BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          SB 790 (Leno)
          
          Hearing Date: 05/23/2011        Amended: 05/11/2011
          Consultant: Brendan McCarthy    Policy Vote: EU&C 6-4
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          ____
          BILL SUMMARY: SB 790 makes a variety of changes to the law 
          governing community choice aggregation, whereby cities and 
          counties may purchase wholesale electricity and deliver it to 
          some or all of their residents without forming a municipal 
          utility.
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                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           
          Updating regulations and          $325        $325      
          $325Special *
             providing oversight

          Costs to state agenciesUnknown                          Various
             due to higher electricity costs

          * Public Utilities Commission Utilities Reimbursement Account.
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          ____

          STAFF COMMENTS: This bill meets the criteria for referral to the 
          Suspense File. 

          Under current law, electricity service in the state is generally 
          provided by investor owned utilities or publicly owned 
          utilities. In addition, electric service providers are allowed 
          to sell electricity directly to non-residential customers, using 
          the transmission and distribution system owned by the utilities. 
          The amount of electricity provided by electric service providers 
          is capped. In addition, current law allows cities and counties 
          to elect to provide electricity to some or all of the residents 
          in their jurisdiction, through a process known as community 
          choice aggregation. There are procedural requirements on cities 
          and counties that set up community choice aggregation plans, but 
          there is no general cap on the amount of electricity service 








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          they may, in aggregate, provide. To date, only one successful 
          community choice aggregation plan has been set up. Under 
          community choice aggregation, customers can opt out of joining 
          the plan and continue to receive retail electricity service from 
          their utility.

          SB 790 makes a variety of changes to the statutes governing 
          community choice aggregation, with the intent to make it easier 
          for local governments to set up community choice aggregation 
          plans.

          The bill authorizes two specific local government agencies and 
          any other local agency that is authorized to generate and 
          deliver electricity to enter into community choice aggregation. 
          The bill requires more sharing of information on customer 
          electricity demand between incumbent utilities and local 
          governments considering community choice aggregation. The bill 
          limits the liability of local governments that participate in 
          community choice aggregation through a joint powers authority. 
          The bill specifies how charges imposed on consumers 
          participating in community choice aggregation for public purpose 
          programs shall be charged and how those charges can be spent.

          The bill requires the Public Utilities Commission to open a 
          rulemaking to develop a code of conduct for investor owned 
          utilities when a local government is considering community 
          choice aggregation. The bill limits the Public Utilities 
          Commission's ability to impose charges on customers electing to 
          participate in community choice aggregation, to offset costs 
          already incurred by their utility (such as for long-term 
          electricity generation contracts purchased to meet projected 
          customer demand or resource adequacy requirements).

          The Public Utilities Commission indicates that it will need 
          three additional, ongoing positions to adopt rules and oversee 
          the implementation of the new requirements, totaling about 
          $325,000 per year.

          In addition to the direct cost to the state from the bill, there 
          are potential indirect costs to state agencies as electricity 
          ratepayers. Because the bill changes the rules for allocating 
          costs between community choice aggregation customers and 
          customers of the investor owned utilities, it is possible that 
          there will be some cost shifting between ratepayers. To the 








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          extent that costs are shifted to investor owned utility 
          customers, the state will share in those costs. The extent of 
          this impact is unknown.