BILL ANALYSIS
SB 1194
Page 1
ASSEMBLY THIRD READING
SB 1194 (Sher)
As Amended August 10, 2000
2/3 vote
UTILITIES & COMMERCE 11-1 APPROPRIATIONS 19-2
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|Ayes:|Wright, Pescetti, |Ayes:|Migden, Ackerman, |
| |Calderon, Cardenas, | |Alquist, Aroner, Brewer, |
| |Maddox, Mazzoni, Papan, | |Cedillo, Corbett, Davis, |
| |Reyes, Villaraigosa, | |Kuehl, Maldonado, Papan, |
| |Vincent, Wesson | |Romero, Runner, Shelley, |
| | | |Thomson, Wesson, Wiggins, |
| | | |Wright, Zettel |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Campbell |Nays:|Campbell, Ashburn |
| | | | |
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SUMMARY : Reaffirms policy that each investor-owned utility
(IOU) shall continue to operate its electric distribution grid
in its service territory and have a reasonable opportunity to
recover its costs, extends the collection of a nonbypassable
system benefit charge to fund specified programs, requires
various reports relating to these programs, and requires further
legislative action before program moneys can be expended.
Specifically, this bill:
1)Restates the policy of the state that each IOU operate its
electric distribution grid in a safe, reliable, efficient, and
cost-effective manner and that electric corporations continue
to make prudent investments in their distribution grids.
2)Reaffirms California's doctrine, as reflected in regulatory
and judicial decisions, regarding IOUs' reasonable opportunity
to recover costs and investments associated with their
electric distribution grid and the reasonable opportunity to
attract capital for investment on reasonable terms.
3)Extends the collection of a nonbypassable system benefit
charge to fund three specific programs: a) energy efficiency
and conservation activities; b) public interest research,
development, and demonstration (RD&D); and, c) in-state
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operation and development of existing, new, and emerging
renewable energy resources.
4)Requires IOUs and municipal utilities to collect specific
dollar amounts for each of the programs beginning on January
1, 2002, through January 1, 2012, and requires the funds to be
deposited in specified accounts until appropriation by the
Legislature.
5)Requires the Energy Resources Conservation and Development
Commission (CEC) to develop investment plans for renewable
energy and RD&D. For renewable energy, CEC is required to
submit an initial investment plan by March 31, 2001,
addressing the application of moneys collected between January
1, 2002, and January 1, 2007. A subsequent investment plan is
due March 31, 2006, relating to the application of moneys
collected between January 1, 2007, and January 1, 2012. For
RD&D, CEC is required to submit an initial investment plan by
March 1, 2001, addressing the application of moneys collected
between January 1, 2002, and January 1, 2007. A subsequent
investment plan is due March 31, 2006, relating to the
application of moneys collected between January 1, 2007, and
January 1, 2012. No moneys may be expended in the years
covered by these plans without further legislative action.
6)Requires the California Public Utilities Commission (CPUC) and
CEC to continue to administer energy efficiency programs, as
defined, following prescribed guidelines.
7)Requires the Governor, on or before January 1, 2004, to
appoint an independent review panel that, on or before January
1, 2005, would be required to submit a report to the
Legislature and CEC evaluating the programs funded under this
bill, and including specific recommendations aimed at
assisting the Legislature in determining whether to change or
eliminate the collection of system benefits charge on or after
January 1, 2007.
8)Requires CPUC to require IOUs to inform all customers who
request residential service connections via telephone of the
availability of the California Alternative Rates for Energy
(CARE) program and how they may qualify for and obtain these
services, and permits IOUs to recover the reasonable costs of
implementing these provisions. Additionally, requires IOUs to
accept applications for the CARE program according to
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procedures specified by CPUC.
9)Authorizes CPUC to include misrepresentation of a material
fact by an applicant obtaining a registration as an electric
service provider (ESP) as a reason to suspend or revoke their
registration.
10)Makes related findings and declarations.
EXISTING LAW :
1)States legislative findings that the transmission and
distribution of electric power are essential services imbued
with the public interest that are provided over facilities
owned and maintained by the state's IOUs.
2)Declares the delivery of electricity over transmission and
distribution systems is currently regulated, and will continue
to be regulated to ensure system safety, reliability,
environmental protection, and fair access for all market
participants.
3)Requires IOUs and municipal utilities to collect a public
goods surcharge from each electricity customer to fund four
specific programs: a) energy efficiency and conservation
activities; b) public interest RD&D; c) in-state operation and
development of existing, new, and emerging renewable energy
sources; and, d) assistance to low-income users. Statutory
authority to collect funds for the renewables programs sunsets
on March 31, 2002.
