BILL NUMBER: AB 2638 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 31, 2000
PASSED THE ASSEMBLY AUGUST 31, 2000
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 Members Cardoza and Calderon
FEBRUARY 25, 2000
An act to add Sections 454.1, 9607, 9608, 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, 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 noncommodity rates if a customer
receives a bona fide offer for electric 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 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
service from an irrigation district at rates less than the electrical
corporation's tariffed rates, the electrical corporation 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 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 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,
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 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.
(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 comparable to those provided
by the current electric retail service provider.
(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.
(7) Service by the district is in the public interest.
(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.
(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 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.
(e) Any project involving electric transmission or distribution
facilities to be constructed or installed by an irrigation district
to serve retail customers located 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 district boundaries before offering service to all
customers within its 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.
(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.
(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 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. 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.