BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 117
                                                                  Page  1

          AB 117 (Migden)
          As Amended January 9, 2002
          Majority vote 

           BUSINESS & PROFESSIONS          APPROPRIATIONS      20-0        
                    (vote not relevant)

          |                                |Ayes:|Migden, Bates, Alquist,   |
          |                                |     |Aroner, Ashburn, Cedillo, |
          |                                |     |Corbett, Correa, Daucher, |
          |                                |     |Goldberg, Robert Pacheco, |
          |                                |     |Papan, Pavley, Runner,    |
          |                                |     |Simitian, Thomson,        |
          |                                |     |Steinberg, Wiggins,       |
          |                                |     |Wright, Wyland            |
          SUMMARY  :  Authorizes end-use customers to aggregate their  
          electric loads with private aggregators as individual users, or  
          with community choice aggregators as members of a local  
          community.  Specifically,  this bill  :  

          1)Defines "private aggregator" basically in a manner as all  
            aggregators are defined in existing law as a marketer, broker  
            or public entity that combines multiple end-use customer  
            electric load to advance buying and selling of electricity and  
            other services for all customer classes, including small  
            business and residential.

          2)Requires a customer to opt-in to be served through the efforts  
            of a private aggregator.

          3)Creates "community choice" or "municipal" aggregation, in  
            which community aggregators, (i.e., cities, counties, or a  
            group of them combined in a joint powers authority) may  
            aggregate the electric load of the consumers to leverage the  
            negotiation of contracts for electricity. 

          4)Does not require a positive opt-in for community aggregation,  
            but all customers must by notified of their right to opt-out  
            of the community choice aggregation program. 

          5)Prohibits aggregation of electric load if that load is served  


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            by a local publicly owned electric utility.

          6)Requires a community choice aggregator establishing load  
            aggregation to develop an implementation plan detailing the  
            process and consequences of aggregation, and consider and  
            adopt it at a duly noticed public hearing.

          7)Requires community choice load aggregation to provide for  
            universal access, reliability, and equitable treatment of all  
            classes of customers, and to meet applicable statutory or  
            California Public Utilities Commission (CPUC) requirements  
            concerning aggregated service.

          8)Directs electrical corporations to cooperate fully with cities  
            and counties as they contemplate community choice aggregation  
            programs, providing appropriate billing, load data and the  

          9)Requires the electrical corporation to continue to provide all  
            metering, billing, collection, and customer service to retail  
            customers that participate in community choice aggregation  
            programs, and identify the community choice aggregator in the  
            utility bill as providing the energy component of the bill.

          10)Permits ratepayers to opt-out to default electric service  
            within six months of the date of enrollment without charge for  
            any costs paid during the time the customer was served by the  
            community choice aggregator.

          11)Specifies that any reentry fees to be imposed after the  
            180-day opt-out period are to reflect the cost of reentry and  
            be CPUC approved.

          12)Permits electrical corporations to recover from ratepayers  
            all reasonable costs of implementing this bill, except that  
            transaction-based costs of notices, billing, metering or other  
            services provided by an aggregator are to be recovered from  
            the aggregator or its customers on terms, and at rates to be  
            approved by CPUC.

          13)Requires an end-use customer that purchases power from a  
            community choice aggregator to pay the Department of Water  
            Resources (DWR) any difference between DWR's procurement costs  
            and the rates collected by DWR from the customer during the  
            term of service, as well as DWR's net unavoidable cost of  


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            future power procurement that is attributable to the customer.

          14)Requires DWR to provide an estimate of the above amounts to  
            the customer and to the Legislature within 30 days of the  

          15)Directs CPUC to develop rules to ensure that net unavoidable  
            costs of power procurement by an electrical corporation are  
            the responsibility those being served by an aggregator, and  
            not shifted onto the remaining customers.

           EXISTING LAW  :

          1)Authorizes specified entities to aggregate electrical loads,  
            and defines an "aggregator" as one of those specified entities  
            that provides power supply services, including combining the  
            loads of multiple end-use customers and facilitating the sale  
            and purchase of electrical energy, transmission, and other  
            services on behalf of the end-use customers.

          2)Requires CPUC to order specified electrical corporations to  
            collect and spend certain funds for prescribed public benefit  
            programs, cost-effective energy efficiency, and conservation.

           FISCAL EFFECT  :  None

           COMMENTS  :  Community aggregation is direct access on a large  
          scale, similar to formation of a municipal utility, except that  
          a municipal utility is self-governing, must purchase power or  
          build plants and transmission lines, assume responsibility for  
          distribution, billing, and meter-reading.  Under aggregation,  
          most of the responsibilities remain with the electrical  
          corporation.  The aggregator procures electricity on the  
          wholesale market, to be delivered through the electrical  
          corporation's infrastructure.  Under this bill the CPUC would  
          oversee and sanction these transactions. 

          This bill which was a gut and amend in Appropriations Committee,  
          now contains provisions identical to ABX2 9 (Migden) of 2001,  
          which passed the Legislature unanimously, but was vetoed by the  
          Governor.  In his veto message, the Governor wrote that the  
          growth in direct access "necessitates more concise  
          cost-containment provisions for the remaining IOU customers than  
          those contained in [AB X2 9]," and that the bill "does not  
          clearly authorize fees to cover costs that may result when  


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          direct access customers return to service with an IOU?"

          Some consumers regard the alternative electricity procurement  
          method created by this bill as a cost-effective option.  This  
          bill protects existing municipal utilities from bypass, but  
          enables considerable load aggregation, in part bypassing  
          electrical corporations.

           Analysis Prepared by  :    Paul Donahue / U. & C. / (916) 319-2083  

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