BILL NUMBER: AB 2638	AMENDED
	BILL TEXT

	AMENDED IN SENATE   AUGUST 31, 2000
	AMENDED IN SENATE   AUGUST 23, 2000
	AMENDED IN SENATE   AUGUST 18, 2000
	AMENDED IN SENATE   AUGUST 7, 2000
	AMENDED IN ASSEMBLY   MAY 25, 2000
	AMENDED IN ASSEMBLY   MAY 15, 2000
	AMENDED IN ASSEMBLY   MAY 8, 2000
	AMENDED IN ASSEMBLY   MAY 1, 2000

INTRODUCED BY   Assembly  Member Calderon  
Members Cardoza and Calderon 

                        FEBRUARY 25, 2000

   An act to add Sections 454.1, 9607, 9608,  and 9609
  9610, 9611, and 9612  to the Public Utilities
Code, and to amend Sections 20804 and 20805 of the Water Code,
relating to services.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2638, as amended,  Calderon   Cardoza
 .  Public utilities:  electrical power:  irrigation districts.
   The Irrigation District Law authorizes an irrigation district that
is governed under that law to sell, dispose of, and distribute
electric power for use outside its boundaries.  Other existing law
authorizes the Public Utilities Commission to establish rates for
public utilities regulated by the commission.
   The bill would, with specified exceptions, authorize an electrical
corporation to discount its  rate to its marginal cost
  noncommodity rates  if a customer receives a bona
fide offer for electric  distribution  service from
an irrigation district, as specified.  The bill would prohibit an
irrigation district  that offers electric service to retail
customers as of January 1, 1999,  from distributing or
transmitting electricity to retail customers without the approval of
the commission,  as specified,  and would require a district
to comply with certain requirements.  The commission would be
required to make a determination as to various matters before
granting approval.  The bill would provide specific exemptions from
these requirements. 
   The bill would prohibit electric transmission or distribution
service by an electrical corporation to retail customers in specified
areas, from January 1, 2001, to December 31, 2025, as prescribed.
The bill would exempt the Modesto Irrigation District from specified
provisions of the Cortese-Knox Local Government Reorganization Act of
1985.  
   The bill would prohibit an irrigation district, without the
agreement of an electrical corporation and with a specified
exception, from exercising the right of eminent domain to take
property owned by an electrical corporation if the irrigation
district intends to put the property to the same or similar use.

   Vote:  majority.  Appropriation:  no.  Fiscal committee:   yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 454.1 is added to the Public Utilities Code, to
read:
   454.1.  (a) Except as provided in subdivision (b), if a customer
with a maximum peak electrical demand in excess of 20 kilowatts
located or planning to locate within the service territory of an
electrical corporation receives a bona fide offer for electric
 distribution  service from an irrigation district
at rates less than the electrical corporation's tariffed rates, the
electrical corporation  may discount its rate to its marginal
cost of serving that customer.   may discount its
noncommodity rates, but may not discount its noncommodity rates below
its distribution marginal cost of serving that customer.  For
purposes of this subdivision, the costs of the electric commodity
shall be excluded from both the irrigation district and electric
corporation's rates.   The electrical corporation may recover
any difference between its tariffed and discounted service from its
remaining customers, allocated as determined by the commission.
However, the reallocation may not increase rates to its remaining
customers by any greater amount than the rates would be increased if
the customer had taken electric distribution service from the
irrigation district and the irrigation district had paid the charge
established in subdivision (e) of Section 9607.  Further, there
 is   shall be  a firewall preventing the
reallocation of such differences resulting from discounting to
residential customers or to commercial customers with maximum peak
demands not in excess of 20 kilowatts.   The commission shall
review the discounts provided under this section by each electrical
corporation and report to the Legislature not later than January 15,
2003. The review shall include an assessment of the effectiveness of
the discount levels and the rate impacts to customers of the
discounts.  The commission shall include in its report a
recommendation of any changes that should be made to the discount
levels in light of other commission approved discount programs. 

