BILL ANALYSIS Ó
AB 895
Page 1
GOVERNOR'S VETO
AB
895 (Rendon)
As Enrolled September 16, 2015
2/3 vote
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|ASSEMBLY: |79-0 |(June 1, 2015) |SENATE: |39-0 |(September 10, |
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|ASSEMBLY: |79-0 |(September 11, | | | |
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Original Committee Reference: U. & C.
SUMMARY: Requires proceeds of any claims arising out of the
2000 to 2002 energy crisis to be monetary and deposited into the
Ratepayer Relief Fund, to be appropriated for the benefit of
ratepayers, as specified.
AB 895
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The Senate amendments do the following:
1)Require that all settlements entered into by the Attorney
General (AG) or the California Public Utilities Commission
(CPUC) be monetary.
2)Limit the restrictions on the distribution and expending of
proceeds to claims recovered by the CPUC.
3)Restrict the use of the Ratepayer Relief Fund to reducing
rates for customers or to reduce debt service on bonds.
4)Allow the CPUC to recover its litigation and investigation
costs.
5)Provide that actions to enforce the CPUC's process for
handling and determining disclosable public records, as well
as actions to enforce Bagley-Keene Open Meetings Act
requirements, may be taken to the superior court.
6)Make various legislative findings regarding the judicial
review provisions of the Bagley-Keene Open Meetings Act.
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
against generators, suppliers, or marketers of electricity or
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natural gas. (Government Code Section 16428.15)
2)Requires that any energy settlement agreement entered into by
the AG, after reimbursing the AG's litigation and
investigation expenses, to be directed for 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 Section 16428.3)
3)Authorizes funds deposited in the Ratepayer Relief Fund to be
appropriated by the Legislature for purposes that benefit
ratepayers. Money in the fund may be appropriated to finance
energy litigation and investigation expenses of state
entities, to reduce rates for customers in the affected
service areas of electrical utilities and gas utilities, and
to reduce the debt service on bonds issued, as specified.
(Government Code Section 16428.5)
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill would have increased revenues, potentially
in the billions of dollars, to the Ratepayer Relief Fund.
COMMENTS:
1)Authors Statement: "After the 2000-02 energy crisis, various
lawsuits were filed seeking billions in refunds to California
ratepayers. Litigation continues to this day. However, a
recent out-of-court case settlement (Dynegy 2012), negotiated
by the CPUC, resulted in money being spent on developing a
statewide electric vehicle charging program, rather than on
refunding ratepayers. Using settlement refunds for purposes
other than direct refunds to ratepayers is a policy decision
the Legislature should make. AB 895 ensures legislative
AB 895
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oversight over the use of ratepayer refunds resulting from
electricity crisis litigation, so that the funds will be used
to benefit ratepayers instead of used for other purposes by
the CPUC."
2)Background: In 1996, legislation established a competitive
deregulated electricity market in California which worked well
until May 2000, after a serious drought diminished the supply
of inexpensive hydropower. This led to the Western
Electricity Crisis of 2000 to 2001. California's increasing
electricity prices, partnered with inadequate infrastructure
and the deteriorating financial stability of major
investor-owned utilities, triggered a crisis in California.
These problems made market manipulation possible, and caused
all-time high retail electricity prices and power outages
throughout California.
Since that time, various lawsuits have sought billions of
dollars in refunds. Litigation continues to this day,
resulting in settlements and judgments in favor of California
electric ratepayers. Most recently, on April 21, 2015, the
United States Supreme Court ruled that a federal law governing
the natural gas market does not shield energy companies from
state antitrust claims made over the 2000 to 2002 energy
crisis, opening the door to further litigation.
3)CPUC Handling of Electric Crisis Settlement Funds: The CPUC
has directed most funds from energy crisis litigation to
ratepayers. However, a recent out-of-court case settlement
(Dynegy 2012), negotiated by the CPUC, resulted in money being
spent on developing a statewide electric vehicle charging
program, rather than on 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.
4)Ratepayer Relief Fund: The Ratepayer Relief Fund was
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established primarily to benefit ratepayers, and fund
investigation and litigation costs of the state in pursuing
allegations of overcharges or unfair practices that adversely
affected ratepayers. Money in the fund may be appropriated to
finance energy litigation and investigation expenses of state
entities, to reduce rates for customers in the affected
service areas of electrical utilities and gas utilities, and
to reduce the debt service on bonds issued, as specified.
This bill ensures legislative oversight over electric crisis
settlement funds by requiring that settlement funds be
deposited into the Ratepayer Relief Fund, to be appropriated
by the Legislature, for the benefit of ratepayers.
5)Bagley-Keene Open Meeting Act: The CPUC is subject to the
Bagley-Keene Open Meeting Act, which requires state entities
take "action" only at a public meeting following public
posting of an agenda describing the item for proposed action.
Any private gathering of a majority of the members of a state
body at the same time and place to hear, discuss, or
deliberate upon any item that is within its jurisdiction is
unlawful.
In June 2014, a court decision held that Californian can
enforce transparency laws, such as the Bagley-Keene Act, on
the CPUC only in a court of appeals or the Supreme Court.
Yet, any superior court can enforce such laws against other
state agencies. Current law only allows a review of
procedural issues of an agency's decision, not the substance;
for the CPUC, however, current law does not allow a review of
either.
This bill provides that actions to enforce the Bagley-Keene
Open Meeting Act and the CPUC's process for disclosing public
records may be taken to the superior court. In addition, this
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bill makes various legislative findings regarding the judicial
review provisions of the Bagley-Keene Open Meeting Act.
GOVERNOR'S VETO MESSAGE:
This bill requires all energy crisis settlement agreements
entered into by the Attorney General and Public Utilities
Commission to be monetary, and specifies that the priority use
of settlement funds is to reduce ratepayer rates.
Although I agree with the intent to maximize ratepayer benefits
from energy crisis settlements, this bill unreasonably limits
the range of solutions that may well serve the public interest.
Analysis Prepared by:
Edmond Cheung / U. & C. / (916) 319-2083 FN:
0002518