BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 895|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: AB 895
Author: Rendon (D)
Introduced:9/1/15 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 10-0, 6/30/15
AYES: Hueso, Fuller, Cannella, Hertzberg, Hill, Lara, Leyva,
McGuire, Morrell, Pavley
NO VOTE RECORDED: Wolk
SENATE APPROPRIATIONS COMMITTEE: 5-0, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NO VOTE RECORDED: Bates, Nielsen
ASSEMBLY FLOOR: 79-0, 6/1/15 - See last page for vote
SUBJECT: Utility rate refunds: energy crisis litigation
SOURCE: Author
DIGEST: This bill prospectively allows the Attorney General
(AG) or the California Public Utilities Commission (CPUC) to
enter into an energy settlement agreement only on a monetary
basis. This bill also prohibits the CPUC from distributing or
expending the proceeds of claims recovered by the CPUC 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:
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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:
(a) to reduce ratepayer costs of those utility ratepayers
harmed by the actions of the settling parties; and (b) 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
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 AG - has been party to litigation
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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 judgments 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 allows the AG or CPUC to enter into an energy
settlement agreement only on a monetary basis and expressly
prohibits nonmonetary compensation in lieu of monetary
compensation. This provision applies only to settlement
agreements entered into before January 1, 2016. Finally, 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 and specifies that the
requirement does not apply to claims brought by an electrical
corporation that arise from 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.:YesLocal: No
According to the Senate Appropriations Committee:
Increased revenues, potentially in the billions of dollars, to
the Ratepayer Relief Fund (special).
Potential costs to the General Fund for litigation costs for
the AG and the Department of Water Resources (DWR) associated
with energy crisis.
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Unknown costs to the state, as a ratepayer, (General Fund and
various special funds) to the extent that settlement monies
are not deposited in the Electric Power Fund to repay bonds
and long-term power contracts entered into by DWR.
Potential impacts to settlement amounts.
SUPPORT: (Verified8/28/15)
California Manufacturers & Technology Association
Office of Ratepayer Advocates
The Utility Reform Network
OPPOSITION: (Verified8/28/15)
None received
ARGUMENTS IN SUPPORT: The author and proponents contend that
the 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.
ASSEMBLY FLOOR: 79-0, 6/1/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
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Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Brough
Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
9/1/15 21:19:44
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