   (b) Subdivision (a) does not apply to a cumulative 75 megawatts of
load served by the Merced Irrigation District, determined as
follows:
   (1) The load is located within the boundaries of Merced Irrigation
District, as those boundaries existed on December 20, 1995, together
with the territory of Castle Air Force Base which was located
outside the district on that date.
   (2) For purposes of this section, a megawatt of load shall be
calculated in accordance with the methodology established by the
California Energy Resource Conservation and Development Commission in
its Docket No.  96-IRR-1890.
   (c) Subdivision (a) applies to the load of customers that move to
the areas described in paragraph (1) of subdivision (b) after
December 31, 2000, and such load shall be excluded from the
calculation of the 75 megawatts in subdivision (b).  
   (d) If an electrical corporation seeks to apply the discounts
permitted under subdivision (a) within the geographic area described
in subdivision (b) of Section 9610, the electrical corporation's
resulting rate for distribution service may not be less than 120
percent of the electrical corporation's marginal distribution cost of
serving that customer. 
  SEC. 2.  Section 9607 is added to the Public Utilities Code, to
read:
   9607.  (a)  The intent of this section is to avoid
cost-shifting to customers of an electrical corporation resulting
from the transfer of distribution services from an electrical
corporation to an irrigation district.
   (b)  Except as otherwise provided in this section and Section
9608, and notwithstanding any other provision of law, an irrigation
district  that offered electric service to retail customers as of
January 1, 1999,  may not  , without the approval of
the commission,  construct, lease, acquire, install, or
operate facilities for the distribution or transmission of
electricity to retail customers located in the service territory of
an electrical corporation providing electric distribution services
 .  The commission may   , unless the district
has first applied for and received the approval of the commission and
implements its service consistent with the commission's order.  The
commission shall find that service to be in the public interest and
shall  approve the request of a district to provide distribution
or transmission of electricity to retail customers located in the
service territory of an electrical corporation providing electric
distribution service if, after notice and hearing, the commission
 first  determines all of the following:
   (1) The district will provide  universal  service to all
retail customers who request service within the area to be served, at
published tariff rates and on a just, reasonable, and
nondiscriminatory basis, comparable to that provided by the current
retail service provider.   The area to be served shall
include at least 10 percent residential and small commercial
customers, based on load, and those customers shall be offered rates
comparable to the district's other residential and small commercial
customers.
   (2) Construction of electric facilities by the district within the
service territory will not have a significant adverse impact on the
environment.
   (3) Service by the district is consistent with the policies of the
state to prevent or eliminate economic waste set forth in Section
8101.
   (4) Service by the district will not adversely affect the
reliability of an existing service by the district or by the
electrical corporation.
   (5) Service by the district within the service territory will not
adversely impact the ability of the electrical corporation to provide
adequate service at reasonable rates within its service territory.
   (6)  
   (2) If the area the district is proposing to serve is either of
the following:
   (A) Is within the district's boundaries but less than the entire
district, the area to be served includes a percentage of residential
customers and small customers, based on load, comparable to the
percentage of residential and small customers in the district, based
on load.
   (B) Includes territory outside the district's boundaries, in which
case the territory outside the district's boundaries must include a
percentage of residential customers and small customers, based on
load, comparable to the percentage of residential and small customers
in the county or counties where service is to be provided, based on
load.
   (3) Service by the district will be consistent with the intent of
the state to avoid economic waste caused by duplication of facilities
as set forth in Section 8101.
   (4) Service by the district will include reasonable mitigation of
any adverse effects on the reliability of an existing service by the
electrical corporation.
   (5)  The district has established, funded, and is carrying
out public purpose and low-income programs  in accordance
with Section 385.   comparable to those provided by the
current electric retail service provider.  
   (7) The district's tariffed electric rates are reasonable,
considering the differences in taxes and the other differences
resulting from the different corporate structures of the district and
the electric corporation.  
   (6) That district's tariffed electric rates, exclusive of
commodity costs, will be at least 15 percent below the tariffed
electric rates, exclusive of commodity costs and nonbypassable
charges under Sections 367, 368, 375, 376, and 379, of the electrical
corporation for comparable services.  
   (8)  
   (7)  Service by the district is in the public interest.
   (b) 
   (c)  An irrigation district that obtains the approval of the
commission under this section to serve an area shall prepare an
annual report available to the public on the total load and number of
accounts of residential, low-income, agricultural, commercial, and
industrial customers served by the irrigation district in the
approved service area.  
   (c)  
   (d)  The commission shall have jurisdiction to resolve and
adjudicate complaint cases brought against an irrigation district
 that offered electric service to retail customers as of January
1, 1999,  by an interested party  where the complaint
concerns service outside the service territory of the district.
  where the complaint concerns retail electric service
outside the boundaries of the district and within the service
territory of an electrical corporation.  Nothing in this section
grants the commission jurisdiction to adjudicate complaint cases
involving retail electric service by an irrigation district inside
its boundaries or inside an irrigation district's exclusive service
territory.  
   (d) No  
   (e) Any project involving  electric transmission or
distribution facilities  may be   to be 
constructed or installed by an irrigation district to serve retail
customers located  outside the service territory of the
district without the prior approval after review under the California
Environmental Quality Act, (Division 13 (commencing with Section
21000) of the Public Resources Code) by the  California Public
Utilities Commission.
   (e) In order to avoid increasing costs to customers of electrical
corporations, if a retail customer is electrically connected to an
electrical corporation, an irrigation district may not electrically
connect the customer unless the irrigation district first pays the
electrical corporation a charge established by the commission to
reimburse the electrical corporation for the fair and reasonable
costs incurred by the electrical corporation to provide electric
transmission and distribution service to the retail customer.  If the
commission establishes an ongoing charge, the irrigation district
shall agree in writing to pay the ongoing charge. If the commission
has not established either a charge or a formula for calculation of a
charge as of the date an irrigation district has designated to
electrically connect a retail customer, the irrigation district shall
agree in writing to pay the charge for that retail customer before
electrically connecting the customer.  As soon as practicable, the
commission shall establish the charge or formula for the calculation
of the charge described in this subdivision.  In establishing the
charge or formula, the commission shall do so in a way that provides
interested parties with predictability as to the level of the charge.
  in the service territory of an electrical corporation
providing electric distribution services shall comply with the
California Environmental Quality Act, (Division 13 (commencing with
Section 21000)) of the Public Resources Code.  The county in which
the construction or installation is to occur shall act as the lead
agency. If a project involves the construction or installation of
electric transmission or distribution facilities in more than one
county, the county where the majority of the construction is
anticipated to occur shall act as the lead agency. 
   (f) An irrigation district may not offer service to customers
outside of its  service territory   district
boundaries  before offering service to all customers within its
 service territory   district boundaries  .

