BILL NUMBER: AB 515 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Richman
(Coauthor: Assembly Member Canciamilla)
FEBRUARY 16, 2005
An act to add Section 367.6 to the Public Utilities Code, relating
to electrical restructuring.
LEGISLATIVE COUNSEL'S DIGEST
AB 515, as introduced, Richman. electrical corporations.
(1) Under existing law, the Public Utilities Commission regulates
electrical corporations. The Public Utilities Act requires the
commission to authorize direct transactions between electricity
suppliers and end-use customers. However, other existing law
suspends the right of retail end-use customers to acquire direct
access service from certain electricity suppliers after a period of
time to be determined by the commission until the Department of Water
Resources no longer supplies electricity under a certain provision
of law. Existing law requires the commission to review and adopt a
procurement plan for each electrical corporation. The commission is
required to establish procurement balancing accounts to track the
differences between recorded revenues and costs to ensure that each
electrical corporation timely recovers prospective procurement costs
pursuant to their procurement plan.
The bill would require the commission, on or before January 1,
2006, to adopt rules under which noncore customers, as defined, by a
date certain on or before June 30, 2006, elect whether to procure
electricity service (commodity service) from an electric service
provider, elect to receive commodity service from the electrical
corporation under a procurement plan for a minimum period of 3 years,
or receive default commodity service from the electrical
corporation. Beginning January 1, 2007, an electrical corporation's
obligation to provide commodity service from its procurement plan
would extend only to core and core-elect customers, as defined, and
to provide default commodity service to noncore customers. Default
commodity service would be provided at the higher of the electrical
corporation's costs of spot electricity purchases, or the tariff rate
for core-elect customers purchasing commodity service pursuant to
the electrical corporation's procurement plan. The commission would
be required to establish rules to ensure that the costs of providing
default commodity service to noncore customers are paid solely by
those noncore customers, without impacting the rates and charges of
core customers. The bill would require the commission, on or before
July 1, 2006, to establish tariffs for noncore customers that include
all applicable transmission, distribution, public goods, and cost
recovery surcharge costs otherwise paid by noncore customers for
certain purposes. Noncore customers that begin taking commodity
service from an electric service provider on or after January 1,
2007, would be required to pay certain costs consistent with those
costs that customers of a community choice aggregator are required to
pay under existing law. The bill would require the commission to
establish rules or tariffs that provide an option for residential
customers to receive commodity service through direct transactions
from renewable resources beginning January 1, 2007, consistent with
cost recovery requirements applicable to community aggregators.
Because a violation of a rule or order of the commission is a crime,
this bill would create a new crime, thereby imposing a state-mandated
local program.
(2)
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature to do all of the
following:(a) To establish a market structure in which electrical
corporations have an obligation to provide electric commodity service
to core customers, and core-elect customers, from a combined
portfolio of generation resources allocated on a nondiscriminatory,
cost-of-service basis.
(b) To affirm the electrical corporation's obligation to provide
transmission, distribution, and resource adequacy services for all
customers.
(c) To allow noncore customers to elect, on prescribed terms, to
receive commodity service from the electrical corporation or from an
electric service provider without shifting costs to other customer
classes.
(d) To require an electrical corporation to serve as default
provider of commodity service, in a manner that will not increase
costs of commodity service to core and core-elect customers, and to
noncore customers that voluntarily or involuntarily return to the
electrical corporation for service.
(e) To encourage the retention of existing and the development of
new cogeneration resources to serve the state's electricity demand in
a clean and efficient manner.
(f) To provide for and expedite the construction of electric
generation capacity to meet the needs of a growing state and replace
this state's most polluting and inefficient electric generation
plants by phasing in a retail market for the most efficient and
financially stable customers.
SEC. 2. Section 367.6 is added to the Public Utilities Code, to
read:
367.6. (a) As used in this section, the following terms have the
following meanings:(1) "Commodity service" means electricity used by
the customer or a supply of electricity available for use by the
customer, and does not include services associated with the
transmission and distribution of electricity.
(2) "Core customers" means small retail end-use customers of an
electrical corporation that are unable as a result of economies of
scale to efficiently enter into direct transactions, including
customers with a maximum peak demand of less than 500 kilowatts.
(3) "Noncore customers" means larger retail end users of
electricity that as a result of economies of scale, can efficiently
enter into direct transactions, including end users with a maximum
peak demand of 500 kilowatts or more, or as reduced by the
commission. On or before January 1, 2009, the commission may reduce
the noncore customer maximum peak demand threshold to accommodate
load growth and reduction of procurement obligations under Department
of Water Resources power contracts being managed by the electrical
corporations. When considering a reduction in the noncore threshold,
the commission shall not strand generation costs in the electrical
corporation's procurement plan portfolio, shift costs between core
and noncore customers, or lower the threshold below 200 kilowatt
maximum peak demand. On or before January 1, 2009, the commission may
additionally establish rules allowing customers to aggregate demand
to meet the noncore threshold.
(4) "Core-elect customer" means a noncore customer that makes an
election to be served pursuant to the electrical corporation's
procurement plan.
