BILL ANALYSIS
SB 1939
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Date of Hearing: August 10, 2000
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
SB 1939 (Alarcon) - As Amended: August 7, 2000
SENATE VOTE : 23-10
SUBJECT : Public utilities: electric power: irrigation
districts.
SUMMARY : Requires local publicly-owned utilities, including
irrigation districts, which have not implemented programs for
low-income electricity customers to perform a needs assessment
for those programs and establish and fund a need-based
low-income rate assistance and energy efficiency program, as
specified. Additionally, requires irrigation districts
authorized to provide electric transmission or distribution
service to retail customers in an investor-owned utility's
(IOU's) or publicly-owned utility's service territory to have
public purpose, universal service, and consumer protection
programs are comparable to those of the incumbent utility
provider. Repeals the requirement that irrigation district
board members be landowners of the district they represent.
Specifically, this bill :
1)Requires a local publicly-owned utility that has not
implemented need-based programs for low-income electricity
customers, or completed an assessment of need for those
programs, on or before December 31, 2000, to:
a) Perform a needs assessment for those programs;
b) Hold one or more noticed public hearings to review the
findings of the needs assessment;
c) Determine the amount, following the public meetings, of
the total funds collected pursuant to these provisions, to
be allocated to low-income programs, including, but not
limited to, targeted energy efficiency services, education,
weatherization, and rate discounts.
1)Requires the governing board of the local publicly-owned
utility, in making its decision on the need for the programs,
to consider all of the following:
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a) The number and income level of low-income customers and
residents that reside in the service area of the utility;
b) The availability of home weatherization services
provided to low-income customers by an IOU;
c) Other factors that may indicate a need for low-income
services.
1)Requires the local publicly-owned utility, following a
determination that low-income services are needed, to promptly
implement and expand those programs. Additionally, requires
the utility to work with existing weatherization providers to
implement energy efficiency, education, and weatherization
programs.
1)Requires the local publicly-owned utility to establish a rate
discount if the utility determines that low-income customers
reside in the utility's service area. The rate discount shall
be established for those customers living below 125 percent of
the federal poverty level.
1)Requires irrigation districts to allocate not less than 10
percent of their public purpose surcharge revenue to non-rate
assistance low-income energy programs, including, but not
limited to, low-income weatherization programs, energy
efficiency programs, education, and outreach.
1)Provides that if an irrigation district has insufficient
low-income customers to fully utilize the benefits offered
under these programs, it shall provide the programs or
supplement energy efficiency work to low-income residents
located in, or adjacent to its service territory.
1)Requires irrigation districts to receive California Public
Utilities Commission (CPUC) approval in order to construct,
lease, acquire, or operate facilities for the purpose of
serving retail electric customers located in the service
territory of an IOU or publicly-owned utility as it existed on
January 1, 2000, based on CPUC certification that the
irrigation district's public purpose, universal service, and
consumer protection programs are comparable to those of the
incumbent utility provider.
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1)Removes the requirement that an irrigation district director
be a freeholder of the district, and makes a related change.
1)Provides that the board of directors of an irrigation district
may adopt a resolution that authorizes a resident and
nonresident person holding title to real property within the
district, or his or her legal representative to vote, and
other related changes.
1)Provides that any eligible voter, as defined, may be a member
of the board of directors.
EXISTING LAW :
1)Requires each local publicly-owned utility to establish a
nonbypassable usage based charge to fund investments in
specified public purpose programs, including providing
services for low-income electricity customers.
1)Provides that 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.
1)Provides that the transmission and distribution of electric
power remain essential services imbued with the public
interest that are provided over facilities owned and
maintained by the state's IOUs.
1)Authorizes irrigation districts to generate, transmit, and
distribute electricity, including sale to municipalities,
public utility districts, or persons.
1)Allows municipal utilities and irrigation districts to provide
electric service both inside and outside the boundaries of
their service territory.
1)Requires a member of the board of directors of an irrigation
district to be a voter and a freeholder of the district and a
resident of the division that the director represents at the
time of nomination or appointment and during the director's
entire term.