   (g)  This section does not apply to electric distribution
service provided by Modesto Irrigation District to those customers or
within those areas described in subdivisions (a), (b), and (c) of
Section 9610.
   (h)  The provisions of this section shall not apply to (1) a
cumulative 90 megawatts of load served by the Merced Irrigation
District that is located within the boundaries of Merced Irrigation
District, as those boundaries existed on December 20, 1995, together
with the territory of Castle Air Force Base which was located outside
the District on that date, or (2) electric load served by the
District which was not previously served by an electric corporation
that is located within the boundaries of Merced Irrigation District,
as those boundaries existed on December 20, 1995, together with the
territory of Castle Air Force Base which was located outside the
District on that date.  
   (h)  
   (i)  For purposes of this section, a megawatt of load shall
be calculated in accordance with the methodology established by the
California Energy Resource Conservation and Development Commission in
its Docket No. 96-IRR-1890, but the 90 megawatts shall not include
electrical usage by customers that move to the areas described in
paragraph (1) after December 31, 2000.  
   (i)  
   (j)  Subdivision (a) of this section shall not apply to the
construction, modification, lease, acquisition, installation, or
operation of facilities for the distribution or transmission of
electricity to customers electrically connected to a district as of
December 31, 2000, or to other customers who subsequently locate at
the same premises.  
   (k) In recognition of contractual arrangements and settlements
existing as of June 1, 2000, this section does not apply to the
acquisition or operation of the electric distribution facilities that
are the subject of the Settlement Agreement dated May 1, 2000,
between Pacific Gas and Electric Company and the San Joaquin
Irrigation District.
   (l) For purposes of this section, retail customers do not include
an irrigation district's own electric load being served of retail by
an electrical corporation. 
  SEC. 3.  Section 9608 is added to the Public Utilities Code, to
read:
   9608.  The provisions of Sections 454.1 and 9607  of this code
and Section 56133 of the Government Code  do not apply to an
irrigation district with respect to an area to be served by the
irrigation district, if all of the following occur:
   (a) The irrigation district acquires substantially all the
electric distribution facilities and related subtransmission
facilities of any electrical corporation that has an obligation to
provide electric distribution service within the area to be served by
the irrigation district.
   (b) The commission approves a service area agreement between the
irrigation district and the electrical corporation pursuant to
Sections 8101 to 8108, inclusive, which service area agreement
provides that the electrical corporation may not provide electric
distribution service in the area to be served by the irrigation
district and that the irrigation district may not provide electric
distribution service in the remainder of the electrical corporation's
service territory.
   (c) The commission relieves the electrical corporation of its
obligation to serve within the area to be served by the irrigation
district.  
  SEC. 4.  Section 9609 is added to the Public Utilities Code, to
read:
   9609.  Notwithstanding any other provision of law, an irrigation
district may not, without the electrical corporation's agreement,
exercise the right of eminent domain to take electric facilities or
real property necessary to the operation of those facilities owned by
an electrical corporation if the irrigation district intends to put
the facilities or real property to the same or similar use.  This
section shall not apply to condemnation of easements required by an
irrigation district reasonably necessary to cross an electrical
corporation's distribution or transmission system and which would not
interfere with the operation and maintenance of the electrical
corporation's system.
  SEC. 5.   
  SEC. 4.  Section 9610 is added to the Public Utilities Code, to
read:
   9610.  Commencing on January 1, 2001, and continuing through
December 31, 2025, all of the following shall apply:
