BILL ANALYSIS                                                                                                                                                                                                              1
          1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                               DEBRA BOWEN, CHAIRWOMAN
          

          SB 920 -  Bowen                                   Hearing Date:   
          April 22, 2003             S
          As Introduced:  February 21, 2003       FISCAL           B
                                                                        
                                                                        9
                                                                        2
                                                                        0

                                      DESCRIPTION
           
           This bill  repeals the provisions of law establishing, and  
          granting powers to, the Electricity Oversight Board (EOB).

           This bill  also repeals the requirement for the Independent  
          System Operator (ISO) to adopt inspection, maintenance, repair  
          and replacement standards for transmission facilities and  
          repeals other, obsolete provisions related to the ISO and the  
          Power Exchange (PX).

                                      BACKGROUND
           
          AB 1890 (Brulte), Chapter 854, Statutes of 1996, established the  
          EOB to oversee the ISO and the PX and to "ensure that the  
          interests of the people of California are served."  Originally,  
          the EOB was supposed to serve as an appellate body for decisions  
          of the ISO and PX governing boards.

          The Federal Energy Regulatory Commission (FERC) took exception  
          to these provisions and, in 1998, ordered the ISO to change its  
          bylaws to eliminate the EOB's appointment function, as well as  
          the EOB's authority to approve ISO bylaws and hear appeals of  
          ISO governing board decisions.  In the face of its order's  
          conflict with the provisions of AB 1890, FERC maintained that AB  
          1890's requirements were preempted by the Federal Power Act

          SB 96 (Peace), Chapter 510, Statutes of 1999, in a compromise  
          with FERC, limited the EOB's confirmation powers to the  
          appointments of customer representatives to the ISO governing  
          board.  It also limited the EOB's authority to serve as an  
          appeal board for decisions made by the ISO to matters that are  











          exclusively within the jurisdiction of the state.

          With the passage of SB 96, the demise of the PX, the passage of  
          AB 5X (Keeley), Chapter 1, Statutes of 2001, to establish an ISO  
          board appointed by the Governor, and SB 47 (Bowen), Chapter 766,  
          Statutes of 2001, to require Senate, rather than EOB,  
          confirmation of ISO board members, the powers of the EOB have  
          been substantially diminished.  The EOB's remaining functions  
          are to investigate wholesale electricity market activities and  
          participate in FERC proceedings as one of the state's  
          representatives.











































                                       COMMENTS
           
           1.Is an EOB necessary?   According to the EOB's web site, EOB  
            staff report directly to the Governor's office.  Over the past  
            few years, the board itself has provided little policy  
            guidance, has met very few times, has taken no significant  
            formal actions, and has been marked by high turnover and  
            vacancies.  While the work performed by EOB staff may have  
            continuing value, it could likely be conducted in much the  
            same manner under the auspices of the Governor's office  
            without the formal board structure.

            This bill simply repeals the statutes establishing the EOB,  
            without providing a successor.  Although the original  
            oversight function may be obsolete, there is a certain amount  
            of "equity" associated with the EOB, such as outstanding legal  
            claims on behalf of the state in EOB's name, which may need to  
            be assigned to another agency to preserve the state's rights  
            if the EOB is abolished.  

           2.Repeal of ISO transmission authority misplaced.   In addition  
            to the EOB provisions, this bill contains an unrelated  
            provision repealing the requirement for the ISO to adopt  
            inspection, maintenance, repair and replacement standards for  
            transmission facilities.  The same issue is addressed in SB  
            888 (Dunn, et al), pending in this committee, which transfers  
            these duties back to the California Public Utilities  
            Commission.   The author and the committee may wish to consider   
            removing this provision from this bill in favor of addressing  
            it in SB 888.

                                       POSITIONS
           
           Sponsor:
           
          Author

          Support:
           
          None on file

           Oppose:
           
          Independent Energy Producers














          




          Lawrence Lingbloom 
          SB 920 Analysis
          Hearing Date:  April 22, 2003