BILL ANALYSIS                                                                                                                                                                                                    



                                                             


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|SENATE RULES COMMITTEE            |                   SB 418|
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                    UNFINISHED BUSINESS
                              

Bill No:  SB 418
Author:   Polanco (D)
Amended:  9/7/99
Vote:     21

  
SENATE VOTES NOT RELEVANT

  ASSEMBLY FLOOR  :  76-1, 9/8/99 - See last page for vote
 

  SUBJECT  :    Public utilities:  transition property

  SOURCE  :     Author

 
  DIGEST  :    This bill authorizes the Public Utilities  
Commission to order a fair and reasonable credit to  
ratepayers of any excess rate reduction bond proceeds.

  Assembly Amendments  delete the prior version.  As it left  
the Senate, the bill was authored by Bowen and stated  
legislative intent to provide for the future funding and  
administration of energy-related public purpose programs.

  ANALYSIS  :    Background  :

As part of electrical restructuring-Chapter 854, Statutes  
of 1996 (AB 1890, Brulte)-electric corporations were  
required to provide residential and small commercial  
customers with a 10% rate reduction until either March 31,  
2002, or when the PUC-authorized net costs of utility  
generation-related assets and obligations were fully  
recovered, whichever came first. AB 1890 also authorized  
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                                                       Page  
2

the electrical corporations to finance the rate reduction  
through bonds that would be repaid by utility ratepayers  
over a ten-year period. 

San Diego Gas & Electric (SDG&E) obtained PUC approval to  
issue $658 million in rate reduction bonds to support its  
rate reduction to its customers. On June 30, 1999, SDB&E  
completed its transition from a monopoly provider of  
service in a regulated market to a fully competitive  
market. Because SDG&E completed the transition period  
early, a significant amount of the bond proceeds originally  
thought necessary to finance the rate reduction are not  
needed.  Under the terms of SDG&E's financing order, the  
PUC ordered that SDG&E is obligated to return any excess  
bond proceeds at its authorized rate of return of 12.54  
percent. SDG&E asserts that because they are not earning an  
amount equivalent to their rate of return for the rate  
reduction bonds they should not be penalized and required  
to use shareholder profits to make up the difference.  

  This bill authorizes the Public Utilities Commission (PUC)  
to order any credit to ratepayers for the excess rate  
reduction bonds issued by San Diego Gas and Electric  
Company that the commission determines is fair and  
reasonable.

  FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
Local:  No


  ASSEMBLY FLOOR  : 
AYES:  Aanestad, Ackerman, Alquist, Ashburn, Bates, Battin,  
  Baugh, Brewer, Briggs, Calderon, Cardenas, Cardoza,  
  Cedillo, Corbett, Correa, Cox, Cunneen, Davis, Dickerson,  
  Ducheny, Dutra, Firebaugh, Florez, Floyd, Frusetta,  
  Gallegos, Granlund, Havice, Hertzberg, Honda, House,  
  Jackson, Kaloogian, Keeley, Knox, Kuehl, Leach, Lempert,  
  Leonard, Longville, Lowenthal, Machado, Maddox,  
  Maldonado, Margett, Mazzoni, McClintock, Migden, Nakano,  
  Olberg, Oller, Robert Pacheco, Rod Pacheco, Papan,  
  Pescetti, Reyes, Romero, Runner, Scott, Shelley, Soto,  
  Steinberg, Strickland, Strom-Martin, Thompson, Thomson,  
  Torlakson, Vincent, Washington, Wayne, Wesson, Wiggins,  
  Wildman, Wright, Zettel, Villaraigosa







                                                      SB 418
                                                       Page  
3

NOES:  Aroner
NOT VOTING:  Baldwin, Bock, Campbell


NC:jk  9/9/99   Senate Floor Analyses 

             SUPPORT/OPPOSITION:  NONE RECEIVED

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