BILL NUMBER: SB 418	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY   AUGUST 19, 1999
	AMENDED IN ASSEMBLY   JULY 15, 1999
	AMENDED IN SENATE   APRIL 26, 1999
	AMENDED IN SENATE   APRIL 5, 1999

INTRODUCED BY   Senator Polanco
    (Coauthor:  Senator Brulte) 

                        FEBRUARY 12, 1999

   An  act to add Section 739.10 to the Public Utilities
Code, relating   act to add Section 846.2 to the Public
Utilities Code, relating to public utilities.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 418, as amended, Polanco.   Utility companies:  gas
transportation service:  tariff   Public utilities:
transition property  . 
   Existing law authorizes the issuance of rate reduction bonds and
authorizes electrical corporations to sell or assign their interests
to financing entities that use the property as a basis for the
issuance of these bonds. Existing law also authorizes electrical
corporations to pledge transition property as collateral for rate
reduction bonds.
   This bill would authorize electrical corporations to repurchase
transition property previously sold and to redeem rate reduction
bonds, as prescribed. The bill would establish a formula to set the
repurchase price, as prescribed. The bill also would provide that the
repurchase and extinguishment of transition property will be
credited in a specified manner against rate reduction financing.
 
   Under existing law, the Public Utilities Commission is responsible
for the regulation of public utilities in the state.
   This bill would require the commission to authorize a public
utility gas corporation to impose a tariff for gas transportation
service on international customers that excludes the costs for public
goods programs and gas restructuring changes, if the commission
determines that offering international gas transportation service
will provide net benefits to affected customers. 
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  
  SECTION 1.  Section 739.10 is added to the Public  
  SECTION 1.  Section 846.2 is added to the Public Utilities Code, to
read:
   846.2.  (a) The provisions set forth in subdivisions (b) and (c)
supersede any other provision of law, and any existing or future
orders or decisions of the commission, and shall be used to clarify
existing financing orders.
   (b) An electrical corporation that ended its rate freeze period
described in subdivision (a) of Section 368 prior to July 15, 1999,
may repurchase, for a price and in an amount determined under
subdivisions (c) and (d), a portion of the transition property
previously sold by the electrical corporation and extinguish that
portion of the transition property.  All the proceeds of the sale of
the transition property shall be used to redeem or defease a portion
of the associated rate reduction bonds.  Upon a redemption or
defeasance of rate reduction bonds, the purchased portion of the
associated transition property shall be automatically extinguished,
and the fixed transition amounts associated with the extinguished
transition property shall be adjusted to reflect the reduced amount
necessary to ensure the timely payment of principal and interest on
the rate reduction bonds that have not been redeemed or defeased.
The commission shall approve that adjustment.
   (c) The price to be paid for the transition property repurchased
pursuant to subdivision (b) shall be equal to the present value,
using a discount rate equal to the rate provided in subdivision (d)
of Section 367, of the excess of the originally projected savings to
be paid or credited to residential and small commercial customers, as
calculated in the original approved issuance advice letter required
by existing financing orders, over the amount of savings actually
provided through rate reductions and offsets from the date of
issuance of the rate reduction bonds to the date of the redemption or
defeasance of the rate reduction bonds.  The originally projected
savings shall be the sum of the 10 percent rate reduction amounts and
the fixed transition amounts during the originally projected four
years and three months rate freeze period.  The amount of transition
property treated as purchased and extinguished by the electrical
corporation is the amount required to generate the fixed transition
amounts necessary to pay principal and interest on the redeemed or
defeased bonds.
   (d) The repurchase and extinguishment of transition property by
the electrical corporation and redemption or defeasance of rate
reduction bonds pursuant to subdivision (b) above shall be in
satisfaction of any and all other obligations to pay or credit to
residential and small commercial customers any balances that have
been credited to or otherwise would be credited to any account in
connection with an early termination of the rate freeze period and
the rate reduction financed with the rate reduction bonds. 
 Utilities Code, to read:
   739.10.  The commission shall authorize a public utility gas
corporation to impose a tariff for gas transportation service on
international customers that excludes the costs for public goods
programs and gas restructuring changes, if the commission determines
that offering international gas transportation service will provide
net benefits to affected customers in the state.