BILL ANALYSIS
AB 995
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 995 (Wright)
As Amended August 18, 2000
2/3 vote
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|ASSEMBLY: | |(May 20, 1999) |SENATE: |30-5 |( August 23, |
| | | | | |2000 ) |
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(vote not relevant)
Original Committee Reference: U. & C.
SUMMARY : Reaffirms policy that each investor-owned utility
(IOU) shall continue to operate its electric distribution grid
in its service territory and have a reasonable opportunity to
recover its costs, extends the collection of a nonbypassable
system benefit charge to fund specified programs, requires
various reports relating to these programs, and requires further
legislative action before program moneys can be expended.
Specifically, this bill:
1)Restates the policy of the state that each IOU operate its
electric distribution grid in a safe, reliable, efficient, and
cost-effective manner and that electric corporations continue
to make prudent investments in their distribution grids.
2)Reaffirms California's doctrine, as reflected in regulatory
and judicial decisions, regarding IOUs' reasonable opportunity
to recover costs and investments associated with their
electric distribution grid and the reasonable opportunity to
attract capital for investment on reasonable terms.
3)Extends the collection of a nonbypassable system benefit
charge to fund three specific programs: a) energy efficiency
and conservation activities; b) public interest research,
development, and demonstration (RD&D); and, c) in-state
operation and development of existing, new, and emerging
renewable energy resources.
4)Requires IOUs and municipal utilities to collect specific
dollar amounts for each of the programs beginning on January
1, 2002, through January 1, 2012, and requires the funds to be
deposited in specified accounts until appropriation by the
Legislature.
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5)Requires the Energy Resources Conservation and Development
Commission (CEC) to develop investment plans for renewable
energy and RD&D. For renewable energy, CEC is required to
submit an initial investment plan by March 31, 2001,
addressing the application of moneys collected between January
1, 2002, and January 1, 2007. A subsequent investment plan is
due March 31, 2006, relating to the application of moneys
collected between January 1, 2007, and January 1, 2012. For
RD&D, CEC is required to submit an initial investment plan by
March 1, 2001, addressing the application of moneys collected
between January 1, 2002, and January 1, 2007. A subsequent
investment plan is due March 31, 2006, relating to the
application of moneys collected between January 1, 2007, and
January 1, 2012. No moneys may be expended in the years
covered by these plans without further legislative action.
6)Requires the California Public Utilities Commission (CPUC) and
CEC to continue to administer energy efficiency programs, as
defined, following prescribed guidelines.
7)Requires the Governor, on or before January 1, 2004, to
appoint an independent review panel that, on or before January
1, 2005, would be required to submit a report to the
Legislature and CEC evaluating the programs funded under this
bill, and including specific recommendations aimed at
assisting the Legislature in determining whether to change or
eliminate the collection of system benefits charge on or after
January 1, 2007.
8)Requires CPUC to require IOUs to inform all customers who
request residential service connections via telephone of the
availability of the California Alternative Rates for Energy
program and how they may qualify for and obtain these
services, and permits IOUs to recover the reasonable costs of
implementing these provisions. Additionally, requires IOUs to
accept applications for the CARE program according to
procedures specified by CPUC.
9)Authorizes CPUC to include misrepresentation of a material
fact by an applicant obtaining a registration as an electric
service provider as a reason to suspend or revoke their
registration.
10)Makes related findings and declarations.
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EXISTING LAW :
1)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 IOUs.
2)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.
3)Requires IOUs and municipal utilities to collect a public
goods surcharge from each electricity customer to fund four
specific programs: a) energy efficiency and conservation
activities; b) public interest RD&D; c) in-state operation and
development of existing, new, and emerging renewable energy
sources; and, d) assistance to low-income users. Statutory
authority to collect funds for the renewables programs sunsets
on March 31, 2002.
4)Requires CEC to transfer funds collected for these programs to
specified funds.
5)Provides that funds expended for production incentives for new
in-state renewable electricity generation technology
facilities are limited to facilities that are operational
prior to January 1, 2002.
6)Authorizes CPUC to utilize enforcement provisions against
electric service providers, including having their
registration suspended or revoked for specified acts of
misconduct.
