BILL ANALYSIS
SB 920
Page 1
SENATE THIRD READING
SB 920 (Bowen)
As Amended August 18, 2003
Majority vote
SENATE VOTE :23-11
UTILITIES AND COMMERCE 10-1 APPROPRIATIONS 17-6
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|Ayes:|Reyes, Richman, Calderon, |Ayes:|Steinberg, Berg, |
| |Campbell, Canciamilla, | |Calderon, Corbett, |
| |Levine, Maddox, Nunez, | |Correa, Diaz, Goldberg, |
| |Ridley-Thomas, Wolk | |Leno, Maldonado, Nation, |
| | | |Negrete McLeod, Nunez, |
| | | |Pavley, Ridley-Thomas, |
| | | |Simitian, Wiggins, Yee |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|La Malfa |Nays:|Bates, Daucher, Haynes, |
| | | |Pacheco, Runner, |
| | | |Samuelian |
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SUMMARY : Eliminates the Electricity Oversight Board (EOB) and
transfers all legal and regulatory proceedings where EOB is a
party as specified and makes related changes to provisions
concerning the Independent System Operator (ISO) and the Power
Exchange (PX). Specifically, this bill :
1)Deletes provisions of law establishing, and granting powers to
EOB, which includes oversight of ISO.
2)Requires the corporate powers of ISO, under the Corporations
Code, to be exercised only by a governing board appointed by
the Governor and confirmed by the Senate.
3)Specifies that it is the intent of the Legislature to abolish
EOB as an agency of the State of California, and to preserve
the state's interest in any legal or regulatory proceedings
where EOB is a party by transferring the state's interest to
the Attorney General (AG). The AG is vested with the power to
exercise all rights, claims, powers or entitlements of EOB in
legal and regulatory proceedings, contracts, settlements,
tariffs, bylaws and articles of incorporation.
SB 920
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4)Requires the Governor to designate a successor for EOB's
nonlitigation duties, including monitoring and investigation
of wholesale electricity markets, and for any litigation where
the AG has a conflict.
5)Requires ISO to receive approval from the Legislature before
entering into a multi-state entity or a regional organization.
6)Deletes an obsolete provision requiring ISO to provide a
report to the Legislature six months after Federal Energy
Regulatory Commission (FERC) approval, which was done in 2000.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, no net fiscal impact assuming costs and
budgets for supporting the litigation duties of EOB would shift
to the AG and to EOB's designated successor for nonlitigation
activities. (The 2003-04 Budget Act appropriates $3.7 million
to EOB, which funds 26 positions.)
COMMENTS : EOB was created in 1996 to help ensure reliable
electricity supply and state public oversight of market
operations. The state, under AB 1890 (Brulte), Chapter 854,
Statutes of 1996, transferred responsibility for ensuring
short-term reliability and some key aspects of long-term
reliability away from the electric utilities and regulatory
bodies to ISO. Because ISO is not a state entity, EOB was
created to ensure accountability to a state body, and to ensure
that California citizens are not exposed to undue economic risk
in connection with system reliability.
Legislation in 1996 restructured the electric generation market
and ended the vertical monopolies held by IOUs. Directives at
that time required investor owned utilities to divest generation
facilities, and to transfer control of their transmission lines
to ISO, a private, non-profit corporation. As the state board
created to provide oversight for ISO, EOB has the primary
responsibility of monitoring grid reliability issues. These
issues include transmission planning, interconnection issues,
congestion management, and local reliability contracts. In
addition, grid reliability represents an integral component of
the overall operation of the restructured wholesale electricity
markets. EOB performs significant market monitoring functions,
including investigating and initiating market rate complaints
and participating in the extensive market redesign proceedings
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under FERC.
With the subsequent demise of 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 EOB have been
substantially diminished. This bill eliminates EOB and
transfers all legal and regulatory proceedings where EOB is a
party to the Attorney General and makes related changes to
provisions concerning ISO and PX. 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 : Daniel Kim / U. & C. / (916) 319-2083
FN: 0002871