BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 117
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          AB 117 (Migden)
          As Amended August 27, 2002
          Majority vote
          |ASSEMBLY:  |73-0 |(January 28,    |SENATE: |29-2 |(August 28,    |
          |           |     |2002)           |        |     |2002)          |
          Original Committee Reference:     B. & P.  

           SUMMARY  :  Allows cities and counties to aggregate their electric  
          loads as community choice aggregators, and provide service  
          directly to their residents.

           The Senate amendments  :

          1)Establish a general exception to the direct access suspension  
            in existing law for community aggregation undertaken by cities  
            and counties serving their own residents.

          2)Change the procedures governing community aggregation to allow  
            cities and counties to aggregate on an "opt-out" basis, rather  
            than an "opt-in" basis.

          3)Provide for cost recovery from customers who depart from  
            electric service offered by the state's investor-owned  
            utilities (IOUs) and electricity purchased by the state  
            Department of Water Resources (DWR).

          4)Require the IOU to direct a proportional share of its energy  
            efficiency activities to the community aggregator's territory.

          5)Require all electric service providers (ESPs) to register with  
            the PUC. 

           EXISTING LAW  :

          1)Requires ESPs that are not IOUs to register with the CPUC, but  
            only if they serve residential and small commercial customers.  

          2)Requires IOUs to collect a non-bypassable surcharge in the  
            distribution component of rates to fund public purpose  


                                                                  AB 117
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            programs, including energy efficiency and conservation  

          3)Requires the Public Utilities Commission (PUC) to suspend the  
            right of retail customers of IOUs to acquire electric power  
            service from non-IOU providers until the DWR no longer  
            supplies power to IOU customers.  PUC suspended direct access  
            effective September 2001.  

           AS PASSED BY THE ASSEMBLY  , this bill authorized 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.

           FISCAL EFFECT  :  Senate Appropriations notes unknown, probably  
          not substantial, costs, recoverable through PUC cost recovery  

           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 IOU. The aggregator  
          procures electricity on the wholesale market, to be delivered  
          through the IOU's infrastructure. 

          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 1995-96 debate on restructuring of the state's  
          electricity markets. 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. 

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

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