FISCAL EFFECT : Unknown
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COMMENTS :
Public Purpose Programs . AB 1890 (Brulte), Chapter 854,
Statutes of 1996, the landmark electric restructuring law,
requires IOUs and publicly-owned utilities to impose a surcharge
on each electricity customer to fund, among other programs,
needs-based public purpose programs for low-income electricity
customers, including but not limited to, targeted energy
efficiency and rate discounts. The publicly-owned utilities,
unlike the IOUs, are not required to spend specified amounts on
public purpose programs and have total discretion as to how
these monies are spent.
An Uneven Record for Irrigation Districts Offering Electric
Service . An overwhelming majority of the publicly-owned
utilities provide substantial funding for public purpose
programs, including low-income services. There are more than 60
irrigation districts in the state, but only four of
them-Imperial Irrigation District, Merced Irrigation District,
Modesto Irrigation District, and the Turlock Irrigation District
are presently providing electrical service. Of the four
irrigation districts providing electrical service, the Imperial
Irrigation District is the only one that has been willing to
establish programs aimed at low-income customers. The three
other irrigation districts offering electric service have either
modest low-income programs or none at all.
Needs Assessment, and the Implementation of Low-Income Programs .
This bill requires local publicly-owned utilities, including
irrigation districts, which have not implemented programs for
low-income electricity customers, or completed a needs
assessment for those programs, on or before December 31, 2000,
to perform a needs assessment for those programs. Following the
needs assessment, the local publicly-owned utilities would be
required under this bill to establish and fund a needs-based
low-income rate assistance and energy efficiency program.
Irrigation districts would be required to allocate not less than
10 percent of their public purpose surcharge revenue to non-rate
assistance low-income energy programs, including, but not
limited to, low-income weatherization programs, energy
efficiency programs, education and outreach, and would be
required to work with existing weatherization providers to
achieve these goals.
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Promoting Equity in the Availability of Low-Income Programs .
The sponsor of this measure, Latino Issues Forum, asserts that
this bill is needed to ensure that publicly-owned utilities and
irrigation districts devote adequate resources to low-income
programs within their service area. "Low-income families
without the sufficient financial resources to pay for electrical
services are oftentimes at risk of having basic and essential
utility services," according to the Mexican-American Legal
Defense and Educational Fund. "SB 1939 will help low-income
families to afford basic utility services at an affordable
rate." Additionally, a recent study by the Rand Corporation
entitled, "The Public Benefits of California's Investments in
Energy Efficiency," indicated that low-income households derive
the greatest benefit from energy efficiency and reduced energy
expenditures. On average, low-income households spend eight
percent of their income on electricity, compared with two
percent of a median-income household. Energy efficiency
programs, such as insulation replacement and weatherstripping,
result in significantly reduced monthly energy costs for
low-income households. Similarly, rate discounts help ease the
burden for low-income families who spend a disproportionate
amount of their monthly income on energy bills.
Benefits of Low-Income Programs Versus Local Control .
Proponents of this measure believe this bill will insure that
low-income electric ratepayers throughout the state receive the
same basic level of low-income programs and services, regardless
of what service territory they reside in. Opponents argue,
however, that it restricts local control and the right of
locally-elected governing boards to decide according to local
needs how public purpose funds should be allocated. Opponents
of this bill argue that restricting local flexibility may have
unintended consequences in some circumstances, such as mandating
a program where there is little need or few qualifying
customers.
Environmental Justice . This bill requires irrigation districts
to obtain CPUC certification in order to provide electric
service outside their service territory. Among the criteria for
CPUC certification is a requirement that irrigation districts
establish environmental policies to foster environmental
justice. Opponents of this bill indicate that these provisions
would add to the legal grounds on which CPUC or irrigation
districts seeking to expand outside their service territory
could be sued furthermore this bill is vague with regards to the
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meaning of terms such as "environmental justice" and "economic
waste." (SB 1622, also authored by Senator Alarcon and
presently before this committee, would require the California
Energy Commission to incorporate environmental justice concepts
into its overall power plant siting process).
