BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1533|
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THIRD READING
Bill No: SB 1533
Author: Padilla (D)
Amended: 5/1/12
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMMITTEE : 12-0, 4/24/12
AYES: Padilla, Fuller, Berryhill, Corbett, De León,
DeSaulnier, Emmerson, Kehoe, Pavley, Rubio, Simitian,
Wright
NO VOTE RECORDED: Strickland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Electricity: energy crisis litigation
SOURCE : Public Utilities Commission
DIGEST : This bill repeals existing law, on January 1,
2016, which requires the Attorney General (AG) to represent
the Department of Finance and to succeed to all rights,
claims, powers, and entitlements of the Electricity
Oversight Board in any litigation or settlement to obtain
ratepayer recovery for the effects of the 2000-02 energy
crisis, and prohibits the AG from expending the proceeds of
any settlements of those claims, except as specified.
ANALYSIS : Existing law requires the AG, until January 1,
2013, to represent the Department of Finance and to succeed
to all rights, claims, powers, and entitlements of the
Electricity Oversight Board (EOB) in any litigation or
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settlement to obtain ratepayer recovery for the effects of
the 2000-02 energy crisis and prohibits the AG from
expending the proceeds of any settlements of those claims,
with certain exceptions.
Background
The EOB was created by 1996 legislation which deregulated
California's wholesale electricity industry. Its primary
mission was to oversee the California Independent System
Operator (CAISO) and the Power Exchange (PX) which for a
time was the marketplace in which all electricity in the
state was bought and sold. The EOB was given very broad
authority over ensuring reliability of the state's supply
of electricity.
The EOB's primary duty at that time was to act as a market
monitor, oversee the state's electricity market and
initiate proceedings at Federal Energy Regulatory
Commission (FERC) in response to market manipulation. The
EOB was a participant in over 400 proceedings at FERC and
was a litigant in over 100 cases in the federal courts of
appeal. Through 2005-06, the EOB had been a party to
settlements of over $1 billion for various overcharges
stemming from the energy crisis.
Among the many developments associated with the energy
crisis were the bankruptcy of the PX in March 2001 and the
replacement of the EOB by an appointed CAISO stakeholder
board with gubernatorial appointees. The EOB was
ultimately defunded in 2008 but the Legislature did not
assign a successor agency to assume its responsibilities.
Comments
The purpose of this bill is to extend the period through
which the AG may, on behalf of the EOB, sign settlements
stemming from the 2000-02 energy crisis. Until defunded in
2008, the EOB was one of the complainants in numerous cases
stemming from the energy crisis, along with the Public
Utilities Commission (PUC), AG, PG&E, Southern California
Edison, and SDG&E (collectively, the "Cal Parties"). The
Cal Parties brought the energy crisis cases against
approximately 65 energy sellers, have now settled with many
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of the sellers, and continue to negotiate settlements with
remaining sellers. In 2004, the Cal Parties, including the
EOB, entered into an escrow agreement with JP Morgan Chase
Bank to handle all future settlements. Under that
agreement, the signatures of all Cal Parties (including
EOB) are required to issue effective escrow instructions
for the purpose of disbursing funds resulting from
settlements with individual energy crisis-era sellers.
Difficulties in getting EOB signatures on settlement
agreements and escrow disbursement instructions began
cropping up in 2007, when the EOB began to be dismantled.
This bill allows the AG to continue to sign for the EOB,
facilitating settlement of certain energy crisis claims and
disbursement of escrow funds.
PUC v. NRG . The PUC recently announced the settlement of a
claim pending at the FERC from the energy crisis with NRG.
The $120 million settlement would allocate $20 million
directly to ratepayers but the remaining in-kind funds
would be dedicated to increasing the infrastructure for the
charging of electric vehicles and under ownership by NRG.
This settlement would be unaffected by the terms of this
bill because the PUC was the only claimant in that action.
Related legislation
AB 1457 (Huber), a technical clean-up bill, contains a
provision identical to this bill.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/15/12)
Public Utilities Commission (source)
RM:do 5/15/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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