BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 895            Hearing Date:    6/30/2015
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          |Author:    |Rendon                                               |
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          |Version:   |2/26/2015    As Introduced                           |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Jay Dickenson                                        |
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          SUBJECT: Utility rate refunds:  energy crisis litigation

          DIGEST:    This bill prohibits the California Public Utilities  
          Commission (CPUC) from distributing or expending the proceeds of  
          claims in any litigation or settlement to obtain ratepayer  
          recovery for the effects of the 2000-02 energy crisis, and  
          requires the proceeds of any claims arising from that crisis be  
          deposited into the Ratepayer Relief Fund for appropriation by  
          the Legislature.

          ANALYSIS:
          
          Existing law:
          
          1)Establishes the Ratepayer Relief Fund in the State Treasury to  
            benefit electricity and natural gas ratepayers, and to fund  
            investigation and litigation costs of the state in pursuing  
            allegations of overcharges and unfair business practices.   
            (Government Code 16428.15) 


          2)Requires that any energy settlement agreement direct  
            settlement funds to the following purposes in priority order:   
            (1) to reduce ratepayer costs of those utility ratepayers  
            harmed by the actions of the settling parties; and (2) for  
            deposit in the Ratepayer Relief Fund.  (Government Code  
            16428.3)


          3)Authorizes funds deposited in the Ratepayer Relief Fund to be  
            appropriated by the Legislature for purposes that benefit  







          AB 895 (Rendon)                                    Page 2 of ?
          
          
            ratepayers.  (Government Code 16428.3)

          This bill:

          1)Prohibits the CPUC from distributing or expending the proceeds  
            of claims in any litigation or settlement to obtain ratepayer  
            recovery for the effects of the 2000-02 energy crisis.

          2)Requires the proceeds of any claims arising from that crisis  
            be deposited into the Ratepayer Relief Fund for appropriation  
            by the Legislature.
          
          Background

          In the latter half of the 1990s, the state restructured its  
          electricity markets to provide more competition.  These efforts  
          were codified in AB 1890 (Brulte, Chapter 854, Statutes of  
          1996).  Soon thereafter, in 2000 and 2001, the state experienced  
          extraordinary wholesale electricity prices in what has become  
          known as the California electricity crisis.  Pacific Gas and  
          Electric declared bankruptcy; Southern California Edison nearly  
          did so.

          Subsequent investigation revealed numerous instances of illegal  
          market manipulation on the part of electricity suppliers.  The  
          state - through the CPUC and the now-defunct Energy Oversight  
          Board and, subsequently, the Attorney General - has been party  
          to litigation related to the energy crisis.  The U.S. Supreme  
          Court recently ruled that energy companies can be sued under  
          state antitrust laws for illegally manipulating natural gas  
          prices during California's 2000-2002 energy crisis.  As a  
          result, there will likely be additional claims relating to the  
          energy crisis, as well as, potentially, additional judgements  
          and settlements that compensate the state.

          In the past, proceeds of claims arising from the energy crisis  
          have been handled differently.  In some instances, the CPUC has  
          directed settlement monies be returned directly to ratepayers.   
          In one instance, however, the CPUC settled with parties to allow  
          in-kind payments to fund installation of electric vehicle  
          charging infrastructure.

          This bill requires that the proceeds of any claims arising from  
          that crisis be deposited into the Ratepayer Relief Fund for  
          appropriation by the Legislature.  The requirement appropriately  








          AB 895 (Rendon)                                    Page 3 of ?
          
          
          leaves the Legislature in charge appropriations of the proceeds  
          of claims related to the energy crisis.

          Prior/Related Legislation
          
          AB 1890 (Brulte, Chapter 854, Statutes of 1996) established a  
          competitive deregulated electricity market in California.

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


            

          ASSEMBLY VOTES:

          Assembly Floor                          (79-0)
          Assembly Appropriations Committee       (17-0)
          Assembly Utilities and Commerce Committee           (15-0)


            SUPPORT:  

          California Manufacturers & Technology Association
          The Utility Reform Network

          OPPOSITION:

          None received

          ARGUMENTS IN SUPPORT:    Ratepayers should directly benefit from  
          any proceeds resulting from litigation related to the energy  
          crisis.  This bill helps ensure this benefit occurs, unless the  
          Legislature - rather than the CPUC - determines the money should  
          be used for other purposes.
          
          

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