BILL ANALYSIS                                                                                                                                                                                                    



                                                          SB 96
                                                          Page  1

Date of Hearing:   July 7, 1999

              ASSEMBLY COMMITTEE ON APPROPRIATIONS 
                    Carole Migden, Chairwoman

           SB 96 (Peace) - As Amended: June 14, 1999 

Policy Committee:                              Utilities and  
Commerce     Vote:                             11-0

Urgency:     No                   State Mandated Local  
Program:NoReimbursable:            

  SUMMARY  :

This bill revises existing provisions relating to the governing  
structures of the Independent System Operator and the Power  
Exchange, and the duties of the Electricity Oversight Board, to  
conform to the Federal Energy Regulatory Commission's  
jurisdictional requirements.

  FISCAL EFFECT  :

Minor absorbable costs to the Electricity Oversight Board to  
adopt the governance modifications in the bill.

  COMMENTS  :

  Background and Purpose  . The Independent System Operator (ISO)  
and Power Exchange (PX) are non-public entities that were  
created as part of California's electrical restructuring.  The  
five-member Electricity Oversight Board (EOB) was also created,  
in part, to oversee the ISO and PX, including determining the  
composition of, and appointment to, their governing boards.   
Because the ISO and PX are engaged in the interstate  
transmission and wholesale power markets, their operations are  
also subject to jurisdiction by the Federal Energy Regulatory  
Commission (FERC) under the Federal Power Act.  In November  
1996, FERC issued an order granting conditional approval of the  
basic electrical restructuring plan.  However, FERC rejected  
certain portions of the ISO and PX bylaws related to California  
residency requirements for board members and certain aspects of  
EOB oversight.

In November 1998, FERC issued an Order Finding Noncompliance and  








                                                          SB 96
                                                          Page  2

directed the ISO and PX to revise their bylaws. The EOB appealed  
this decision as a challenge to the state's authority, and the  
appeal is still pending.  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. The bill makes modifications regarding appointment  
functions, changes to bylaws, residency requirements, appeals,  
and future member-state appointments that comply with the  
November 1998 FERC decision.

  Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081