BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1201 - Torlakson Hearing
Date: April 13, 2004 S
As Amended: March 15, 2004 FISCAL/URGENCY B
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DESCRIPTION
Existing law:
1.Permits the Bay Area Rapid Transit District (BART) to purchase
"preference power" from a federal power marketing agency ,
requires Pacific Gas & Electric Company (PG&E) to deliver that
power via its transmission and distribution facilities without
discrimination or delay, and requires PG&E to bill BART as
though all power is delivered to a single point (SB 184 (Kopp),
Chapter 681, Statutes of 1995).
2.Exempts BART's load served by preference power from the
"competition transition charge" (CTC) collected pursuant to AB
1890 (Brulte), Chapter 856, Statutes of 1996.
This bill permits BART to purchase electricity on the same terms
from a local publicly-owned electric utility.
BACKGROUND
Until 1994, BART was served by PG&E. Under the federal
Reclamation Project Act of 1939, BART qualifies as a "preference
entity" to purchase and receive hydropower from the Central Valley
Project (CVP). This federal power is marketed by the Western Area
Power Administration (WAPA). In 1994, BART received, under a
10-year contract, an allocation of federal reclamation project
power from the CVP through WAPA.
The provisions of SB 184 and AB 1890 referenced above enabled BART
to receive its allocation of federal preference power at its
multiple delivery points in the Bay Area via PG&E's transmission
and distribution system, without paying many of the costs
associated with retail service.
BART has sought another preference power contract from WAPA to
replace the current contract, which ends in 2006. Demand for
low-cost federal preference power is high, and costs and other
terms are not as favorable as they have been in the past. BART
must give notice to WAPA by June whether it wants to continue
buying power from WAPA under a new contract. BART is seeking this
urgency bill to give it another supply option if contracting with
WAPA doesn't work out.
A local publicly-owned ("municipal") electric utility could sell
excess power to BART in much the same way as WAPA currently does,
provided PG&E is required to deliver it to BART's facilities
within PG&E's service area. While the cost may not be as low as
the federal preference power, it is likely to be lower than the
alternative - bundled retail service from PG&E. BART's other
previous option - direct access - is not available currently as
direct access has been suspended pursuant to AB 1X (Keeley),
Chapter 4, Statutes of 2001.
COMMENTS
1.Why only BART? This bill is the latest in a series of special
statutes allowing BART to seek lower-cost alternatives to PG&E
service in the wholesale market. BART's argument for special
treatment is that electricity costs are a major part of its
operating costs (which are funded by taxpayers and fare
revenues) and BART requires access to wholesale electricity to
provide cost-effective transit services. BART is also unique in
that it departed PG&E service before electric restructuring or
the 2000/2001 energy crisis, so the costs incurred during that
time, which are now embedded in PG&E's bundled rates and
recovered from departing customers through surcharges, were not
incurred to serve BART.
2.Is a CTC exemption warranted? BART was among several parties
who obtained an exemption from the "nonbypassable" charges that
AB 1890 required for recovery of IOU generation-related costs
that could be stranded by customer departure to other suppliers.
The current exemption applies only to the extent BART's load is
served by federal preference power, and not if BART load is
served via the direct access or bundled service options. As an
adjunct to permitting BART to purchase electricity from a
municipal utility, this bill would extend the CTC exemption to
BART load served by a municipal utility. Most of the original
elements of the CTC have been fully collected. The remaining
charge ("tail CTC") is collected to pay for pre-existing
contracts with qualifying facilities which are still in effect.
Although BART has been exempt from the costs of these contracts,
the contracts were entered by PG&E prior to BART's departure.
The author and the committee may wish to consider whether an
extension of the CTC exemption is justified.
3.Technical amendment. Section 374 of the Public Utilities Code
lists several CTC exemptions, including BART's. Subdivision (a)
of Section 374, exempting certain load served by irrigation
districts, is no longer operative (as of March 31, 2002) and
should be repealed.
POSITIONS
Sponsor:
Bay Area Rapid Transit District
Support:
None on file
Oppose:
None on file
Lawrence Lingbloom
SB 1201 Analysis
Hearing Date: April 13, 2004