BILL NUMBER: SB 96 ENROLLED
BILL TEXT
PASSED THE SENATE SEPTEMBER 3, 1999
PASSED THE ASSEMBLY JULY 15, 1999
AMENDED IN ASSEMBLY JUNE 14, 1999
AMENDED IN SENATE MARCH 11, 1999
INTRODUCED BY Senators Peace and Baca
(Coauthors: Assembly Members House, Leach, Leonard, and
Longville)
DECEMBER 8, 1998
An act to amend Sections 335, 337, 338, and 339 of, to add Section
341.5 to, and to repeal and add Section 359 of, the Public Utilities
Code, relating to public utilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 96, Peace. Electrical restructuring: Independent System
Operator: Power Exchange.
(1) The existing restructuring of the electrical services industry
provides for the authorization of direct transactions between
electricity suppliers and end use customers and for the creation of
an Independent System Operator and a Power Exchange. An Electricity
Oversight Board is also created to, among other things, oversee the
Independent System Operator and the Power Exchange, and to determine
the composition and terms of service and to appoint the members of
the governing boards of the Independent System Operator and the Power
Exchange. The Electricity Oversight Board is the appeal board for
majority decisions of the Independent System Operator governing
board.
This bill would revise specified provisions relating to the
Independent System Operator and the Power Exchange, and to the duties
of the Electricity Oversight Board. The bill would require the
Independent System Operator and the Power Exchange to each be
administered by a governing board appointed by the Electricity
Oversight Board until an agreement with a participating state is in
effect. The bill would authorize the Electricity Oversight Board to
decline to confirm the appointments of specified members of the
governing boards of the Independent System Operator and the Power
Exchange, and would specify that the board has the exclusive right to
approve procedures and qualifications for those governing board
members, all of whom would be required to be electricity consumers,
as specified. The bill would make the Electricity Oversight Board
the appeal authority for majority decisions of the governing board of
the Independent System Operator only with respect to prescribed
matters, that would be subject to California's exclusive
jurisdiction. The bill would impose prescribed requirements
regarding the bylaws of the Independent System Operator and the Power
Exchange.
(2) Existing law governing electrical restructuring states the
intent of the Legislature that California enter into a compact with
western region states, and that the compact should require the
publicly and investor-owned utilities located in those states that
sell energy to California retail customers to adhere to enforceable
standards and protocols to protect the reliability of the
interconnected regional transmission and distribution systems.
This bill would repeal that intent provision, and, instead, state
the intent of the Legislature to provide for the evolution of the
Independent System Operator and the Power Exchange into regional
organizations to promote the development of regional electricity
transmission markets in the western states and to improve the access
of consumers served by the Independent System Operator and the Power
Exchange to those markets. The bill would state that the preferred
means by which that voluntary evolution should occur is through the
adoption of a regional compact or other comparable agreement, as
described.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 335 of the Public Utilities Code is amended to
read:
335. In order to ensure that the interests of the people of
California are served, a five-member Electricity Oversight Board is
hereby created as provided in Section 336. For purposes of this
chapter, any reference to the Oversight Board shall mean the
Electricity Oversight Board. Its functions shall be all of the
following:
(a) To oversee the Independent System Operator and the Power
Exchange.
(b) To determine the composition and terms of service and to
exercise the exclusive right to decline to confirm the appointments
of specific members of the governing boards of the Independent System
Operator and the Power Exchange, as specified in subdivision (d).
(c) To serve as an appeal board for majority decisions of the
Independent System Operator governing board, as they relate to
matters subject to exclusive state jurisdiction, as specified in
Section 339.
(d) Those members of the Independent System Operator and Power
Exchange governing boards whose appointments the Oversight Board has
the exclusive right to decline to confirm include proposed governing
board members representing agricultural end-users, industrial
end-users, commercial end-users, residential end-users, end-users at
large, nonmarket participants, and public interest groups.
SEC. 2. Section 337 of the Public Utilities Code is amended to
read:
337. The Oversight Board shall have the exclusive right to
approve procedures for the election and submission for confirmation
and the qualifications for Independent System Operator governing
board members specified in subdivision (d) of Section 335, all of
whom shall be required to be electricity consumers in the area served
by the Independent System Operator. The Independent System Operator
governing board shall include, but not be limited to,
representatives of investor-owned utility transmission owners,
publicly owned utility transmission owners, nonutility electricity
sellers, public buyers and sellers, private buyers and sellers,
industrial end-users, commercial end-users, residential end-users,
agricultural end-users, public interest groups, and nonmarket
participant representatives. A simple majority of the board shall
consist of persons who are themselves unaffiliated with electric
generation, transmission or distribution corporations. The
structural composition of the Independent System Operator governing
board existing on July 1, 1999, shall remain in effect until an
agreement with a participating state is legally in effect. However,
prior to such an agreement, California shall retain the right to
change the Independent System Operator governing board into a
nonstakeholder board. In the event of such a legislative change,
revised bylaws shall be filed with the Federal Energy Regulatory
Commission under Section 205 of the Federal Power Act (16 U.S.C.A.
Sec. 824d).
