BILL ANALYSIS                                                                                                                                                                                                                1
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               SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                           MARTHA M. ESCUTIA, CHAIRWOMAN
            

            AB 380 -  Nunez                                   Hearing  
            Date:  June 30, 2005                 A
            As Amended:         June 28, 2005            FISCAL       B
                                                                         
              
                                                                         
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                                     DESCRIPTION
             
             This bill  establishes "resource adequacy" standards for  
            electric utilities and other providers of electric service,  
            collectively referred to as "load-serving entities" (LSEs).

            Specifically,  this bill  :

               1.   Requires the California Public Utilities Commission  
                 (CPUC) to establish resource adequacy requirements to  
                 meet specified objectives - most importantly, ensuring  
                 that each LSE has enough reasonably-priced power to  
                 serve their customers reliably.
               2.   Requires all LSEs to be subject to the same  
                 requirements for resource adequacy, energy efficiency,  
                 and the renewable portfolio standard.
               3.   Requires LSEs to report resource adequacy  
                 information to the CPUC.
               4.   Requires the CPUC to enforce resource adequacy  
                 requirements for all LSEs.
               5.   Assures full recovery of utility resource adequacy  
                 costs approved by the CPUC.
               6.   Exempts municipal utilities, the State Water  
                 Project, and specified customer generation.
               7.   Establishes separate, self-enforced resource  
                 adequacy requirements for municipal utilities.

                                      BACKGROUND











             
            The CPUC has adopted resource adequacy requirements which  
            require LSEs to achieve 15-17% reserve margins by June 1,  
            2006.  In its orders on resource adequacy, the CPUC has  
            maintained it has authority to apply requirements to  
            non-utility LSEs, such as energy service providers (ESPs).   
            The ESPs have contested the CPUC's authority to require  
            ESPs to meet the CPUC's requirements, but haven't changed  
            the CPUC's mind or succeeded in getting a court to overturn  
            the CPUC's jurisdiction in this area.  The CPUC is in the  
            process of implementing its resource adequacy requirements.

            Currently, the CPUC's jurisdiction over ESPs is derived  
            from general registration requirements which don't specify  
            the ESPs' resource adequacy obligations.  This bill would  
            make the CPUC's authority to apply and enforce resource  
            adequacy requirements on ESPs unambiguous.  According to  
            the CPUC, this bill would minimize if not eliminate any  
            legal uncertainty over its authority to set resource  
            adequacy standards.  


































                                      COMMENTS

               1.   A single, clear definition of "resource adequacy"  
                 should be established.   This bill describes various  
                 criteria for resource adequacy in multiple different  
                 sections.   The author and the committee may wish to  
                 consider  replacing these multiple references with a  
                 single definition of resource adequacy, drawing from  
                 the criteria already contained in the bill.

                2.   Language compromising California Energy Commission  
                 (CEC) authority to collect and disclose LSE data  
                 should be removed.   This bill appropriately authorizes  
                 the CPUC to r  equire the production of information from  
                 all LSEs necessary to  determine compliance.  However,  
                 the bill also requires the CEC to use the information  
                 provided to the CPUC and to ensure its  
                 confidentiality.  This provision conflicts with SB  
                 1389 (Bowen), Chapter 568, Statutes of 2002, which  
                 gives the CEC broad authority to collect data to  
                 fulfill its forecasting duties and prepare the  
                 Integrated Energy Policy Report.  SB 1389 further  
                 provides a detailed process governing disclosure of  
                 information which balances public interest in  
                 disclosure against industry interest in  
                 confidentiality.  With respect to resource adequacy  
                 data, this bill would short circuit SB 1389,  
                 compromising the CEC's authority and potentially  
                 reversing recent legislative efforts to improve public  
                 disclosure.   The author and the committee may wish to  
                 consider  removing these provisions and leaving the CEC  
                 and CPUC data collection authorities and disclosure  
                 standards as they are currently.

                3.   Overlap with pending initiative.   The "Repeal of  
                 Electricity Deregulation and Blackout Prevention Act,"  
                 pending on the November 2005 special election ballot,  
                 contains similar, but not identical, provisions  
                 enacted in a different code section.  If this bill and  
                 the ballot measure are both enacted, there will be  
                 some conflicts between the two which will need to be  
                 reconciled.

                4.   Prior legislation.   AB 2006 (Nunez), which was  










                 vetoed by the Governor last year, also contained  
                 resource adequacy provisions similar to this bill.

                                    ASSEMBLY VOTES
             
            Assembly Floor                     (74-0)
            Assembly Appropriations Committee  (18-0)
            Assembly Utilities and Commerce Committee(11-0)

                                      POSITIONS
             
             Sponsor:
             
            Author








































             Support:
             
            Alliance for Retail Energy Markets (if amended)
            American Federation of State, County and Municipal  
            Employees
            California Public Utilities Commission
            Coalition of California Utility Employees
            Duke Energy
            Pacific Gas and Electric Company (if amended)
            Sempra Energy (if amended)
            Southern California Edison
            The Utility Reform Network

             Oppose:
             
            South San Joaquin Irrigation District
            Western States Petroleum Association


            



































            Lawrence Lingbloom 
            AB 380 Analysis
            Hearing Date:  June 30, 2005