California Legislature—2013–14 Regular Session

Assembly Bill No. 923

Introduced by Assembly Member Bigelow

February 22, 2013

An act to amend Section 368 of the Public Utilities Code, relating to electrical rates.

LEGISLATIVE COUNSEL’S DIGEST

AB 923, as introduced, Bigelow. Electrical rates.

Under existing law, the restructuring of the electrical services industry provides for a rate reduction of not less than 10% for residential and small commercial customers of electrical corporations, to remain in effect until the earlier of March 31, 2002, or the date on which specified costs have been fully recovered.

This bill would make technical, nonsubstansive changes to that provision.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 368 of the Public Utilities Code is
amended to read:

368.  

Each electrical corporation shall propose a cost recovery
plan to the commission for the recovery of the uneconomic costs
of an electrical corporation’s generation-related assets and
obligations identified in Section 367. The commission shall
authorize the electrical corporation to recover the costs pursuant
to the plan if the plan meets the following criteria:

(a) The cost recovery plan shall set rates for each customer class,
rate schedule, contract, or tariff option, at levels equal to the level
as shown on electric rate schedules as of June 10, 1996, begin delete provided
that end delete begin insert if end insert rates for residential and small commercial customers begin delete shall
be end delete begin insert are end insert reduced so that these customers begin delete shall end delete receive rate reductions
of no less than 10 percent for 1998 continuing through 2002. These
rate levels for each customer class, rate schedule, contract, or tariff
option shall remain in effect until the earlier of March 31, 2002,
or the date on which the commission-authorized costs for utility
generation-related assets and obligations have been fully recovered.
The electrical corporation shall be at risk for those costs not
recovered during that time period. Each utility shall amortize its
total uneconomic costs, to the extent possible, such that for each
year during the transition period its recorded rate of return on the
remaining uneconomic assets does not exceed its authorized rate
of return for those assets. For purposes of determining the extent
to which the costs have been recovered, any over-collections
recorded in Energy Costs Adjustment Clause and Electric Revenue
Adjustment Mechanism balancing accounts, as of December 31,
1996, shall be credited to the recovery of the costs.

(b) The cost recovery plan shall provide for identification and
separation of individual rate components begin insert , end insert such as charges for
energy, transmission, distribution, public benefit programs, and
recovery of uneconomic costs. The separation of rate components
required by this subdivision shall be used to ensure that customers
of the electrical corporation who become eligible to purchase
electricity from suppliers other than the electrical corporation pay
the same unbundled component charges, other than energy, that a
bundled service customer pays. begin delete No cost end delete begin insert Cost end insert shifting among
customer classes, rate schedules, contract, or tariff options shall
begin insert not end insert result from the separation required by this subdivision. Nothing
in this provision is intended to affect the rates, terms, and
conditions or to limit the use of any Federal Energy Regulatory
Commission-approved contract entered into by the electrical
corporation prior to the effective date of this provision.

(c) In consideration of the risk that the uneconomic costs
identified in Section 367 may not be recoverable within the period
identified in subdivision (a) of Section 367, an electrical
corporation that, as of December 20, 1995, served more than four
million customers, and was also a gas corporation that served less
than four thousand customers, shall have the flexibility to employ
risk management tools, such as forward hedges, to manage the
market price volatility associated with unexpected fluctuations in
natural gas prices, and the out-of-pocket costs of acquiring the risk
management tools shall be considered reasonable and collectible
within the transition freeze period. This subdivision applies only
to the transaction costs associated with the risk management tools
and shall not include any losses from changes in market prices.

(d) In order to ensure implementation of the cost recovery plan,
the limitation on the maximum amount of cost recovery for nuclear
facilities that may be collected in any year adopted by the
commission in Decision 96-01-011 and Decision 96-04-059 shall
be eliminated to allow the maximum opportunity to collect the
nuclear costs within the transition cap period.

(e) As to an electrical corporation that is also a gas corporation
serving more than four million California customers, so long as
any cost recovery plan adopted in accordance with this section
satisfies subdivision (a), it shall also provide for annual increases
in base revenues, effective January 1, 1997, and January 1, 1998,
equal to the inflation rate for the prior year plus two percentage
points, as measured by the consumer price index. The increase
shall do both of the following:

(1) Remain in effect pending the next general rate case review,
which shall be filed not later than December 31, 1997, for rates
that would become effective in January 1999. For purposes of any
commission-approved performance-based ratemaking mechanism
or general rate case review, the increases in base revenue authorized
by this subdivision shall create no presumption that the level of
base revenue reflecting those increases constitute the appropriate
starting point for subsequent revenues.

(2) Be used by the utility for the purposes of enhancing its
transmission and distribution system safety and reliability,
including, but not limited to, vegetation management and
emergency response. To the extent the revenues are not expended
for system safety and reliability, they shall be credited against
subsequent safety and reliability base revenue requirements. Any
excess revenues carried over shall not be used to pay any monetary
sanctions imposed by the commission.

(f) The cost recovery plan shall provide the electrical corporation
with the flexibility to manage the renegotiation, buy-out, or
buy-down of the electrical corporation’s power purchase
obligations, consistent with review by the commission to assure
that the terms provide net benefits to ratepayers and are otherwise
reasonable in protecting the interests of both ratepayers and
shareholders.

(g) An example of a plan authorized by this section is the
document entitled “Restructuring Rate Settlement” transmitted to
the commission by Pacific Gas and Electric Company on June 12,
1996.