BILL NUMBER: SB 418	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY   SEPTEMBER 7, 1999
	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

                        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.   by a financing order of the
Public Utilities Commission if the commission determines that the
issuance of those bonds in relationship to transition costs, would
reduce rates that certain customers would have paid if the financing
order had not been adopted. Existing law also makes financing orders
in relation to rate reduction bonds binding on the commission. 
   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.   the commission to order a fair and
reasonable credit to ratepayers of any excess rate reduction bond
proceeds, as defined. 
   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 

   846.2.  (a) Notwithstanding subdivision (c) of Section 841, for
any electrical corporation that ended its rate freeze period
described in subdivision (a) of Section 368 prior to July 15, 1999,
the commission may order a fair and reasonable credit to ratepayers
of any excess rate reduction bond proceeds.
   (b) "Excess rate reduction bond proceeds," as used in this
section, means proceeds from the sale of rate reduction bonds
authorized by commission financing orders issued pursuant to this
article that are subsequently determined by the commission to be in
excess of the amounts necessary to provide the 10 percent rate
reduction during the period when the rates were frozen pursuant to
subdivision (a) of Section 368.   (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
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.