BILL ANALYSIS                                                                                                                                                                                                    

                    Appropriations Committee Fiscal Summary
          |                               |117(Migden)                 |
          |                               |                            |
          |Hearing Date:  8/13/02         |Amended: 8/5/02             |
          |Consultant:  Lisa Matocq       |Policy Vote: E, U & C       |
          |                               |6-0                         |
          |                               |                            |
          BILL SUMMARY:   AB 117, subject to certain conditions,  
          allows cities and counties to "aggregate" their electric  
          loads and provide service directly to their residents.    
                              Fiscal Impact (in thousands)
           Major Provisions                      2002-03             2003-04          
            2004-05               Fund  
          PUC                      Unknown, probably not substantial, costs.    
                                   Costs should be offset by fee revenues.
          DWR                      Uncollected costs should be recovered        
                                   through PUC cost recovery mechanism
          *Public Utilities' Reimbursement Account (PURA)
          **Electric Power Fund
          STAFF COMMENTS:  In community aggregation, a city or  
          county, for example, may purchase electricity on behalf of,  
          and provide it directly to, its residents.  Certain  
          conditions must be met, one of which is that each customer  
          must "opt in".  Investor-owned utilities customers' right  
          to obtain power from alternate providers was suspended in  
          2001, in order to ensure a sufficient revenue stream to  
          cover the Department of Water Resources' (DWR) costs of  
          purchasing electricity.   

          This bill (1) establishes an exception to the direct access  
          suspension for cities and counties providing service to  
          their own residents, (2) changes the "opt in" to an "opt  
          out" condition, (3) requires all non-investor-owned utility  
          electric service providers (ESPs) to register with the  
          Public Utilities Commission (PUC), and (4) requires the PUC  


          to require investor-owned utilities to continue to offer  
          energy efficiency programs, on a proportionate basis, in  
          the community aggregator's territory.  These programs are  
          funded through the public goods surcharge.  

          The bill contains provisions to ensure DWR's cost recovery,  
          as well as the electrical corporation's when customers opt  
          out.  Increased costs to the PUC are unknown, but probably  
          not substantial.  PURA revenues are derived from an annual  
          fee charged to public utilities sufficient to cover the  
          costs of the PUC's annual budget.  Therefore, any increased  
          costs to the PUC should be recovered through fee revenues.   
          The provisions of the bill relating to cities and counties  
          are permissive, therefore, and increased costs would be  

          AB 9xx (Migden) of 2001 was similar to this bill and was  
          vetoed by Governor Davis.  In his veto message, the  
          Governor stated, among other things, that there needed to  
          be more concise "cost-containment provisions for the  
          remaining IOU customers".  This bill contains additional  
          cost-containment provisions.   AB 80 (Havice), pending in  
          the Senate, establishes an exemption from the direct access  
          suspension for the cities of Cerritos and San Marcos.