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).
CONTINUED
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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 8/28/02)
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
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 8/28/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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