   (a) No electrical corporation shall provide electric transmission
or distribution service to retail customers in either of the
following areas:
   (1) The Modesto Irrigation District electric service area as
defined in the August 15, 1940, Purchase of Properties agreement
between Modesto Irrigation District and Pacific Gas and Electric
Company.
   (2) The Mountain House Community Services District as defined in
the master specific plan adopted by the board of supervisors of the
County of San Joaquin on November 10, 1994.
   (b) (1) Within the purchase zone as described in Exhibit "B" of
The Asset Sale Agreement By and Between Pacific Gas and Electric
Company and Modesto Irrigation District Dated July 23, 1997,
contained in Public Utilities Commission Application Number
97-07-030, Pacific Gas and Electric Company and Modesto Irrigation
District may each provide electric transmission and distribution
service to retail customers.  The area described in this subdivision
shall be considered to be within both Pacific Gas and Electric
Company's and Modesto Irrigation District's electric service area.
   (2) The Legislature recognizes that electrical corporations and
irrigation districts may each construct infrastructure, and that the
infrastructure may, in some cases, be duplicative.  In those cases,
the Legislature encourages irrigation districts and electrical
corporations to enter into agreements pursuant to Sections 8101 to
8108, inclusive, where those agreements further the interests of the
state as set forth in Section 8101.
   (c) Modesto Irrigation District may provide up to 8 megawatts of
peak sales to Contra Costa Water District for delivery to its Old
River Intake Facility and Rock Slough Pumping Plant.
   (d) Except as provided in subdivisions (a), (b), and (c), Modesto
Irrigation District may not provide electric transmission or
distribution service to retail customers in the territory of Pacific
Gas and Electric Company.
  SEC. 5.  Section 9611 is added to the Public Utilities Code, to
read:
   9611.  Chapter 3 (commencing with Section 56100) of Part 1 of
Division 3 of the Government Code does not apply to electric service
provided by the Modesto Irrigation District within the geographic
areas described in subdivisions (a) and (b) of Section 9610.
  SEC. 6.  Section 9612 is added to the Public Utilities Code, to
read:
   9612.  The Legislature finds and declares that the policies stated
in Section 8101 to 8108, inclusive, would be furthered and that it
would be in the best interests of the state, and not incompatible
with the public interest, if an agreement embodying the provisions of
Section 9610 were to be approved by the commission.  The Legislature
hereby encourages the Pacific Gas and Electric Company and Modesto
Irrigation District to agree on the terms of an agreement embodying
the provisions of Section 9610, and encourages the commission to
approve that agreement to the extent that the agreement is consistent
with the policies of this state.
  SEC. 7.   Section 20804 of the Water Code is amended to read:

   20804.  At the hearing the board of supervisors shall determine by
resolution whether or not the petition and notice comply with
Chapter 1 of this part.  Notwithstanding Section 22116 or any other
provision of law, the board shall also determine whether the petition
has been presented and the district is proposed to be formed for the
primary purpose of providing irrigation services.    
  SEC. 6.  
  SEC. 8.   Section 20805 of the Water Code is amended to read:

   20805.  (a) If the board of supervisors determines that any of the
requirements for the formation petition or notice were not complied
with, the petition shall be dismissed without prejudice to the right
of the proper number of persons to present a new petition covering
the same matter or to present the same petition with additional
signatures if additional signatures are necessary to comply with the
requirements of Chapter 1 of this part.
   (b) If the board of supervisors determines that the district is
being formed for a primary purpose other than providing irrigation
services, the petition shall be dismissed without prejudice to the
right of the proper number of persons to present a new petition for
the primary purpose of providing irrigation services.