BILL ANALYSIS AB 1421 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1421 (Wright) As Amended August 18, 1999 Majority vote ASSEMBLY: 50-17 ( May 27, 1999 ) SENATE: 26-8 ( September 1, 1999 ) Original Committee Reference: U. & C. SUMMARY : Defines basic gas service, to be provided by the incumbent utilities, and prohibits the California Public Utilities Commission (CPUC) from unbundling distribution-related gas services, such as metering and billing, for most customers. The Senate amendments delete provisions relating to basic electric service, and the establishment of a default provider of electric service. Additionally, the amendments require electric utilities serving agricultural customers to conduct research relating to the energy usage of agricultural customers, and require CPUC to consider the research results in setting distribution rates for agricultural customers. EXISTING LAW : 1)Permits 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. 1)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. AS PASSED BY THE ASSEMBLY , this bill: 1)Declared 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)Defined basic gas service to include transmission, storage, distribution, purchasing natural gas on behalf of a customer, AB 1421 Page 2 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)Declared 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. 4)Defined 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)Specified that the incumbent gas utility shall continue to be the exclusive provider of revenue cycle services, except as specified, and provided that the incumbent electric utility shall continue to provide revenue cycle services unless the customer elects to receive power from another provider. FISCAL EFFECT : Absorbable costs to CPUC. COMMENTS : The natural gas commodity market in California was deregulated several years ago, enabling customers to choose to buy the gas commodity from the incumbent utility provider or alternate providers. The distribution of natural gas is provided by the incumbent gas utilities. This bill would establishes the incumbent gas utilities as the providers of basic gas service, and prohibit CPUC from unbundling distribution-related gas services, such as metering and billing, for most customers. SB 1602 (Peace), Chapter 401, Statutes of 1998, authorized CPUC to investigate the further restructuring of gas services, and required CPUC to submit its recommendations to the Legislature. Chapter 401 prohibited CPUC from enacting any gas restructuring decisions prior to January 1, 2000. This bill repeals Chapter 401, and prohibits the further unbundling of gas services. 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. AB 1421 Page 3 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. This bill also provides for a study of the electric distribution rates for agricultural customers with multiple meters. Many agricultural customers believe that utilities are not fairly metering their consumption, which leads to high distribution rates. The intent of this study is to create a more accurate load profile for agricultural customers by determining the typical simultaneous peak load for those customers. (A load profile is an estimate of how much energy is purchased at any given hour by each customer class). CPUC will be required to consider the research results in setting distribution rates for agricultural customers. Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083 FN: 0003058