(b) Beginning January 1, 2007, an electrical corporation's
obligation to provide commodity service from the electrical
corporation's procurement plan portfolio, shall extend only to core
and core-elect customers. The electric corporation's obligation to
provide commodity service to noncore customers shall be limited to
the provision of default service pursuant to subdivision (d). The
electrical corporation's obligation to provide transmission,
distribution and resource adequacy services shall extend to all
customers.
(c) Beginning January 1, 2007, an electrical corporation shall
have no obligation to procure electricity for noncore customers
pursuant to a procurement plan, but shall have an obligation to
procure electricity for core-elect customers that elect to receive
commodity service for a minimum term of three years pursuant to the
electrical corporation's procurement plan.
(d) The electrical corporation shall serve as a default provider
of commodity service for all noncore customers. The electrical
corporation shall provide default commodity service to noncore
customers that, on or after January 1, 2007, voluntarily or
involuntarily return to the electrical corporation for commodity
service and have not elected to take commodity service as described
in subdivisions (c) and (e). Default commodity service shall be
provided at the higher of the electrical corporation's cost of spot
electricity purchases, or the tariff rate for core-elect customers
purchasing commodity service pursuant to the electrical corporation's
procurement plan. The commission shall establish rules to ensure
that the costs of providing default commodity service to noncore
customers are paid solely by those noncore customers, without
impacting the rates and charges of core customers.
(e) On or before January 1, 2006, the commission shall adopt rules
to implement this section. These rules shall include all of the
following:
(1) A date certain, on or before June 30, 2006, by which noncore
customers must make an election to be served by the electrical
corporation for a minimum of three years as a core-elect customer, or
to receive service from an electric service provider. Noncore
customers failing to make an affirmative election shall receive
default commodity service.
(2) Terms and condition under which noncore customers may take
default service, including the time period after which a customer
must select core-elect service or return to non-utility service.
(3) Provisions to ensure prompt recovery of reasonable costs an
electrical corporation incurs to serve customers pursuant to this
section, and in meeting its obligation to serve, and provisions to
ensure there is no cost shifting between customer classes.
(4) A method for determining the rates and charges for core and
core-elect customers, and the default commodity service price,
including estimated prices to be in effect as of January 1, 2007.
(5) Rules for the aggregation of customer load at multiple meters
for purposes of determining the core or noncore status of a customer,
including the use of appropriate meters.
(6) Provisions to ensure that no cost-shifting occurs between core
and core-elect customers.
(7) A six-month notice requirement to begin receiving or to cancel
core-elect service upon completion of the three year commitment.
(f) On or before July 1, 2006, the commission shall establish
tariffs for a noncore customer that include all applicable
transmission, distribution, public goods, and cost recovery surcharge
costs otherwise paid by noncore customers for the following
purposes:
(1) To transmit over nondedicated electrical corporation
facilities, electricity generated by a corporation or person at one
location for consumption by the same corporation or person, or an
affiliated corporation, or person at a separate location.
(2) To procure electricity from new or expanded generation
facilities.
(3) To procure electricity from a cogeneration facility that sold
electricity to the electrical corporation on or after June 1, 2003.
(g) In coordination with the resource planning and procurement
process established in Section 454.5, the commission shall annually
establish the appropriate mix and level of long-term, medium-term,
and short-term commitments to be made by an electrical corporation,
consistent with the electrical corporation procurement obligations
established in this section, and shall ensure the flexibility needed
to minimize stranded procurement costs.
(h) Noncore customers that begin taking commodity service from an
electric service provider on or after January 1, 2007, shall be
required to pay the costs described in subdivisions (d), (e), (f),
and (g) of Section 366.1, to the extent those costs continue to be
incurred by the electrical corporations, as determined by the
commission. Any customer receiving service under a direct transaction
prior to September 20, 2001, shall not incur any additional
obligations under this requirement unless they become core-elect
customers.
(i) In consultation with the State Energy Resources Conservation
and Development Commission and the Independent System Operator, the
commission shall establish resource adequacy requirements that ensure
the availability of planning reserves sufficient to serve all
customers of the electrical corporation, including noncore and
community choice aggregation customers. The resource adequacy
requirements shall ensure cost recovery by the electrical corporation
for acquired reserves through a nonbypassable component of the
electrical corporation's transmission and distribution charges.
(j) The commission shall ensure that noncore customers moving from
core-elect to noncore commodity service at the end of a three-year
term, do not have an obligation for any future costs incurred by the
electrical corporation or Department of Water Resources associated
with the electrical corporation's procurement plan, and that costs of
the electrical corporation's procurement plan shall be recoverable
only from core and core-elect customers served by the electrical
corporation pursuant to subdivision (c).
(k) The commission shall ensure that all electric service
providers and community choice aggregators meet the renewable
portfolio standard and support demand-side management programs,
either directly or through in-lieu arrangements approved by the
commission.
(l) The commission shall establish rules or tariffs that provide
an option for residential customers to receive commodity service
through direct transactions from renewable resources beginning
January 1, 2007, that fully compensates the electrical corporation
and the Department of Water Resources for the customer's
proportionate share of costs consistent with subdivisions (d), (e),
(f), and (g) of Section 366.1.
SEC. 3.
No reimbursement is required by this act pursuant to Section 6 of
Article XIII B of the California Constitution because the only costs
that may be incurred by a local agency or school district will be
incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.