BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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                              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





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          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,  







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             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  :








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          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  







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             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  







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             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.







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          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,  







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            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

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