4)Requires CEC to transfer funds collected for these programs to
specified funds.
5)Provides that funds expended for production incentives for new
in-state renewable electricity generation technology
facilities are limited to facilities that are operational
prior to January 1, 2002.
6)Authorizes CPUC to utilize enforcement provisions against
electric service providers, including having their
registration suspended or revoked for specified acts of
misconduct.
FISCAL EFFECT :
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1)CPUC indicates minor absorbable special fund costs to continue
administering the energy efficiency program.
2)CEC indicates absorbable costs to prepare the investment plans
for future legislative consideration to determine expenditure
of funds collected for RD&D and renewable energy programs.
3)Absorbable special fund costs for CPUC and CEC to provide
assistance to the independent review panel.
COMMENTS :
1)Electric Distribution Grid. Historically, California's
electrical corporations were vertically integrated companies
that owned operated, managed and controlled electric
generation, transmission and distribution. In 1996,
California enacted landmark electric restructuring legislation
AB 1890 (Brulte), Chapter 854, Statutes of 1996, which created
a competitive generation market and transferred control of the
investor owned utilities transmission to the Independent
System Operator. With the passage of Chapter 854 and past
decisions of CPUC, there has been uncertainly created
regarding investments in new generation and transmission. In
an effort to ensure that similar uncertainly does not occur
with regard to the distribution system, this bill reaffirms
the core distribution functions that remain under the
authority of CPUC. This bill also reaffirms the historical
cost recovery doctrine governing investments in the electric
distribution grid to ensure that essential investments
continue to be made to the grid.
1)Public Purpose Programs. Another key component of Chapter 854
that this bill seeks to address is the collection of a
separate component to fund specified public purpose programs
such as: a) cost-effective energy efficiency and conservation
activities; b) public interest research and development; and,
c) renewable energy. Under existing law, 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 these programs through 2001. CPUC's authority
to collects funds to support the renewables program became
explicitly inoperative on March 31, 2002. This bill extends
the authority to collects funds to support these programs for
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up to 10 years in two five-year blocks. However, rather than
simply extending the funding authorization, this bill requires
CEC to develop investment plans for the renewable and RD&D
programs covering each five year block. Further, the
Legislature must take specific action before any of these
moneys can be spent.
1)Program Improvements. Both opponents and proponents of this
bill acknowledge that it was the Legislature's intent that
funding for the renewable program terminate after five years.
California, however, has not reached the levels of renewable
resources envisioned at that time. This bill seeks to
optimize public investment and ensure that the most
cost-effective and efficient investments in renewable
resources are pursued and directs CEC to prepare an investment
plan aimed at development of a fully competitive and
self-sustaining California renewable energy supply. This bill
also established revised guidelines to establish a level of
parity amongst new, repowered, refurbished and existing
sources of renewable energy. This bill further includes
provisions to ensure that any ESPs whose registration is
revoked for misrepresenting a material fact on its application
is required to refund any customer credits funds obtained
pursuant to that application. This bill also requires CEC to
address issues regarding the organizational environment
managing the RD&D program. Finally, this bill provides for
improvements in the energy efficiency program by requiring
CPUC to ensure local and regional interests, multifamily
dwellings and energy service industry capabilities are
incorporated into the program portfolio design. In past
years, the program design left many of these entities
incapable or unqualified to access the energy efficiency
moneys.
1)Systems Benefit Charge. This bill establishes that the
systems benefit charges to fund the energy efficiency,
renewable energy, and research and development programs is
nonbypassble for every customer of an electrical corporation.
1)While this bill authorizes CEC to require each electrical
corporation through 2012, funds cannot be expended until the
Legislature acts after review of the investment plans
described above. This bill further includes provisions that
place limits on program funding levels and customer surcharge
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rates which large users have indicated provides them greater
certainty regarding costs to support these programs.
1)Independent Review Panel. This bill requires the Governor to
appoint an independent review panel of members with expertise
on the energy service needs of large and small electricity
consumers to review the operation of the programs. The panel,
to be appointed by January 1, 2004, is required to prepare a
report on or before January 1, 2005 evaluating the public
purpose programs. The report will also assess whether the
programs are consistent with the statutory goals, if
established targets for renewable generation are likely to be
achieved, and whether changes should be made to result in more
efficient use of public resources. The panel is also directed
to compare CEC's programs with efforts in other states. The
report is aimed at assisting the Legislature to determine
whether to change or eliminate the collection of the system
benefits charge.
Analysis Prepared by : Carolyn Veal-Hunter / U. & C. / (916)
319-2083
FN: 0005702