogeneration facility.
(b) Further, consistent with state policy, with respect to
self-cogeneration or cogeneration deferral agreements, the commission
shall do the following:
(1) Provide that a utility shall execute a final self-cogeneration
or cogeneration deferral agreement with any customer that, on or
before December 20, 1995, had executed a letter of intent (or similar
documentation) to enter into the agreement with the utility,
provided that the final agreement shall be consistent with the terms
and conditions set forth in the letter of intent and the commission
shall review and approve the final agreement.
(2) Provide that a customer that holds a self-cogeneration or
cogeneration deferral agreement that was in place on or before
December 20, 1995, or that was executed pursuant to paragraph (1) in
the event the agreement expires, or is terminated, may do any of the
following:
(A) Continue through December 31, 2001, to receive utility service
at the rate and under terms and conditions applicable to the
customer under the deferral agreement that, as executed, includes an
allocation of uneconomic costs consistent with subdivision (e) of
Section 367.
(B) Engage in a direct transaction for the purchase of electricity
and pay uneconomic costs consistent with Sections 367, 368, 375, and
376.
(C) Construct a self-cogeneration or cogeneration facility of
approximately the same capacity as the facility previously deferred,
provided that the costs provided in Sections 367, 368, 375, and 376
shall apply consistent with subdivision (e) of Section 367, unless
otherwise authorized by the commission pursuant to subdivision (c).
(3) Subject to the fire wall described in subdivision (e) of
Section 367 provide that the ratemaking treatment for
self-cogeneration or cogeneration deferral agreements executed prior
to December 20, 1995, or executed pursuant to paragraph (1) shall be
consistent with the ratemaking treatment for the contracts approved
before January 1995.
(c) The commission shall authorize, within 60 days of the receipt
of a joint application from the serving utility and one or more
interested parties, applicability conditions as follows:
(1) The costs identified in Sections 367, 368, 375, and 376 shall
not, prior to June 30, 2000, apply to load served onsite by a
nonmobile self-cogeneration or cogeneration facility that became
operational on or after December 20, 1995.
(2) The costs identified in Sections 367, 368, 375, and 376 shall
not, prior to June 30, 2000, apply to any load served under over the
fence arrangements entered into after December 20, 1995, between
unaffiliated entities.
(d) For the purposes of this subdivision, all onsite or over the
fence arrangements shall be consistent with Section 218 as it existed
on December 20, 1995.
(e) To facilitate the development of new microcogeneration
applications, electrical corporations may apply to the commission for
a financing order to finance the transition costs to be recovered
from customers employing the applications.
(f) To encourage the continued development, installation, and
interconnection of clean and efficient self-generation and
cogeneration resources, to improve system reliability for consumers
by retaining existing generation and encouraging new generation to
connect to the electric grid, and to increase self-sufficiency of
consumers of electricity through the deployment of self-generation
and cogeneration, both of the following shall occur:
(1) The commission shall determine if any policy or action
undertaken by the Independent System Operator, directly or
indirectly, unreasonably discourages the connection of existing
self-generation or cogeneration or new self-generation or
cogeneration to the grid.
(2) If the commission finds that any policy or action of the
Independent System Operator unreasonably discourages, the connection
of existing self-generation or cogeneration or new self-generation or
cogeneration to the grid, the commission shall undertake all
necessary efforts to revise, mitigate, or eliminate that policy or
action of the Independent System Operator.
SEC. 9. 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.