BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1973|
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THIRD READING
Bill No: SB 1973
Author: Perata (D)
Amended: 5/31/00
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 6-4, 4/25/00
AYES: Bowen, Brulte, Kelley, Peace, Speier, Vasconcellos
NOES: Alarcon, Hughes, Mountjoy, Murray
NOT VOTING: Solis
SENATE AG. & WATER RESOURCES COMMITTEE : 7-1, 5/2/00
AYES: Kelley, Bowen, Johannessen, Monteith, Peace, Perata,
Speier
NOES: Wright
NOT VOTING: Costa, Ortiz, Poochigian
SENATE APPROPRIATIONS COMMITTEE 9-2, 5/25/00
AYES: Alpert, Bowen, Burton, Escutia, Johnson, Kelley,
McPherson, Perata, Vasconcellos
NOES: Karnette, Leslie
NOT VOTING: Johnston, Mountjoy
SUBJECT : Public Utilities Commission: water conveyance
SOURCE : Natomas Mutual Water Company
Western Water Company
DIGEST : This bill requires the Public Utilities
Commission (PUC), by 12/31/01, to establish regulations
that determine fair compensation charged by public agencies
that provide wheeling services to water transferors, and
CONTINUED
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allows the PUC to adjudicate wheeling rates set by public
water agencies.
ANALYSIS : Existing law establishes that California
should facilitate water transfers in order to meet the
growing water needs in the state. The ability to convey
the water from its place of origin to the place of need is
equally as important as the acquisition of a water transfer
itself. Many times a water transfer requires the
involvement of a third party who owns conveyance
infrastructure to move water from the seller to the buyer.
When a third party conveys the water from the seller to the
buyer it is called wheeling.
In order to facilitate water transfers and provide
conveyance for transfers the Legislature enacted the
"wheeling statutes", comprised of sections 1810-1814 of
the Water Code. These statutes describe the conditions
under which wheeling may occur. A major provision within
these statutes directs the state to allow open access to
state, local, or regional water conveyance facilities where
there is unused capacity, if fair compensation is paid to
the facility owner.
Current law defines fair compensation as the reasonable
charges incurred by the owner of the conveyance system, and
lists the factors the facility owner can include in
calculating the cost of wheeling water. Despite the
seeming clarity of the law, the statutes are not specific
enough to prevent disputes between conveyance facility
owners and recipients of water transfers about what "fair
compensation" should be for wheeling services. Disputes
over fair compensation have resulted in litigation which is
still pending.
This bill makes findings and declarations regarding the
state's policy to encourage water transfers.
The bill requires the PUC to begin proceedings to develop
guidelines for setting wheeling rates by January 31, 2001
and to conclude the proceedings by December 31, 2001.
The guidelines established by the PUC are to include a
requirement that any proposed transferee of water provide
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proof that it is in compliance with specified provisions of
law relating to urban water management plans and with the
best management practices for urban water conservation for
the state.
The bill would allow a water transferor to file a complaint
with the PUC if the transferor believes the rate set by the
public agency for wheeling services exceeds fair
compensation as defined in section 1811 of the Water Code.
Once the complaint is filed, the PUC has exclusive
authority to decide if the wheeling rate was set consistent
with the guidelines established by the PUC. If the PUC
finds the rate is inconsistent with the guidelines, it may
require the public agency to re-calculate and re-set the
rate. Alternatively, if the PUC believes it is in the best
interest of the public, the PUC may set the rate itself.
The bill provides that a water conveyance facility's owner
and a transferor must provide the PUC access to its books,
records, documents and reports that are necessary to make a
determination of fair compensation.
The bill provides that any determination of the PUC
involving facilities that control inflow into the
Sacramento-San Joaquin Delta and the San Francisco Bay and
that divert water from the Delta are to include
certification by the State Water Resources Control Board
that the proposed wheeling will not harm fish or wildlife,
will not degrade water quality and will not reduce water
levels so as to interfere with diversions or navigation in
the Delta.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
The PUC estimates that once the guidelines are established
25 to 1,000 petitions for review of fair compensation will
be filed annually for the first two or three years. Since
the Administrative Law Judge (ALJ) Division would handle
these petitions, costs would be high. The PUC estimates
the need for two ALJs and two support staff. Any number of
factors could reduce the anticipated workload and thus, the
cost.
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The PUC estimates the need for additional staff to advise
the commissioners and staff on technical water issues,
conduct workshops, participate in settlement/stipulation
meetings, and testify at public hearings. A one-time
contract for a consultant to help in the determination of
costing methods used by water agencies would be needed.
SUPPORT : (Verified 5/30/00) (As of previous amended
version)
Natomas Mutual Water Company (co-source)
Western Water Company (co-source)
California Water Association
Natural Resources Defense Council
Environmental Defense Fund
Environmental Water Caucus
San Diego Water Authority
City of San Diego
San Diego Regional Chamber of Commerce
OPPOSITION : (Verified 5/30/00) (As of previous amended
version)
California Municipal Utilities Association
City of San Bernardino Municipal Water Department
American Federation of State, County and Municipal
Employees, AFL-CIO
Metropolitan Water District of Southern California
Independent Cities Association
State Water Contractors
Association of California Water Agencies
Santa Clara Valley Water District
Contra Costa Water District
City of Long Beach Board of Water Commissioners
NC:jk 5/31/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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