BILL ANALYSIS
SB 96
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Date of Hearing: June 21, 1999
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
SB 96 (Peace) - As Amended: June 14, 1999
SENATE VOTE : 35-0
SUBJECT : Electrical restructuring: Independent System Operator:
Power Exchange.
SUMMARY : This bill revises specific provisions relating to the
governing structures of the Independent System Operator (ISO) and the
Power Exchange (PX) and the duties of the Electricity Oversight Board
(EOB). Specifically, this bill :
1)Repeals existing law establishing the Legislature's intent and
replaces it with more specific provisions.
2)Establishes that California shall have the exclusive right to
decline appointments to the ISO and PX only for the electric service
matters within the state's exclusive jurisdiction.
3)Establishes that the existing ISO and PX board composition shall
remain in effect until another state joins the ISO or PX.
4)Establishes that procedures for all other governing board members
shall be the subject of Federal Energy Regulatory Commission's
(FERC) exclusive approval.
5)Requires the ISO and PX to modify their bylaws to apply only to
matters that are not subject to Federal jurisdiction and
specifically adds language which states that California's bylaws
approval function shall not preclude FERC from taking any action
necessary to address undue discrimination or other violations of the
Federal Power Act.
6)Removes the California residency requirement and instead requires
that board members represent classes of consumers served by the ISO
and PX.
7)Limits EOB's appeals functions to matters within the state's
jurisdiction.
8)Requires the ISO and PX to modify their bylaws to state that any
SB 96
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future agreement regarding board appointments among participating
states which would have the effect of expanding the ISO and PX into
a multistate entity be filed with FERC.
EXISTING LAW establishes the Legislature's intent that California
enter into a compact with western region states and requires utilities
in those states selling energy into the California market to adhere to
enforceable standards and protocols to protect the reliability of
regional transmission and distribution systems.
Provides for the creation of an ISO and PX with certain prescribed
powers and duties.
FISCAL EFFECT : Unknown
COMMENTS :
1)AB 1890, (Brulte) [Chapter 854, Statutes of 1996], contained intent
language that established the process for California's entry into an
interstate compact with other western states to require utilities
selling energy into the California markets to adhere to standards
and protocols to protect the reliability of regional transmission
and distribution systems. This bill repeals those provisions and
provides a detailed description of the responsibilities of the EOB,
the ISO and PX. This bill outlines activities which are the
exclusive jurisdiction of State government agencies and FERC, as
well as those that are the responsibility of both FERC and state
government agencies.
2)The restructuring of California's electric industry occurred on two
parallel paths. Approval was required by the state, which came in
the form of comprehensive electric restructuring legislation, AB
1890. Because the ISO and PX are non-public entities engaged in the
interstate transmission and wholesale power markets, their
operations are subject to FERC jurisdiction under the Federal Power
Act. Thus, in November, 1996, FERC issued an order granting
conditional approval of the basic restructuring plan. When FERC
approved the ISO and PX tariffs, it rejected those portions of their
bylaws requiring California residency and EOB appointment of
governing board members.
3) In November 1998, FERC issued an Order Finding Noncompliance and
directed the ISO and PX to revise their bylaws within 45 days to
remove references to EOB in the process of appointing Governing
Board members, the California residency requirement, and
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requirements that the EOB approve changes to the ISO and PX Bylaws.
Additional directives of the November 1998 decision required that
the Bylaws be changed to remove the EOB in hearing appeals of the
ISO Governing Board except on a voluntary basis. In that compliance
with FERC decision would greatly undermine the state's authority, at
the direction of the Governor and with approval of the Attorney
General, EOB appealed the decision as a challenge to our state's
authority. The appeal is still pending. However, in an effort to
continue effective oversight of the restructured electricity market
by FERC and EOB, parties to the appeal have indicated that it would
be beneficial to settle these matters if a reasonable balance of
State and federal interests could be maintained. This bill is
intended to codify the basis of a resolution under consideration by
representatives of FERC and the State Legislature.
4)This bill addresses the critical issues raised by FERC in the
November 1998 decision. This bill makes modifications that comply
with the November 1998 decision in the areas of appointment
functions, changes to the Bylaws, the residency requirement,
appeals, and future member state appointments. Based on discussions
with FERC staff a slight modification may be needed to clarify that
California does not have exclusive jurisdiction over the appointment
of all board members representing consumer groups. Otherwise, the
proposed changes provide the necessary protections to California's
authority without encroaching into FERC's jurisdiction.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Carolyn Veal-Hunter / U. & C. / (916)
319-2083