BILL ANALYSIS
AB 1421
Page 1
ASSEMBLY THIRD READING
AB 1421 (Wright)
As Amended May 25, 1999
Majority vote
UTILITIES AND COMMERCE 11-0
APPROPRIATIONS 13-1
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|Ayes:|Wright, Pescetti, |Ayes:|Ashburn, Granlund, |
| |Campbell, Cardenas, | |Hertzberg, Kuehl, |
| |Frusetta, Maddox, | |Ackerman, Runner, |
| |Mazzoni, Papan, Reyes, | |Shelley, Steinberg, |
| |Vincent, Wesson | |Thomson, Wesson, Wiggins, |
| | | |Wright, Zettel |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Brewer |
| | | | |
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SUMMARY : Defines basic gas and electric service, to be provided
by the incumbent utilities
unless the customer opts to receive basic service from another
provider. Specifically, this bill:
1)Declares core (i.e., small commercial and residential)
customers should continue to receive bundled, basic gas
service from the incumbent gas utility unless the customer
elects to receive service from another entity.
2)Defines basic gas service to include transmission, storage,
distribution, purchasing natural gas on behalf of a customer,
revenue cycle services (i.e., metering, billing, and
collection) and after-meter services (i.e., leak
investigation, inspecting customer piping and appliances,
carbon monoxide investigation, pilot relighting, and high bill
investigation).
3)Declares all customers of an electrical corporation should
continue to receive bundled, basic electric service from the
incumbent electric utility unless the customer elects to
receive power through a direct transaction with another
service provider.
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4)Defines basic electric service to include transmission,
distribution, purchasing electric power on behalf of a
customer, and revenue cycle services (i.e., metering, billing,
and collection).
5)Specifies that the incumbent gas utility shall continue to be
the exclusive provider of revenue cycle services, except as
specified, and provides that the incumbent electric utility
shall continue to provide revenue cycle services unless the
customer elects to receive power from another provider.
EXISTING LAW permits the California Public Utilities Commission
(CPUC) to investigate the restructuring of natural gas services,
as specified, but prohibits the enactment and enforcement of any
natural gas restructuring decisions for core customers prior to
January 1, 2000.
Permits CPUC to exercise its authority to investigate a process
for certification and regulation of the rates, charges, terms,
and conditions of default service, and to submit its findings
and recommendations to the Legislature for approval.
FISCAL EFFECT : Absorbable costs to CPUC.
COMMENTS : This bill establishes investor-owned utilities (IOUs)
as the providers of basic gas and electric service. None of the
provisions of this bill affect direct access. A customer is
still free to choose an energy service provider (ESP) other than
the incumbent utility. This bill does not impose any new
requirements on customers switching providers and will not make
it more difficult for ESPs to sign up direct access customers.
This bill establishes that revenue cycle services and
after-meter services shall be included in bundled, basic gas
service. Thus, utilities will be prevented from charging
separately to investigate gas leaks, relight pilot lights, check
gas appliances, or check for carbon monoxide leaks. Low- and
middle-income customers will be protected from having to choose
between safety and saving money on a service call. In
September, 1998, CPUC's Safety Branch determined that further
unbundling of natural gas metering and billing would create
safety risks for customers, the public, and utility employees.
ESPs assert this bill prevents competitive energy providers from
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emerging into a larger market by "freezing in place the current
system which requires ESPs to beat a wholesale price with a
retail price." ESPs must include all the costs of providing
service in the retail rate, while the IOUs are permitted to
include some of these costs in the non-bypassable distribution
rate. Opponents of this bill assert that it would force ESP
customers to continue to "pay twice for some services." None of
the provisions of this bill affect what is included in the
non-bypassable distribution rate. CPUC is presently engaged in
a proceeding to determine the post-transition market structure,
which includes an investigation of credits to customers who
receive power from ESPs. This bill would not affect the current
CPUC proceeding, or CPUC's authority in this area.
The Coalition of California Utility Employees and the Southern
California Gas Workers Council, the sponsors of this bill,
assert that this bill guarantees residential and small
commercial customers safe and reliable basic gas and electric
service, including bundled revenue-cycle services (metering and
billing), if they choose to receive electric and gas from their
existing investor-owned utility. This bill ensures that
(default provider) customers "continue to get the benefits of
competitive energy prices from the Power Exchange by doing
nothing."
This bill prohibits "state-mandated slamming," by prohibiting
CPUC from adopting proposals to force utility customers to shop
for gas and electricity. According to the author, this will
protect residential and small business customers from being
slammed by aggressive marketing practices, an all too common
occurrence for long distance telephone customers.
Existing law permits CPUC to investigate the terms and
conditions of default service, and to submit its findings and
recommendations to the Legislature for approval. This bill
repeals these provisions, and reaffirms the Legislature's role
as the primary determiner of the terms and conditions of default
service. The purpose of these provisions, according to the
author, is to prevent CPUC from forcing customers to choose a
gas or electric provider.
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083
AB 1421
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