BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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                                 THIRD READING


          Bill No:  AB 117
          Author:   Migden (D)
          Amended:  8/27/02 in Senate
          Vote:     21

           
           SENATE ENERGY, U.&C. COMMITTEE  :  6-0, 6/25/02
          AYES:  Bowen, Alarcon, Dunn, Murray, Sher, Vasconcellos

           SENATE APPROPRIATIONS COMMITTEE  :  12-0, 8/21/02
          AYES:  Alpert, Battin, Bowen, Burton, Escutia, Johannessen,  
            Johnson, Karnette, Murray, Perata, Poochigian, Speier

           ASSEMBLY FLOOR  :  73-0, 1/28/02 - See last page for vote


           SUBJECT  :    Electrical restructuring:  aggregation

           SOURCE  :     Author


           DIGEST  :    This bill, subject to certain conditions, allows  
          cities and counties to aggregate their electric loads and  
          provide service directly to their residents.

           ANALYSIS  :    Existing law authorizes retail competition  
          within investor-owned utility (IOU) service areas (direct  
          access) and authorizes marketers, public agencies, cities,  
          counties, and special districts to offer electric service  
          to customers aggregated on a voluntary basis, provided that  
          each customer in their jurisdiction agrees to participate  
          by a positive written declaration (opt-in community  
          aggregation).

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          Existing law (AB 1X (Keeley), Chapter 4, Statutes of 2001)  
          requires the California Public Utilities Commission (CPUC)  
          to suspend the right of retail customers of IOUs to acquire  
          electric power service from non-IOU providers until the  
          Department of Water Resources (DWR) no longer supplies  
          power to IOU customers.  Pursuant to AB 1X, the CPUC has  
          suspended direct access as of September 20, 2001.

          This bill establishes a general exception to the direct  
          access suspension for community aggregation undertaken by  
          cities and counties serving their own residents.  This bill  
          changes the procedures governing community aggregation to,  
          among other things, allow cities and counties to aggregate  
          on an "opt-out" basis, rather than an "opt-in" basis.  This  
          bill contains provisions to ensure cost recovery from  
          departing customers.

          Existing law requires IOUs to collect a non-bypassable  
          surcharge in the distribution component of rates to fund  
          public purpose programs, including energy efficiency and  
          conservation activities.

          This bill requires the IOU to direct a proportional share  
          of its energy efficiency activities to the community  
          aggregator's territory.

          Existing law requires non-IOU electric service providers  
          (ESPs) to register with the CPUC, but only if they serve  
          residential and small commercial customers.

          This bill requires all ESPs to register with the CPUC.

           Background  :

          In 1996, the Legislature passed AB 1890 (Brulte), Chapter  
          856, Statutes of 1996, to restructure the electric  
          industry.  One of the key features of electrical  
          restructuring was the authorization of retail competition  
          within IOU service areas.  AB 1890 ended the service  
          monopoly of utilities and authorized retail customers to  
          purchase energy directly from suppliers.  These  
          transactions are known as "direct access."  Community  
          aggregation is a form of direct access where, for example,  
          a city may act as a purchasing agent on behalf of its  







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          residents.

          Opt-in community aggregation, wherein the governing body of  
          the community, such as the city council, chooses an  
          electricity supplier for the entire community, was  
          discussed but ultimately tabled during the AB 1890 debates.  
           This bill resurrects that concept by permitting the  
          governing body to select a provider of electricity which  
          then becomes the default provider for everyone in the  
          community. 

          AB 1X, as part of the structure to authorize DWR to  
          purchase electricity for utility customers, authorized the  
          CPUC to prohibit additional direct access (including  
          community aggregation).  AB 1X permits the issuance of  
          ratepayer-backed revenue bonds to finance DWR purchasing  
          costs.  To ensure the predictable revenue stream necessary  
          for the issuance of bonds and prevent cost-shifting from  
          direct access to bundled service customers, the CPUC was  
          authorized to prevent additional migration of IOU customers  
          by suspending direct access.  Pursuant to AB 1X, the CPUC  
          has suspended IOU customers' right to acquire direct access  
          service after September 20, 2001.

          The public goods surcharge and accompanying programs were  
          established initially by AB 1890 and extended by SB 1194  
          (Sher), Chapter 1050, Statutes of 2000 and AB 995 (Wright),  
          Chapter 1051, Statutes of 2000.  The public goods surcharge  
          is a per-kilowatt-hour fee paid by all electric customers  
          to fund four public goods categories:  (1) energy  
          efficiency; (2) renewable energy sources; (3) research and  
          development of alternative energy supplies; and (4)  
          assistance to low-income customers.

          The law requires the IOUs to spend specific amounts of  
          money or percentages of money from the baseline year 1994,  
          in each of the first three categories, while the fourth,  
          the low-income assistance program, is a needs-based  
          program.  Because the public goods surcharge is collected  
          in the distribution component of rates and is  
          non-bypassable, customers purchasing electricity from a  
          community aggregator would continue to pay the public goods  
          surcharge to their IOU.








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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  6/25/02) (Unable to reverify at time  
          of writing)

          California Public Interest Research Group
          California State Association of Counties
          City of Berkeley
          City of Corona Joint Powers Authority
          City of Culver City
          CR & R, Incorporated
          East Bay Municipal Utility District
          League of California Cities
          Pacific Area Communications
          Pacific Gas and Electric Company (if amended)
          An individual 

           OPPOSITION  :    (Verified  6/25/02) (Unable to reverify at  
          time of writing)

          Southern California Edison


           ASSEMBLY FLOOR  :
          AYES:  Aanestad, Alquist, Aroner, Ashburn, Bates, Bogh,  
            Briggs, Calderon, John Campbell, Canciamilla, Cardenas,  
            Cardoza, Cedillo, Chan, Chavez, Chu, Cogdill, Cohn,  
            Correa, Cox, Daucher, Diaz, Dickerson, Dutra, Firebaugh,  
            Florez, Frommer, Goldberg, Harman, Havice, Hollingsworth,  
            Horton, Jackson, Keeley, Kehoe, Kelley, Koretz, Leonard,  
            Leslie, Longville, Lowenthal, Maldonado, Matthews,  
            Migden, Mountjoy, Nakano, Nation, Negrete McLeod,  
            Oropeza, Robert Pacheco, Rod Pacheco, Papan, Pavley,  
            Pescetti, Reyes, Richman, Runner, Shelley, Simitian,  
            Steinberg, Strickland, Strom-Martin, Thomson, Vargas,  
            Washington, Wayne, Wesson, Wiggins, Wright, Wyland,  
            Wyman, Zettel, Hertzberg


          NC:jk  8/27/02   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE








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