BILL ANALYSIS Ó
SB 1533
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Date of Hearing: June 25, 2012
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 1533 (Padilla) - As Amended: May 1, 2012
SENATE VOTE : 33-0
SUBJECT : Electricity: energy crisis litigation.
SUMMARY : Renews until January 1, 2016, the Attorney General's
(AG's) ability to sign for the Electricity Oversight Board (EOB)
in any litigation or settlement to obtain ratepayer recovery for
the effects of 2000-02 energy crisis.
EXISTING LAW :
1)Requires the AG, until January 1, 2013, to represent the
Department of Finance and to succeed all rights, claims,
powers and entitlements of the EOB in any litigation or
settlement to obtain ratepayer recovery for the effects of the
2000-02 energy crisis.
2)Prohibits the AG from expending the proceeds of any
settlements of those claims, except as specified.
FISCAL EFFECT : Unknown.
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.
1)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
SB 1533
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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.
2)EOB : Until defunded in 2008, the EOB was one of the
complainants in numerous cases
stemming from the energy crisis, along with the California
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 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. The
provisions in this bill sunset January 1, 2016.
3)Related legislation : AB 1390 Assembly Utilities & Commerce
Committee (Chapter 179
Statutes of 2011) authorized the AG to sign for the EOB, but
that law is scheduled to sunset on January 1, 2013.
REGISTERED SUPPORT / OPPOSITION :
Support
California Public Utilities Commission (CPUC) (Sponsor)
Opposition
SB 1533
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None on file.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083