BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 895


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          Date of Hearing:  May 20, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          895 (Rendon) - As Introduced February 26, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill prohibits the Public Utilities Commission (PUC) from  
          distributing proceeds collected from litigation claims to obtain  
          ratepayer recovery for the effects of the 2000 to 2002 energy  
          crisis.  Instead, this bill requires all proceeds collected from  








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          litigation claims to be deposited into the Ratepayer Relief Fund  
          to be appropriated by the Legislature for the benefit of  
          ratepayers.  


          FISCAL EFFECT:


          Unknown future, likely significant, revenues available for  
          Legislature to expend on programs to t benefit ratepayers.  To  
          date, energy crisis litigation has gleaned over $5 billion for  
          the state.


          COMMENTS:


          1)Purpose.  According to the author, the purpose of this bill is  
            to ensure legislative oversight of the use of ratepayer  
            refunds resulting from electricity crisis litigation.


          2)Background.  In 1996, the Legislature established a  
            deregulated electricity market.  In 2000, a serious drought  
            diminished the supply of inexpensive hydropower.  The  
            resulting increased electricity prices, inadequate  
            infrastructure, and the deteriorating financial stability of  
            the investor-owned utilities (IOUs) triggered an electricity  
            crisis.  During the crisis, market manipulation resulted in  
            high retail electricity prices and power outages throughout  
            the state. 





            Since then, various lawsuits have sought billions of dollars  
            in refunds.  Litigation continues resulting in settlements and  
            judgments in favor of California electric ratepayers.  








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            Currently there are about 10 more contracts subject to  
            litigation.





            AB 1756, Chapter 228, Statutes of 2003, required any funds  
            paid to the state as a result of energy litigation are to be  
            allocated in the following priority order:  1) to reimburse  
            the state's costs of investigation and litigation; 2) to  
            reduce the costs of ratepayers harmed by the actions of the  
            defendants; and 3) to reduce or pay debt service on the energy  
            bonds issued by the Department of Water Resources  


             The PUC has directed most funds from the energy crisis  
            litigation to ratepayers. However, the PUC spent funds from a  
            recent out-of-court settlement (Dynegy 2012) on developing a  
            statewide electric vehicle charging program, rather than  
            refunding ratepayers. This program is not meeting the  
            milestones specified in the settlement order, raising  
            questions about the supposed benefit to ratepayers and the  
            effectiveness of the current process. 


          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081



















                                                                     AB 895


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