BILL NUMBER: SB 672	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 21, 2011

INTRODUCED BY   Senator Fuller

                        FEBRUARY 18, 2011

   An act  to amend Section 365.1 of the Public Utilities Code,
  relating to electricity.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 672, as amended, Fuller. Electricity: rates: interregional
parity.
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations
and gas corporations, as defined. Existing law authorizes the
commission to fix the rates and charges for every public utility, and
requires that those rates and charges be just and reasonable. 
   Existing law, relative to electrical restructuring, requires the
commission to authorize and facilitate direct transactions between
electricity suppliers and retail end-use customers. Existing law,
enacted during the energy crisis of 2000-01, authorized the
Department of Water Resources, until January 1, 2003, to enter into
contracts for the purchase of electricity, and to sell electricity to
retail end-use customers at not more than the department's
acquisition costs and to recover those costs through the issuance of
bonds to be repaid by ratepayers. That law suspended the right of
retail end-use customers, other than community choice aggregators and
a qualifying direct transaction customer, as defined, to acquire
service through a direct transaction until the Department of Water
Resources no longer supplies electricity under that law. Existing law
continues the suspension of direct transactions except as expressly
authorized, until the Legislature, by statute, repeals the suspension
or otherwise authorizes direct transactions. Existing law requires
the commission to authorize direct transactions for nonresidential
end-use customers subject to a reopening schedule that will phase in
over a period of not less than 3 years and not more than 5 years, and
is subject to an annual maximum allowable total kilowatthour limit
established, as specified, for each electrical corporation. 
   This bill would  state the intent of the Legislature to
enact legislation to require interregional parity in electrical rates
  restrict the annual maximum allowable total
kilowatthour limit for permissable direct transactions so that it is
applicable only to nonresidential for-profit end-use customers and is
not applicable to not-for-profit end-use customers  .
   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 365.1 of the   Public
Utilities Code   is amended to read: 
   365.1.  (a) Except as expressly authorized by this section, and
subject to the limitations in subdivisions (b) and (c), the right of
retail end-use customers pursuant to this chapter to acquire service
from other providers is suspended until the Legislature, by statute,
lifts the suspension or otherwise authorizes direct transactions. For
purposes of this section, "other provider" means any person,
corporation, or other entity that is authorized to provide electric
service within the service territory of an electrical corporation
pursuant to this chapter, and includes an aggregator, broker, or
marketer, as defined in Section 331, and an electric service
provider, as defined in Section 218.3. "Other provider" does not
include a community choice aggregator, as defined in Section 331.1,
and the limitations in this section do not apply to the sale of
electricity by "other providers" to a community choice aggregator for
resale to community choice aggregation electricity consumers
pursuant to Section 366.2.
   (b) The commission shall allow individual retail nonresidential
end-use customers to acquire electric service from other providers in
each electrical corporation's distribution service territory
 , up to   . Nonresidential for-profit 
end-use customers shall be subject to  a maximum allowable
total kilowatthours annual limit. The maximum allowable annual limit
 for nonresidential for-profit   end-use customers 
shall be established by the commission for each electrical
corporation at the maximum total kilowatthours supplied by all other
providers to distribution customers of that electrical corporation
during any sequential 12-month period between April 1, 1998, and the
effective date of this section.  No limit shall apply for
not-for-profit end-use customers.  Within six months of the
effective date of this section, or by July 1, 2010, whichever is
sooner, the commission shall adopt and implement a reopening schedule
that commences immediately and will phase in the allowable amount of
increased kilowatthours over a period of not less than three years,
and not more than five years, raising the allowable limit of
kilowatthours supplied by other providers in each electrical
corporation's distribution service territory from the number of
kilowatthours provided by other providers as of the effective date of
this section, to the maximum allowable annual limit for that
electrical corporation's distribution service territory. The
commission shall review and, if appropriate, modify its currently
effective rules governing direct transactions, but that review shall
not delay the start of the phase-in schedule.
   (c) Once the commission has authorized additional direct
transactions pursuant to subdivision (b), it shall do both of the
following:
   (1) Ensure that other providers are subject to the same
requirements that are applicable to the state's three largest
electrical corporations under any programs or rules adopted by the
commission to implement the resource adequacy provisions of Section
380, the renewables portfolio standard provisions of Article 16
(commencing with Section 399.11), and the requirements for the
electricity sector adopted by the State Air Resources Board pursuant
to the California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code). This
requirement applies notwithstanding any prior decision of the
commission to the contrary.
   (2) (A) Ensure that, in the event that the commission authorizes,
in the situation of a contract with a third party, or orders, in the
situation of utility-owned generation, an electrical corporation to
obtain generation resources that the commission determines are needed
to meet system or local area reliability needs for the benefit of
all customers in the electrical corporation's distribution service
territory, the net capacity costs of those generation resources are
allocated on a fully nonbypassable basis consistent with departing
load provisions as determined by the commission, to all of the
following:
   (i) Bundled service customers of the electrical corporation.
   (ii) Customers that purchase electricity through a direct
transaction with other providers.
   (iii) Customers of community choice aggregators.
   (B) The resource adequacy benefits of generation resources
acquired by an electrical corporation pursuant to subparagraph (A)
shall be allocated to all customers who pay their net capacity costs.
Net capacity costs shall be determined by subtracting the energy and
ancillary services value of the resource from the total costs paid
by the electrical corporation pursuant to a contract with a third
party or the annual revenue requirement for the resource if the
electrical corporation directly owns the resource. An energy auction
shall not be required as a condition for applying this allocation,
but may be allowed as a means to establish the energy and ancillary
services value of the resource for purposes of determining the net
costs of capacity to be recovered from customers pursuant to this
paragraph, and the allocation of the net capacity costs of contracts
with third parties shall be allowed for the terms of those contracts.

   (C) It is the intent of the Legislature, in enacting this
paragraph, to provide additional guidance to the commission with
respect to the implementation of subdivision (g) of Section 380, as
well as to ensure that the customers to whom the net costs and
benefits of capacity are allocated are not required to pay for the
cost of electricity they do not consume.
   (d) (1) If the commission approves a centralized resource adequacy
mechanism pursuant to subdivisions (h) and (i) of Section 380, upon
the implementation of the centralized resource adequacy mechanism the
requirements of paragraph (2) of subdivision (c) shall be suspended.
If the commission later orders that electrical corporations cease
procuring capacity through a centralized resource adequacy mechanism,
the requirements of paragraph (2) of subdivision (c) shall again
apply.
   (2) If the use of a centralized resource adequacy mechanism is
authorized by the commission and has been implemented as set forth in
paragraph (1), the net capacity costs of generation resources that
the commission determines are required to meet urgent system or
urgent local grid reliability needs, and that the commission
authorizes to be procured outside of the Section 380 or Section 454.5
processes, shall be recovered according to the provisions of
paragraph (2) of subdivision (c).
   (3)  Nothing in this   This  subdivision
 supplants   does not supplant  the
resource adequacy requirements of Section 380 or the resource
procurement procedures established in Section 454.5.
   (e) The commission may report to the Legislature on the efficacy
of authorizing individual retail end-use residential customers to
enter into direct transactions, including appropriate consumer
protections. 
  SECTION 1.    It is the intent of the Legislature
to enact legislation to require interregional parity in electrical
rates.