BILL ANALYSIS                                                                                                                                                                                                    1
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   SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                  DEBRA BOWEN, CHAIRWOMAN


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|SB 1194 - Sher                |Hearing Date:April 13,    | S|
|                              |1999                      |  |
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|As Introduced:February 26,    |                          | B|
|1999                          |                          |  |
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                         DESCRIPTION
  
  This bill  requires public utilities to continue to  
administer the energy efficiency and conservation  
activities funded by AB 1890 through 2001.

  The bill  further requires the California Public Utilities  
Commission (CPUC) to study the feasibility of administering  
these activities through a non-profit public benefit  
corporation.

                        KEY QUESTIONS
  
1)The CPUC has already proposed to require that utilities  
  continue to administer these activities through 2001 and  
  has indicated its preference that a non-profit be  
  established to administer them beyond 2001.  What  
  additional value will codifying these decisions provide?

2)Should a study of future administration options for these  











  activities include consideration of the full range of  
  alternatives, rather than focus exclusively on non-profit  
  administration?

                          BACKGROUND
  
AB 1890 (Brulte), Chapter 854, Statutes of 1996, required  
utilities to fund a variety of system reliability, in-state  
benefit and low-income customer programs at specified  
levels from 1998 through 2001.  The largest set of programs  
is "cost-effective energy efficiency and conservation  
activities," for which the three investor-owned utilities  
are required to collect and spend a total of $840 million  
over the four-year period.

This funding was intended to ensure that low income and  
energy efficiency programs continued (at least in the short  
term) in the restructured electric industry.  In order to  
provide oversight of these programs, the CPUC established  
the Low Income Governing Board (LIGB) and the California  
Board for Energy Efficiency (CBEE).

Prior to AB 1890, the CPUC required utilities to administer  
the various services provided by these programs as part of  
their regulated service.  In the wake of AB 1890, the CPUC  
proposed to place the administration of the programs under  
the administration of independent bodies, the LIGB and  
CBEE.  The proposed independent administration of these  
programs, i.e. outside of state government and civil  
service requirements, prompted labor interests to intervene  
and challenge the CPUC's proposal.  The challenge led to a  
State Personnel Board ruling rejecting the CPUC's creation  
of the LIGB and CBEE as independent bodies.

In response to the ruling and to provide for continuing  
administration of the programs, the CPUC placed the  
programs under utility administration through 2001.  Beyond  
2001, the CPUC indicated a preference for legislative  
creation of a non-profit organization to administer the  
programs, to the extent that future funding for the  
programs is authorized. 

According to its sponsor, the CPUC, this bill is intended  
to codify the CPUC's decision and recognize the need for  










legislative and CPUC action to implement ongoing  
administration.  Apparently, because the statutory fate of  
these programs beyond 2001 remains uncertain, the CPUC is  
not comfortable providing for long-term administration  
without some direction from the Legislature. 

                           COMMENTS

Why limit the options  ?  Although the CPUC has indicated a  
preference for administration of these programs by a  
non-profit, the Legislature has not yet made a decision.   
If the study required by this bill is intended to provide  
useful guidance to the Legislature as it considers the  
options for future administration of these programs, should  
it include consideration of the full range of alternatives,  
rather than focus exclusively on non-profit administration?  
 If so, since the CPUC has already indicated a preference  
for non-profit administration, should the study be  
conducted by a more neutral party?

                          POSITIONS
  
  Support:
 CPUC (Sponsor)

  Oppose:
  None reported to Committee.


Lawrence Lingbloom                  
SB 1194 Analysis
Hearing Date:  April 13, 1999