BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 96|
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UNFINISHED BUSINESS
Bill No: SB 96
Author: Peace (D), et al
Amended: 6/14/99
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 10-0, 3/23/99
AYES: Bowen, Baca, Brulte, Hughes, Kelley, Mountjoy,
Peace, Solis, Speier, Vasconcellos
NOT VOTING: Alarcon
SENATE FLOOR : 35-0, 4/26/99 (Consent)
AYES: Alpert, Bowen, Brulte, Burton, Chesbro, Costa, Dunn,
Escutia, Figueroa, Hayden, Haynes, Hughes, Johannessen,
Johnson, Johnston, Kelley, Knight, Lewis, McPherson,
Monteith, Morrow, Mountjoy, Murray, O'Connell, Ortiz,
Peace, Polanco, Poochigian, Rainey, Schiff, Sher, Solis,
Speier, Vasconcellos, Wright
NOT VOTING: Alarcon, Baca, Karnette, Leslie, Perata
ASSEMBLY FLOOR : Not available
SUBJECT : Electrical restructuring: Independent System
Operator:
Power Exchange
SOURCE : Author
DIGEST : This bill declares legislative intent, and
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
CONTINUED
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Oversight Board (EOB) to reflect a settlement between the
state and the Federal Energy Regulatory Commission (FERC).
Assembly Amendments add co-authors and add the provisions
that revise the governing structure of the ISO and the PX
and the duties of the EOB to reflect the settlement.
ANALYSIS : AB 1890 (Brulte, Chapter 854, Statutes of
1996) established intent language that contemplates
California's entry into an interstate compact with other
western states to require utilities selling energy into
California markets to adhere to standards and protocols to
protect the reliability of regional transmission and
distribution systems.
This bill replaces that provision with more detailed intent
language that also describes the evolution of the ISO and
the PX into organizations that would serve the western
regional market and would be governed by members selected
by participating states and overseen, jointly or
separately, by those states. These changes reflect the
Federal Energy Regulatory Commission's (FERC) position that
the ISO and the PX, as corporations engaged in interstate
commerce of electricity transmission and wholesale power,
can't be governed exclusively by California.
The modifications of AB 1890 that are contained in this
bill:
1.Establish California's right to decline to confirm
specific ISO and PX governing board members
(agricultural, industrial, commercial and residential
end-users, end-users at large and public interest
groups).
2.Identify those matters that fall within exclusive state
jurisdiction for purposes of appeal and approval of
bylaws.
3.Replace residency requirements with requirements that
specific board members be consumers in the territories
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served by the ISO and PX.
Comments :
AB 1890 required the establishment of the ISO and the PX as
"separately incorporated public benefit, nonprofit
corporations." The purpose of the ISO is to ensure
efficient use and reliable operation of the state's
electricity transmission system, while the PX is intended
to provide an open, efficient public auction to meet
customers' electricity loads. AB 1890 requires the
governing boards of the ISO and the PX to be composed of
California residents appointed by the Electricity Oversight
Board (EOB). The EOB itself is composed of five members -
three voting members appointed by the Governor, who must be
California residents and electricity ratepayers, and one
non-voting member each appointed from the Assembly and the
Senate.
Inasmuch as the ISO and the 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. When it approved the ISO and
the PX tariffs, FERC rejected those portions of their
bylaws requiring California residency and EOB appointment
of governing board members. In doing this, FERC exercised
jurisdiction over not only the interstate operations of the
ISO and the PX, but also over the framework of the
institutions themselves.
Earlier this year, California and FERC agreed to suspend
legal action and attempt to reach a settlement of
differences. That settlement is reflected in this bill.
These arrangements will remain in force until another state
joins the ISO or PX at which time the governance structure
and appointment functions will be based upon state
agreements. This bill effects a compromise between federal
and state interests and removes uncertainties that have
complicated various ISO and PX efforts over the last
several years.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
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Local: No
Minor, absorbable costs to the EOB to adopt the governance
modifications in the bill.
SUPPORT : (Verified 7/14/99)
PG&E
Southern California Edison
California Independent System Operator
NC:jk 7/14/99 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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