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