BILL ANALYSIS Ó SB 1533 Page 1 Date of Hearing: August 8, 2012 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 1533 (Padilla) - As Amended: May 1, 2012 Policy Committee: UtilitiesVote:12-0 (Consent) Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill extends, from January 1, 2013 to January 1, 2016, the requirement for the Attorney General (AG) to represent the Department of Finance and to succeed the Electricity Oversight Board (EOB) in any litigation or settlement to obtain electricity ratepayer relief as a result of the 2000-2002 energy crisis. FISCAL EFFECT The bill will result in absorbable costs to the AG and allow continued resolution of energy crisis-related litigation, including receipt of any resulting settlement revenues to benefit ratepayers and the state. COMMENTS Background and Purpose . The EOB was created by AB 1890 (Brulte)/Chapter 854 of 1996, which deregulated California's wholesale electricity industry. As a result of the energy crisis ten years ago, one of the EOB's primary duties was to initiate proceedings at the Federal Energy Regulatory Commission (FERC) in response to market manipulation. The EOB was a participant in over 400 proceedings at FERC and has been a litigant in over 100 cases in the federal courts of appeal. The EOB ceased operations on April 1, 2008 and was defunded in 2008-09. Until that time, the EOB was one of the complainants in the Energy Crisis cases, along with the Public Utilities SB 1533 Page 2 Commission (PUC), the 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 settlement 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 surfaced in 2007, when the EOB was being dismantled. AB 1390 (Utilities and Commerce Committee)/Chapter 179 of 2011, designated the AG to assume the EOB's authority and responsibilities regarding this litigation. SB 1533 extends this authority for an additional three years to allow for continued settlement of claims and disbursement of escrow funds. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081