BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1939| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 1939 Author: Alarcon (D) Amended: 8/28/00 Vote: 21 SENATE ENERGY, U.&C. COMMITTEE : 8-2, 5/9/00 AYES: Bowen, Alarcon, Hughes, Mountjoy, Murray, Peace, Solis, Vasconcellos NOES: Brulte, Kelley SENATE LOCAL GOVERNMENT COMMITTEE : 4-0, 5/17/00 AYES: Johannessen, Johnston, Soto, Rainey SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SENATE FLOOR : 23-10, 5/31/00 AYES: Alarcon, Alpert, Bowen, Burton, Chesbro, Costa, Dunn, Escutia, Figueroa, Hayden, Hughes, Johnston, Murray, O'Connell, Ortiz, Peace, Perata, Polanco, Schiff, Sher, Solis, Soto, Speier NOES: Brulte, Haynes, Kelley, Knight, Leslie, Lewis, McPherson, Monteith, Mountjoy, Poochigian ASSEMBLY FLOOR : 60-17, 8/29/00 - See last page for vote SUBJECT : Public utilities: electric power: irrigation districts SOURCE : Latino Issues Forum DIGEST : This bill requires local publicly-owned CONTINUED SB 1939 Page 2 utilities, including irrigation districts, which have not implemented programs for low-income electricity customers, to perform a needs assessment and establish rate assistance and energy efficiency programs, and prohibits irrigation districts from providing electric transmission or distribution service to retail customers in another utility's service territory unless the district certifies by ordinance that it provides public purpose programs, and has universal service, consumer protection, and environmental policies comparable to those of the incumbent utility provider. Additionally, makes various changes to irrigation district voting requirements. Assembly Amendments : 1. Delete a provision that required a portion of the electric surcharge collected for various public purpose programs be used to provide a 15% rate discount for low-income customers. 2. Requires certain local publicly-owned electric utilities to conduct an assessment of needs for low-income programs, 3. Add provisions that restrict irrigation districts from providing electrical service unless certain conditions are met. 4. Double-join Section 2 of the bill to AB 2638 (Calderon). ANALYSIS : 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. 2. 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, SB 1939 Page 3 and fair access for all market participants. 3. 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 investor-owned utilities (IOUs). 4. Authorizes irrigation districts to generate, transmit, and distribute electricity, including sale to municipalities, public utility districts, or persons. 5. Allows municipal utilities and irrigation districts to provide electric service both inside and outside the boundaries of their service territory. 6. 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 requires local publicly-owned utilities, including irrigation districts, which have not implemented programs for low-income electricity customers, to perform a needs assessment and establish rate assistance and energy efficiency programs, the bill prohibits irrigation districts from providing electric transmission or distribution service to retail customers in another utility's service territory unless the district certifies by ordinance that it provides public purpose programs, and has universal service, consumer protection, and environmental policies comparable to those of the incumbent utility provider. The bill also makes various changes to irrigation district voting requirements. Comments : SB 1939 Page 4 1. 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. 2. 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. 3. 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. 4. Promoting equity in the availability of low-income SB 1939 Page 5 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. 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 8% of their income on electricity, compared with 2% 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. 5. Electric distribution competition. Section two of this bill relates to electric distribution competition. Under this bill, in order to provide electrical service in the service territory of an IOU or local publicly owned electric utility, an irrigation district must certify by ordinance that it provides public purpose programs, universal service, customer protection, and environmental policies regarding distribution facilities 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, comparable to that provided by the current distribution service provider." Irrigation districts would be additionally required to establish environmental policies to establish environmental policies to minimize or eliminate the duplication of electric transmission or distribution policies. 6. Section 2 linked with AB 2638. Section two relating to SB 1939 Page 6 electric distribution competition shall not become operative if AB 2638 (Calderon) is enacted and becomes operative. AB 2638, currently in the Senate, permits irrigation districts to build and operate electric facilities in the service territory of an IOU only upon the approval of CPUC or pursuant to a service territory agreement between an irrigation district and an IOU. 7. Voting criteria. Section three of this bill relates to irrigation district voting requirements and the qualifications of directors. Current law provides that only landowners are eligible to sit on the board of directors of an irrigation district. This bill removes that requirement in irrigation districts providing retail electric service. Section three of this bill does not affect the 12 irrigation districts whose governance is specifically set forth in other sections of Division 11 of the Water Code. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes 1. Any costs to the California Public Utilities Commission (CPUC) to enforce the requirements of this bill would be absorbable. 2. Any costs to local utilities to comply with the bill requirements would be non-reimbursable because the costs could be offset from the electric rates charged by those utilities. SUPPORT : (Per Local Government Committee analysis) (Unable to reverify at time of writing) California Journal For Filipino Americans California Rural Legal Assistance Foundation Central Valley Opportunity Center Coalition of California Utility Employees Community Action Agency of San Mateo County, Inc. Community Medical Center Congress of California Seniors Consumer Federation of California Finca Management, Inc. SB 1939 Page 7 Foundation For Quality Housing Opportunities,Inc. The Greenlining Institute Hermandad Mexicana Nacional -- several members JERICHO Latin American Civic Association Latino Issues Forum Mexican American Legal Defense and Educational Fund Pacific Gas and Electric Company 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 OPPOSITION : (Per Local Government Committee analysis) (Unable to reverify at time of writing) Agricultural Energy Consumers Association Alameda Power and Telecom Association of California Water Agencies California League of Food Processors California Municipal Utilities Association City of Azusa Light and Water Department Cities of Gridley, Lodi and Lompoc City of San Bernardino Municipal Water Department Imperial Irrigation District Lassen Municipal Utility District Merced Irrigation District Modesto Irrigation District Northern California Power Agency Roseville Electric Sacramento Municipal Utility District Southern California Public Power Authority Trinity Public Utilities District Turlock Irrigation District ASSEMBLY FLOOR : AYES: Aanestad, Alquist, Aroner, Bates, Bock, Calderon, Campbell, Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox, Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh, Florez, Gallegos, Havice, Honda, Jackson, Keeley, Knox, Kuehl, Lempert, Longville, Lowenthal, SB 1939 Page 8 Machado, Maddox, Maldonado, Margett, Mazzoni, Migden, Nakano, Robert Pacheco, Rod Pacheco, Papan, Pescetti, Reyes, Romero, Runner, Scott, Shelley, Steinberg, Strom-Martin, Thomson, Torlakson, Villaraigosa, Vincent, Washington, Wayne, Wesson, Wiggins, Wildman, Wright, Zettel, Hertzberg NOES: Ackerman, Ashburn, Baldwin, Battin, Baugh, Brewer, Briggs, Granlund, House, Kaloogian, Leach, Leonard, McClintock, Olberg, Oller, Strickland, Thompson NC:sl 8/30/00 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****