SEC. 3. Section 338 of the Public Utilities Code is amended to
read:
338. The Oversight Board shall have the exclusive right to
approve procedures and the qualifications for Power Exchange
governing board members specified in subdivision (d) of Section 335,
all of whom shall be required to be electricity customers in the area
served by the Power Exchange. The Power Exchange governing board
shall include, but not be limited to, representatives of
investor-owned electric distribution companies, publicly owned
electric distribution companies, nonutility generators, public buyers
and sellers, private buyers and sellers, industrial end-users,
commercial end-users, residential end-users, agricultural end-users,
public interest groups, and nonmarket participant representatives.
The structural composition of the Power Exchange governing board
existing on July 1, 1999, shall remain in effect until an agreement
with a participating state is legally in effect. However, prior to
such an agreement, California shall retain the right to change the
Power Exchange governing board into a nonstakeholder board. In the
event of such a legislative change, revised bylaws shall be filed
with the Federal Energy Regulatory Commission under Section 205 of
the Federal Power Act (16 U.S.C.A. Sec. 824d).
SEC. 4. Section 339 of the Public Utilities Code is amended to
read:
339. (a) The Oversight Board is the appeal board for majority
decisions of the Independent System Operator governing board relating
to matters that are identified in subdivision (b) as they pertain to
the Independent System Operator.
(b) The following matters are subject to California's exclusive
jurisdiction:
(1) Selections by California of governing board members, as
described in Sections 335, 337, and 338.
(2) Matters pertaining to retail electric service or retail sales
of electric energy.
(3) Ensuring that the purposes and functions of the Independent
System Operator and Power Exchange are consistent with the purposes
and functions of California nonprofit public benefit corporations,
including duties of care and conflict of interest standards for
directors of the corporations.
(4) State functions assigned to the Independent System Operator
and Power Exchange under state law.
(5) Open meeting standards and meeting notice requirements.
(6) Appointment of advisory representatives representing state
interests.
(7) Public access to corporate records.
(8) The amendment of bylaws relevant to these matters.
(c) Only members of the Independent System Operator governing
board may appeal a majority decision of the Independent System
Operator related to any of the matters specified in subdivision (b)
to the Oversight Board.
SEC. 5. Section 341.5 is added to the Public Utilities Code, to
read:
341.5. (a) The Independent System Operator and Power Exchange
bylaws shall contain provisions that identify those matters specified
in subdivision (b) of Section 339 as matters within state
jurisdiction. The bylaws shall also contain provisions which state
that California's bylaws approval function with respect to the
matters specified in subdivision (b) of Section 339 shall not
preclude the Federal Energy Regulatory Commission from taking any
action necessary to address undue discrimination or other violations
of the Federal Power Act (16 U.S.C.A. Sec. 791a et seq.) or to
exercise any other commission responsibility under the Federal Power
Act. In taking any such action, the Federal Energy Regulatory
Commission shall give due respect to California's jurisdictional
interests in the functions of the Independent System Operator and
Power Exchange and to attempt to accommodate state interests to the
extent those interests are not inconsistent with the Federal Energy
Regulatory Commission's statutory responsibilities. The bylaws shall
state that any future agreement regarding the apportionment of the
Independent System Operator and Power Exchange board appointment
function among participating states associated with the expansion of
the Independent System Operator and Power Exchange into multistate
entities shall be filed with the Federal Energy Regulatory Commission
pursuant to Section 205 of the Federal Power Act (16 U.S.C.A. Sec.
824d).
(b) Any necessary bylaw changes to implement the provisions of
Section 335, 337, 338, 339, or subdivision (a) of this section, or
changes required pursuant to an agreement as contemplated by
subdivision (a) of this section with a participating state for a
regional organization, shall be effective upon approval of the
respective governing boards and the Oversight Board and acceptance
for filing by the Federal Energy Regulatory Commission.
SEC. 6. Section 359 of the Public Utilities Code is repealed.
SEC. 7. Section 359 is added to the Public Utilities Code, to
read:
359. (a) It is the intent of the Legislature to provide for the
evolution of the Independent System Operator and the Power Exchange
into regional organizations to promote the development of regional
electricity transmission markets in the western states and to improve
the access of consumers served by the Independent System Operator
and the Power Exchange to those markets.
(b) The preferred means by which the voluntary evolution described
in subdivision (a) should occur is through the adoption of a
regional compact or other comparable agreement among cooperating
party states, the retail customers of which states would reside
within the geographic territories served by the Independent System
Operator and the Power Exchange.
(c) The agreement described in subdivision (b) should provide for
all of the following:
(1) An equitable process for the appointment or confirmation by
party states of members of the governing boards of the Independent
System Operator and the Power Exchange.
(2) A respecification of the size, structure, representation,
eligible membership, nominating procedures, and member terms of
service of the governing boards of the Independent System Operator
and the Power Exchange.
(3) Mechanisms by which each party state, jointly or separately,
can oversee effectively the actions of the Independent System
Operator and the Power Exchange as those actions relate to the
assurance of electricity system reliability within the party state
and to matters that affect electricity sales to the retail customers
of the party state or otherwise affect the general welfare of the
electricity consumers and the general public of the party state.
(4) The adherence by publicly owned and investor-owned utilities
located in party states to enforceable standards and protocols to
protect the reliability of the interconnected regional transmission
and distribution systems.