FISCAL EFFECT :
1)CPUC indicates minor absorbable special fund costs to continue
administering the energy efficiency program.
2)CEC indicates absorbable costs to prepare the investment plans
for future legislative consideration to determine expenditure
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of funds collected for RD&D and renewable energy programs.
3)Absorbable special fund costs for CPUC and CEC to provide
assistance to the independent review panel.
COMMENTS : Electric Distribution Grid. Historically,
California's electrical corporations were vertically integrated
companies that owned operated, managed and controlled electric
generation, transmission and distribution. In 1996, California
enacted landmark electric restructuring legislation AB 1890
(Brulte), Chapter 854, Statutes of 1996, which created a
competitive generation market and transferred control of the
investor owned utilities transmission to the Independent System
Operator. With the passage of Chapter 854 and past decisions of
CPUC, there has been uncertainly created regarding investments
in new generation and transmission. In an effort to ensure that
similar uncertainly does not occur with regard to the
distribution system, this bill reaffirms the core distribution
functions that remain under the authority of CPUC. This bill
also reaffirms the historical cost recovery doctrine governing
investments in the electric distribution grid to ensure that
essential investments continue to be made to the grid.
Public Purpose Programs. Another key component of Chapter 854
that this bill seeks to address is the collection of a separate
component to fund specified public purpose programs such as: a)
cost-effective energy efficiency and conservation activities; b)
public interest research and development; and, c) renewable
energy. Under existing law, the three investor owned utilities,
Southern California Edison Company (SCE), Pacific Gas and
Electric Company and San Diego Gas and Electric Company, are
required to collect specified amounts to fund these programs
through 2001. CPUC's authority to collects funds to support the
renewables program became explicitly inoperative on March 31,
2002. This bill extends the authority to collects funds to
support these programs for up to 10 years in two five-year
blocks. However, rather than simply extending the funding
authorization, this bill requires CEC to develop investment
plans for the renewable and RD&D programs covering each five
year block. Further, the Legislature must take specific action
before any of these moneys can be spent.
Program Improvements. It was the Legislature's intent that
funding for the renewable program terminate after five years.
California, however, has not reached the levels of renewable
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resources envisioned at that time. This bill seeks to optimize
public investment and ensure that the most cost-effective and
efficient investments in renewable resources are pursued and
directs CEC to prepare an investment plan aimed at development
of a fully competitive and self-sustaining California renewable
energy supply. This bill also established revised guidelines to
establish a level of parity amongst new, repowered, refurbished
and existing sources of renewable energy. This bill also
requires CEC to address issues regarding the organizational
environment managing the RD&D program. Finally, this bill
provides for improvements in the energy efficiency program by
requiring CPUC to ensure local and regional interests,
multifamily dwellings and energy service industry capabilities
are incorporated into the program portfolio design. In past
years, the program design left many of these entities incapable
or unqualified to access the energy efficiency moneys.
Systems Benefit Charge. This bill establishes that the systems
benefit charges to fund the energy efficiency, renewable energy,
and research and development programs is nonbypassble for every
customer of an electrical corporation. While this bill
authorizes CEC to require each electrical corporation to collect
the systems benefit charges through 2012, funds cannot be
expended until the Legislature acts after review of the
investment plans described above. This bill further includes
provisions that place limits on program funding levels and
customer surcharge rates which large users have indicated
provides them greater certainty regarding costs to support these
programs.
Independent Review Panel. This bill requires the Governor to
appoint an independent review panel of members with expertise on
the energy service needs of large and small electricity
consumers to review the operation of the programs. The panel,
to be appointed by January 1, 2004, is required to prepare a
report on or before January 1, 2005 evaluating the public
purpose programs. The report will also assess whether the
programs are consistent with the statutory goals, if established
targets for renewable generation are likely to be achieved, and
whether changes should be made to result in more efficient use
of public resources. The panel is also directed to compare
CEC's programs with efforts in other states. The report is
aimed at assisting the Legislature to determine whether to
change or eliminate the collection of the system benefits
charge.
AB 995
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Analysis Prepared by : Carolyn Veal -Hunter / U. & C. / (916)
319-2083
FN: 0006114