BILL ANALYSIS
AB 67
Page 1
ASSEMBLY THIRD READING
AB 67 (Levine)
As Amended May 2, 2005
Majority vote
UTILITIES AND COMMERCE 10-0 APPROPRIATIONS
(vote not available)
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|Ayes:|Levine, Bogh, Baca, | | |
| |Blakeslee, Cohn, De La | | |
| |Torre, Keene, Montanez, | | |
| |Ridley-Thomas, Wyland | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires the California Public Utilities Commission
(PUC) to annually provide a 10-year forecast of the elements of
electricity rates to the Legislature. Specifically, this bill :
1)Requires PUC to provide to the Legislature by June 1, 2006,
and by June 1 annually thereafter, a 10-year forecast of the
elements in electricity rates within each class of ratepayers
for each electrical corporation.
2)Permits PUC to require submission of pro-forma analyses,
debt-retirement schedules, amortization schedules, wholesale
energy cost projections, resource plans, market assessments,
and related outlooks from electrical corporations, gas
corporations, and energy market participants.
3)Requires PUC to include in the report a detailed description
of any changes in projections or assumptions that may be
different from the previous year's forecast.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, the purpose of this bill is
to provide transparency of the elements of the electricity rates
of the investor-owned utilities (IOUs). More specifically, the
author is interested in when the elements of rates that resulted
from deregulation, such as the costs associated with the State
purchasing electricity for the IOUs and the Pacific Gas and
Electric (PG&E) bankruptcy, will sunset or retire. In addition,
AB 67
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the bill is intended to provide the Legislature with a clear
understanding of the impacts proposals for new or augmented
programs will have on electricity rates.
During the energy crisis of 2000-01, electricity rates
escalated. The State had to purchase electricity for the IOUs
because they were not credit-worthy due to market rules that
were in place at the time. As a result, PG&E declared
bankruptcy. The State issued billions of dollars in bonds for
the Department of Water Resources (DWR) to procure energy
through long-term contracts on behalf of the IOUs. Some are
concerned that these contracts are higher-priced because due to
the energy crisis, California was placed in an unfavorable
bargaining position. Others point to provisions in the contracts
that give the energy seller the choice of where the electricity
will be delivered, which can drive up the price. Although many
of the contracts have been renegotiated, each of these elements
may have caused rates to increase. There was a general
understanding that eventually, rates would decline back to more
"normal" levels as the costs of the energy crisis and bond costs
expired. It is difficult to determine whether that has
happened, and if so, by how much.
There is uncertainty surrounding the annual costs of DWR
contracts and the bond debt. DWR contracts are billed through
the IOUs' generation charge, and some believe, put upward
pressure on the price of electricity. Some of these contracts
start to fall off sharply in about 2009 and completely expire by
2012. This bill would require PUC to develop and reveal these
annual costs.
Analysis Prepared by : Gina Mandy / U. & C. / (916) 319-2083
FN:
0010625