BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1194
                                                                  Page  1

          Date of Hearing:   June 28, 2000

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS 
                              Carole Migden, Chairwoman

                     SB 1194 (Sher) - As Amended:  June 21, 2000 

          Policy Committee:                              Utilities and  
          Commerce     Vote:                            11-1

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill extends an electrical usage rate charge to continue  
          funding three energy-related programs.  Specifically, this bill:

          1)Extends the collection of a nonbypassable system benefits  
            charge on all electric utility bills for 10 years to continue  
            funding:  a) energy efficiency and conservation activities; b)  
            public interest research, development, and demonstration  
            (RD&D) and; c) in-state operation and development of existing,  
            and emerging renewable energy resources.

          2)Requires investor-owned and municipal utilities to collect  
            specific dollar amounts for each of the programs beginning on  
            January 1, 2002, through January 1, 2012.  (A total of $425.5  
            million is to be collected for the three programs in 2002;  
            this amount will be adjusted annually at a rate equal to the  
            lesser of the annual growth in electric commodity sales or  
            inflation.)

          3)Requires the Public Utilities Commission (PUC) to continue  
            administering the energy efficiency programs.

          4)Prohibits expenditure of any moneys collected for the RD&D and  
            renewal energy programs without further Legislative action.

          5)Requires the Energy Resources Conservation and Development  
            Commission (CEC) to develop specified investment plans, by  
            March 2001, covering the first five year increment of the RD&D  
            and renewable energy programs, and requires subsequent  
            investment plans in 2006 covering the second five-year  
            increment.








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          6)Requires the governor to appoint an independent review panel  
            by January 2004 to submit a report to the Legislature and CEC  
            by January 2005 that evaluates the three programs and includes  
            recommendations to assist the Legislature in determining  
            whether to change or eliminate the collection of system  
            benefits charge after 2006.

          7)Adds an additional condition-misrepresentation of material  
            fact during application-by which an electrical service  
            provider may have their registration revoked by the PUC.


           FISCAL EFFECT  

          1)The PUC indicates minor absorbable special fund costs to  
            continue administering the energy efficiency programs.

          2)The CEC indicates absorbable costs to prepare the investment  
            plans for future legislative consideration to determine  
            expenditure of funds collected for the RD&D and renewable  
            energy programs.

          3)Absorbable special fund costs for the PUC and the CEC to  
            provide assistance to the independent review panel.

           COMMENTS  

           1)Background  .  As part of the state's electrical restructuring  
            legislation of 1996 (AB 1890, Brulte), the three  
            investor-owned utilities, Southern California Edison Company  
            (SCE), Pacific Gas and Electric Company (PG&E) and San Diego  
            Gas and Electric Company (SDG&E), are required to collect  
            specified amounts to fund the three programs through 2001.   
            While this bill extends the authority to collect funds to  
            support the programs for up to 10 years (in two five-year  
            blocks), rather than simply extending the funding  
            authorization, this bill requires the CEC to first develop  
            investment plans for the renewable and RD&D programs covering  
            each five year block.

           2)System Benefits Charge  .  The bill establishes that the system  
            benefits charge to fund the three programs is nonbypassable  
            for every customer of an electrical corporation.  Growth in  
            the amounts authorized for collection will be limited to the  








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            lesser of the annual growth in electric commodity sales or  
            inflation.  These provisions place limits on program funding  
            levels and customer surcharge rates, which large users have  
            indicated provides them greater certainty regarding costs to  
            support these programs. 

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081