BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 811| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 811 Author: Keeley (D) Amended: 8/25/99 in Senate Vote: 21 SENATE ENERGY, U.&C. COMMITTEE : 7-0, 7/13/99 AYES: Alarcon, Baca, Brulte, Kelley, Peace, Solis, Speier NOT VOTING: Bowen, Hughes, Mountjoy, Vasconcellos SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 76-0, 5/25/99 - See last page for vote SUBJECT : Electrical restructuring SOURCE : California Retailers Association DIGEST : This bill requires the California Public Utilities Commission to establish a Power Exchange credit based on actual energy usage, as specified. ANALYSIS : The value, and price, of electricity varies by time of day and season. Consumption of electricity is much lower at 4:00 a.m. than it is at 4:00 p.m. and so is the price. Traditional mechanical meters record the total amount of electricity consumed between readings, but do not record actual consumption patterns (temporal data). TOU meters measure energy as it is being used, providing an exact reading of how much energy was used at any given time. CONTINUED AB 811 Page 2 According to the sponsor of this bill, the California Retailers Association, retail stores and office buildings have above average loads (high usage during the day) and little ability to shift loads due to the constraints of normal business hours. Customers exceeding a certain load who choose a direct access energy service provider (ESP) are required to install a TOU meter. The meter data is used to precisely calculate their bill - actual usage in any hour multiplied by the actual energy cost for that hour. Before the ESP can bill the customer, the local utility must generate a bill for transmission and distribution services, and for the CTC. AB 1890 requires that these charges be determined residually by subtracting a credit for the commodity portion of the bill. This credit is referred to as the PX credit. Currently, the PX credit is calculated based on average "load profiles," even for customers with TOU meters. All customers within a given customer class (e.g., residential, small commercial, agricultural, industrial) are credited for the total energy they consume according to a load profile for their customer class, rather than according to their own actual hourly usage. The load profile uses average historical data to estimate how much energy is purchased at any given hour by each customer class. As a result, customers with a below average load (relatively low peak usage) get a higher PX credit relative to the actual value of the energy they consume than customers with an above average load (relatively high peak usage). Because of the relationship between the PX credit and CTC calculations, above average customers also pay relatively more CTC. If customers are allowed to take advantage of TOU meter readings in the calculation of the PX credit, those with above average loads will get a larger PX credit and smaller CTC obligation than they get under the current method. This bill requires the California Public Utilities Commission (CPUC) to establish a Power Exchange energy credit (PX credit) that is calculated according to actual hourly data for customers with time-of-use (TOU) meters installed on or after June 30, 2000. AB 811 Page 3 The bill allows customers with TOU meters installed before June 30, 2000 to make a one-time choice, before June 30, 2000, to have their PX credit calculated according to actual hourly data or the average load profile for their customer class. The bill requires additional incremental billing costs resulting from the hourly calculation methodology to be recoverable from that customer class and prohibits shifting any costs between customer classes. Comments Potential Impact on Consumption Patterns and CTC Collection . The current PX credit methodology effectively rewards efficient usage patterns, to the extent that a customer can "beat" the average load profile for his or her class. When the PX credit is calculated according to an average load profile, customers who are more efficient than average receive a higher PX credit and, consequently, pay a lower CTC amount than they would if the PX credit is calculated according to hourly usage. By enabling customers to collect a PX credit calculated according to hourly usage, this bill benefits above average energy consumers by increasing their PX credit and, consequently, decreasing their relative CTC contribution. Essentially, these customers will be rewarded, compared to the current rules, for using an above average energy load. The bill confines the CTC impact by prohibiting cost-shifting between customer classes, consistent with existing law. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 8/25/99) California Retailers Association (source) Agricultural Energy Consumers Association Association of California Water Agencies Building Owners & Managers Association of California Building Owners & Managers Association of San Francisco California Cast Metals Association California Manufacturers Association Chemical Industry Council of California AB 811 Page 4 Green Mountain Energy Resources New Energy Ventures Southern California Edison ASSEMBLY FLOOR : AYES: Aanestad, Ackerman, Alquist, Aroner, Ashburn, Baldwin, Bates, Battin, Baugh, Bock, Brewer, Briggs, Calderon, Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox, Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh, Florez, Frusetta, Gallegos, Granlund, Havice, Hertzberg, Honda, House, Jackson, Kaloogian, Keeley, Knox, Kuehl, Leach, Lempert, Leonard, Longville, Lowenthal, Machado, Maddox, Maldonado, Margett, Mazzoni, McClintock, Migden, Nakano, Olberg, Oller, Robert Pacheco, Rod Pacheco, Pescetti, Reyes, Romero, Runner, Scott, Shelley, Steinberg, Strickland, Strom-Martin, Thompson, Thomson, Torlakson, Vincent, Washington, Wayne, Wesson, Wiggins, Wildman, Wright, Zettel, Villaraigosa NOT VOTING: Campbell, Floyd, Papan, Soto NC:cm 8/25/99 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****