BILL NUMBER: SB 418	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY   AUGUST 30, 1999
	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 846.2 to the Public Utilities Code, relating
to public utilities.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 418, as amended, Polanco.  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.
   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 846.2 is added to the Public Utilities Code, to
read:
   846.2.  (a) The provisions set forth in subdivisions  (b)
and (c)   (b), (c), and (d)  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)   subdivision (c)
 , 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.