BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 995|
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THIRD READING
Bill No: AB 995
Author: Wright (D), et al
Amended: 8/18/00 in Senate
Vote: 27
SENATE ENERGY, U.&C. COMMITTEE : 9-1, 6/13/00
AYES: Bowen, Alarcon, Kelley, Mountjoy, Murray, Peace,
Solis, Speier, Vasconcellos
NOES: Brulte
SENATE APPROPRIATIONS COMMITTEE : 10-1, 8/7/00
AYES: Alpert, Bowen, Escutia, Karnette, Kelley, Leslie,
McPherson, Mountjoy, Perata, Vasconcellos
NOES: Johnson
ASSEMBLY FLOOR : Not Relevant
SUBJECT : Electric restructuring: public benefit
programs
SOURCE : Author
DIGEST : This bill relates to public benefit programs for
electrical corporation utility users. The bill 1) extends,
until January 1, 2012, the current surcharge on electricity
to fund specified public purpose programs, 2) establishes
several reporting requirements, 3) precludes the
expenditure of funds collected until and unless the
Legislature takes further action based on the reports, and
4) requires the Governor to appoint an independent review
panel to prepare and submit a report evaluating the
CONTINUED
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programs funded by the bill
ANALYSIS : Current law states legislative findings that
the transmission and distribution of electric power are
essential services imbued with the public interest that are
provided over facilities owned and maintained by the
State's electrical corporations.
Current law declares the delivery of electricity over
transmission and distribution systems is currently
regulated, and will continue to be regulated to ensure
system safety, reliability, environmental protection, and
fair access for all market participants.
This bill, known as the "Reliable Electric Service
Investments Act", states legislative intent that electrical
corporations continue to be responsible for operating and
controlling all facets of their electric distribution
grids.
This bill requires electrical corporations to continue
operating their electric distribution grid in their service
territories consistent with existing law.
This bill requires electric corporations to make reasonable
investments in their distribution grids and be afforded a
reasonable opportunity to recover the costs of those
investments from ratepayers.
Current law requires investor-owned (IOU) and municipal
utilities to collect a public goods surcharge from each
electricity customer to fund four specific programs: 1)
energy efficiency; 2) renewable energy sources; 3) research
and development of alternative energy supplies; and 4)
assistance to low-income users.
Current law funds the first three programs at specific
amounts and sunsets on December 31, 2001 (the low-income
assistance program is a needs-based activity that doesn't
sunset).
This bill extends the collection of the public goods
program surcharge for each of these programs for ten years.
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The bill establishes the funding levels for each of the
public purpose programs, beginning January 1, 2002.
This bill requires the California Energy Commission (CEC)
to develop an investment plan for the renewable energy and
research and development programs. This plan must be
approved by the Legislature before any of the program money
can be spent.
This bill establishes a review panel, to be appointed by
the Governor by January 1, 2004, and requires the panel to
review the CEC's goals associated with the public goods
programs by January 1, 2005.
This bill transfers the administration of the research and
development funds for the energy efficiency program from
the California Public Utilities Commission (CPUC) to the
CEC.
This bill requires the CEC to report on renewable energy
and research and development, develop and submit to the
Legislature investment plans, and recommend allocations
among specified projects and requires the Public Utilities
Commission (PUC) to continue administering the energy
efficiency program.
This bill includes in acts of misconduct the
misrepresentation of a material fact by an applicant in
obtaining a registration as an electric service provider.
The bill requires any provider whose registration is
revoked because of this to refund all of the customer
credit funds it received from the Energy Commission. Such
funds would be deposited in the Renewable Resource Trust
Fund. This subdivision may not be construed to apply
retroactively.
NOTE: The Legislative Counsel states the bill would result
in a change in state taxes for the purpose of increasing
state revenue within the meaning of Section 3 of Article
XIIIA of the California Constitution, thus requiring a
two-thirds vote. The State Department of Finance, however,
states that "Finance has previously determined that the
revenues collected from this surcharge are fees because the
revenues are used for specified programs that benefit all
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Californians."
Background
Electrical corporations providing distribution services own
and operate the electric distribution grid connecting the
transmission lines to homes and businesses. The grid
provisions in this bill state legislative intent that these
electrical corporations are entitled to manage their own
grid systems and recover "reasonable" costs associated with
their investments in this portion of the distribution
system.
The second major part of the bill alters the public goods
charge program and extends it for ten years. The CEC is
required to develop and submit to the Legislature an
investment plan for both the renewable energy and research
and development programs -- and the money collected
pursuant to the public goods charge can't be spent until
the Legislature approves the investment plan. At the
five-year mark, a panel appointed by the Governor must
review the programs and determine whether they're meeting
their prescribed goals. At that point, another investment
plan must be approved by the Legislature before money
collected pursuant to the public goods charge can be spent.
The public goods surcharge and accompanying programs were
created in the original electric restructuring legislation,
AB 1890 (Brulte), Chapter 854, Statutes of 1996. AB 1890
provided a transition to a competitive marketplace in
energy generation, recognizing certain energy activities
which provide a clear public benefit may not be invested in
or funded in a competitive environment. To support these
important activities, AB 1890 set up a per kilowatt hour
surcharge paid by all electric customers to fund four
public goods categories: 1) energy efficiency; 2)
renewable energy sources; 3) research and development of
alternative energy supplies; and 4) assistance to
low-income users.
The public goods surcharge amounts to less than three
percent of an electricity customer's bill. This surcharge
was put in place for a four-year period for three of the
programs, with the low-income program set aside as a
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needs-based program with no sunset. The public goods
surcharge for energy efficiency, renewable energy, and the
public interest energy research and development programs
will sunset on December 31, 2001.
According to the CPUC, the energy efficiency programs
funded by the investor-owned utilities generated over $2.7
billion in net benefits between 1990-1997, and a March 2000
by the Rand Corporation noted similar benefits.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02
2002-03 Fund
Program extension (revenues to the listed
programs)
1. Energy efficiency
$228,000*
2. Renewable energy
62,500*
3. R&D 135,000*
Admin. (CEC)/(PUC) Minor, absorbable
costsGeneral**/
Special
*The funding levels are adjusted each year to account for a
growth in electric commodity sales or inflation, whichever
is less.
**Energy Resources Program Account/PUC Utilities
Reimbursement
Account
Staff Comments
The State, which consumed a minimum of 2.8 million
megawatts of electricity in 1997-98, will likely incur
surcharge costs in excess of $150,000 annually.
The PUC will incur minor costs to continue administering
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the energy efficiency program and to provide assistance to
the independent review panel. The CEC will have similar
costs to prepare the investment plans to determine the
expenditure of funds collected for the R&D and the
renewable energy programs.
SUPPORT : (Verified 8/18/00)
American Association of Business Persons with Disabilities
American Lung Association of California
California Chamber of Commerce
California League of Conservation Voters
California Manufacturers & Technology Association
California Public Interest Research Group
California Retailers Association
Coalition of California Utility Employees
Consumers First
ELEY Associates
Episcopal Environmental Commission of the Diocese of
California and the Regeneration Project
Global Green USA (opposed to amendment described in Comment
#8)
Global Possibilities
Independent Energy Producers
National Energy Foundation
Natural Resources Defense Council
Next Generation
Pacific Gas and Electric Company
Planning and Conservation League
Positive Energy
Sacramento Municipal Utility District
Sacramento Tree Foundation
Sea West
Southern California Edison
Union of Concerned Scientists
NC:kb 8/17/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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