BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 1194
Author: Sher (D)
Amended: 8/21/00
Vote: 27
PRIOR SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : 65-6, 8/23/00 - See last page for vote
SUBJECT : Electrical restructuring: public benefit
programs
SOURCE : California Public Utilities Commission
DIGEST : This bill reaffirms policy that each
investor-owned utility 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 monies can be expended.
Assembly Amendments delete the prior version. As it left
the Senate, the bill required the California Public
Utilities Commission to study the feasibility of
administering specified energy efficiency and conservation
activities through a non-profit public benefit corporation.
ANALYSIS :
CONTINUED
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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
investor-owned utilities (IOU's).
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 IOU's and municipal utilities to collect a
public goods surcharge from each electricity customer to
fund the following four specific programs:
A. Energy efficiency and conservation activities.
B. Public interest research, development and
demonstration.
C. In-state operation and development of existing,
new, and emerging renewable energy sources.
D. Assistance to low-income users.
Statutory authority to collect funds for the renewables
programs sunsets on March 31, 2002.
4.Requires the California Energy Resources Conservation and
Development Commission (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 the California Public Utilities Commission
(PUC) to utilize enforcement provisions against electric
service providers, including having their registration
suspended or revoked for specified acts of misconduct.
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This bill reaffirms policy that each 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 monies can be expended.
Specifically, this bill:
1. Restates policy of the state that
each IOU operate its electric distribution grid in 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 IOU's 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 the
following programs:
A. Energy efficiency and conservation activities.
B. Public interest research, development and
demonstration.
C. In-state operation and development of existing,
new, and emerging renewable energy resources.
4. Requires IOU's 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 CEC to develop
investment plans for renewable energy and public
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interest research, development, and demonstration. For
renewable energy, the CEC is required to submit an
initial investment plan by March 31, 2002, addressing
the application of monies collected between January 1,
2002, and January 1, 2007. A subsequent investment plan
is due March 31, 2006, relating to the application of
monies collected between January 1, 2007, and January 1,
2012. For public interest research, development and
demonstration, the CEC is required to submit an initial
investment plan by March 1, 2001, addressing the
application of monies collected between January 1, 2002,
and January 1, 2007. A subsequent investment plan is
due march 31, 2006, relating to the application of
monies collected between January 1, 2007, and January 1,
2012. No monies may be expended in the years covered by
these plans without further legislative action.
6. Requires the PUC 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, 2006, will 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 the PUC to require IOU's 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 IOU's to recover the reasonable costs of
implementing these provisions. Additionally, requires
IOU's to accept applications for the CARE program
according to procedures specified by the PUC.
9. Authorizes the PUC to include
misrepresentations of a material fact by an applicant
obtaining a registration as an electric service provider
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as a reason to suspend or revoke their registration.
10. Makes related findings and
declarations.
Comments
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 IOU's transmission to the
Independent System Operator. With the passage of AB 1890,
and past decisions of the PUC, there has been uncertainty
created regarding investments in new generation and
transmission. In an effort to ensure that similar
uncertainty does not occur with regard to the distribution
system, this bill reaffirms the core distribution functions
that remain under the authority of the PUC. 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.
Public Purpose Program . Another key component of AB 1890
that this bill seeks to address is the collection of a
separate component to fund specified public purpose
programs, such as (1) cost-effective energy efficiency and
conservation activities, (2) public interest research and
development, and (3) renewable energy. Under existing law,
the three IOU's, Southern California Edison Company,
Pacific Gas and Electric Company, and San Diego Gas and
Electric Company are required to collect specified amounts
to fund these programs through 2002. PUC's authority to
collect funds to support the renewables program becomes
explicitly inoperative on March 31, 2002. This bill
extends the authority to collect funds to support these
programs for up to ten years in two five-year blocks.
However, rather than simply extending the funding
authorization, this bill requires the CEC to develop
investment plans for the renewable and public interest
research, development, and demonstration programs covering
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each five-year block. Further, the Legislature must take
specific action before any of these monies can be spent.
Program Improvements . 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 the CEC to prepare an
investment plan aimed at the 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 also requires the CEC to address issues regarding
the organizational environment managing of public interest
research, development and demonstration program. Finally,
this bill provides for improvements in the energy
efficiency program by requiring the PUC 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 monies.
Systems Benefit Charge . This bill establishes that the
system benefit charges to fund the energy efficiency,
renewable energy, and research and development programs is
nonbypassable for every customer of an electrical
corporation. While this bill authorizes the CEC to require
each electrical corporation to collect the systems benefit
charge 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 rates which large users have indicated provides
them greater certainty regarding costs to support these
programs.
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
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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
generations 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.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
>
ASSEMBLY FLOOR :
AYES: Aanestad, Ackerman, Alquist, Aroner, Battin, Baugh,
Bock, Briggs, Calderon, Campbell, Cardenas, Cardoza,
Cedillo, Corbett, Correa, Cox, Cunneen, Davis, Dickerson,
Ducheny, Dutra, Firebaugh, Florez, Gallegos, Granlund,
Havice, House, Jackson, Keeley, Knox, Kuehl, Leach,
Lempert, Longville, Lowenthal, Machado, Maddox,
Maldonado, Margett, Mazzoni, Migden, Nakano, Olberg,
Robert Pacheco, Papan, Pescetti, Reyes, Romero, Scott,
Shelley, Steinberg, Strickland, Strom-Martin, Thomson,
Torlakson, Villaraigosa, Vincent, Washington, Wayne,
Wesson, Wiggins, Wildman, Wright, Zettel, Hertzberg
NOES: Ashburn, Kaloogian, Leonard, McClintock, Rod
Pacheco, Thompson
NC:cm 8/24/00 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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