Electric Distribution Competition . Section two of this bill
relates to electric distribution competition and requires
irrigation districts to receive CPUC authorization to construct,
lease, acquire, or operate facilities providing electric
transmission or distribution service to retail customers in an
investor-owned utility's (IOU's) or publicly-owned utility's
service territory. Those irrigation districts would also be
required to have public purpose, universal service, and consumer
protection programs that are comparable to those of the
incumbent utility provider. Universal service is defined as
"?service to all retail customers who request service within
reasonable physical proximity to the district's distribution or
transmission wires and poles allowing for line extensions and
service, at published tariff rates and on a just, reasonable,
and non-discriminatory basis." Universal service requirements
would prevent the irrigation districts from "cherry-picking"
large industrial and commercial customers served by the
incumbent IOU's and municipal utilities. Irrigation districts
would be additionally required to establish environmental
policies to foster environmental justice and minimize or
eliminate the duplication of electric transmission or
distribution facilities and other economic waste.
Freeholder Criteria. Sections three and four of this bill
relates to irrigation district voting requirements. Existing
law requires a member of the board of directors of an irrigation
district to be a voter and a freeholder of the district and a
resident of the division that the director represents at the
time of nomination or appointment and during the director's
entire term. This bill would remove that requirement that a
director be a freeholder of the district, and would make a
related change. The bill would also provide that the board of
directors of an irrigation district may adopt a resolution that
authorizes a resident and nonresident person holding title to
real property within the district, or his or her legal
representative to vote. This bill provides that any eligible
voter, as defined, may be a member of the board of directors.
This bill would provide that those provisions regarding
titleholders are operation as long as the district does not
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provide certain services for domestic purposes and would require
the district to notify the Secretary of State 30 days prior to
commencing to provide any of those services.
Suggested Amendments : 1) Irrigation Districts Only . The
requirements in section one of this bill, which apply to public
purpose programs, apply to both irrigation districts and other
local publicly-owned electric utilities. While a case can
certainly made that most irrigation districts have been slow to
implement low-income low-income assistance programs, the same
cannot be said of other local publicly-owned electric utilities.
The author may wish to consider amending this bill to delete
the requirements in section one relating to cities and municipal
utilities; 2) Irrigation District Service Territories As of
January 1, 2000 . This bill freezes in place the service
territories of irrigation districts as they existed on January
1, 2000, unless CPUC approves the request of an irrigation
district to serve outside its service territory. The author may
also wish to consider amending the bill to delete the
operational date of January 1, 2000, so that these provisions
take effect when the bill takes effect; and 3) Low-Income
Programs Outside the Irrigation District's Service Territory .
This bill provides that if an irrigation district has
insufficient low-income customers to fully utilize the benefits
offered under these programs, it shall provide the programs or
supplement energy efficiency work to low-income residents
located in, or adjacent to its service territory. This
duplication of effort would be wasteful and inefficient. The
author may wish to amend this bill to delete these provisions.
Related Legislation : AB 2638 (Calderon) subjects irrigation
districts seeking to provide electric service in an IOU service
territory to increased universal service requirements, CPUC
dispute resolution as needed, and a California Environmental
Quality Act (CEQA) analysis in which the county board of
supervisors is the lead agency. The bill is scheduled to be
heard in the Senate Energy, Utilities and Communications
Committee on August 8, 2000.
REGISTERED SUPPORT / OPPOSITION :
Support
California Journal for Filipino Americans
Central Valley Opportunity Center, Inc.
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Coalition of California Utility Employees
Community Medical Centers
Community Action Agency of San Mateo County, Inc.
Congress of California Seniors
Consumer Federation of California
Finca Management Inc.
Foundation For Quality Housing Opportunities, Inc.
Greenlining Institute
Jericho
Latin American Civic Association
Latino Issues Forum (Sponsor)
Mexican American Legal Defense and Educational Fund
Pacific Gas and Electric
Pacoima Beautiful
Pueblo Y Salud, Inc.
San Fernando Gardens Resident Management Corporation
Sempra Energy
Southern California Gas Workers Council
TELACU
United Farm Workers of America, AFL-CIO
Watts/Century Latino Organization
West Angeles Community Development Corporation
12 constit uents
Opposition
California League of Food Processors
California Municipal Utilities Association
Imperial Irrigation District
Merced Irrigation District
Modesto Irrigation District
Northern California Power Agency
Southern California Public Power Authority
Turlock Irrigation District
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083