BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 920
                                                                  Page  1

          Date of Hearing:   August 20, 2003

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                    SB 920 (Bowen) - As Amended:  August 18, 2003 

          Policy Committee:                               
          UtilitiesVote:10-1

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill eliminates the Electricity Oversight Board (EOB),  
          assigns the EOB's litigation to the Attorney General (AG), and  
          makes related changes regarding the Independent System Operator  
          (ISO) and the Power Exchange (PX).  Specifically, this bill:

          1)Repeals provisions of law establishing and granting powers to  
            the EOB, which includes oversight of the ISO. 

          2)Declares that the AG may exercise all rights, claims, powers,  
            and entitlements of the EOB in any litigation. 

          3)Requires the governor to designate a successor for the EOB's  
            nonlitigation duties, including monitoring and investigation  
            of wholesale electricity markets, and for any litigation where  
            the AG has a conflict.

          4)Requires the corporate powers of the ISO, under the  
            Corporations Code, to be exercised only by a governing board  
            appointed by the governor and confirmed by the Senate. 

          5)Requires ISO to receive approval from the Legislature before  
            entering into a multi-state entity or a regional organization.  


           FISCAL EFFECT 

          No net fiscal impact assuming costs and budgets for supporting  
          the litigation duties of the EOB would shift to the AG and to  
          the EOB's designated successor for nonlitigation activities.   
          (The 2003-04 Budget Act appropriates $3.7 million to the EOB,  








                                                                  SB 920
                                                                  Page  2

          which funds 26 positions.)

           COMMENTS  

           Background and Purpose  .  The EOB was established by AB 1890 to  
          oversee the ISO and the PX-specifically to confirm ISO and PX  
          board members and to hear appeals of those boards' decisions.   
          These functions were negated by the Federal Energy Regulatory  
          Commission's (FERC's) assertion of exclusive jurisdiction over  
          the ISO and PX.  SB 96 (Peace)-Chapter 510/Statutes of 1996  
          attempted a compromise with FERC by in part limiting the EOB's  
          confirmation powers to the appointments of customer  
          representative to the ISO board, but this was later abandoned by  
          the FERC.  With the subsequent demise of the PX, the passage of  
          AB 5X (Keeley)-Chapter 1/Statutes of 2001, which established an  
          ISO board appointed by the Governor, and SB 47 (Bowen)-Chapter  
          766/Statutes of 2001, which required Senate, rather than EOB  
          confirmation of ISO board members, the powers of the EOB have  
          been substantially diminished.  According to the author, EOB  
          staff still represent the state in FERC proceedings, but they  
          report directly to the Governor's Office.  In the past few  
          years, the board itself has met very few times and has provided  
          very little policy guidance or taken significant formal actions.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081