BILL NUMBER: AB 923 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 21, 2013
INTRODUCED BY Assembly Member Bigelow
FEBRUARY 22, 2013
An act to amend Section 368 of add Section
365.2 to the Public Utilities Code, relating to
electrical rates energy .
LEGISLATIVE COUNSEL'S DIGEST
AB 923, as amended, Bigelow. Electrical rates.
Public Utilities Commission: direct transaction proceedings.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations
and gas corporations, as defined. Existing law authorizes the
commission to fix the rates and charges for every public utility, and
requires that those rates and charges be just and reasonable.
Existing law, relative to electrical restructuring, requires the
commission to authorize and facilitate direct transactions between
electricity suppliers and retail end-use customers. Existing law,
enacted during the energy crisis of 2000-01, authorized the
Department of Water Resources, until January 1, 2003, to enter into
contracts for the purchase of electricity, and to sell electricity to
retail end-use customers at specified costs and procedures. That law
suspended the right of retail end-use customers, other than
community choice aggregators and a qualifying direct transaction
customer, as defined, to acquire service through a direct transaction
until the Department of Water Resources no longer supplies
electricity under that law. Existing law continues the suspension of
direct transactions except as expressly authorized, until the
Legislature, by statute, repeals the suspension or otherwise
authorizes direct transactions. Existing law requires the commission
to authorize direct transactions for nonresidential end-use customers
subject to a reopening schedule adopted and implemented by July 1,
2010, that will phase in over a period of not less than 3 years and
not more than 5 years, and subject to an annual maximum allowable
total kilowatthour limit established for each electrical corporation.
The federal Flood Control Act of 1962 provides that specified
amounts of electricity generated by the Central Valley Project power
system are to be made available to Tuolumne County and Calaveras
County on a first-preference basis.
This bill would require the commission, in a proceeding relating
to direct transactions, to consider the federal restrictions on a
preference power electricity provider, as defined, to engage in
direct transactions.
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
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 365.2 is added to the
Public Utilities Code , to read:
365.2. (a) In a proceeding relating to direct transactions, the
commission shall consider the federal restrictions on a preference
power electricity provider to engage in direct transactions.
(b) As used in this section, the following terms mean the
following:
(1) "Federal act" means the federal Flood Control Act of 1962
(Public Law 87-874).
(2) "Preference power electricity provider" means a public power
authority, or its successors, that receives all its electricity
pursuant to a preference right adopted and authorized by the United
States Congress pursuant to Section 203 of the federal act.
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, if
rates for residential and small commercial customers are reduced so
that these customers 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, 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. Cost shifting among customer classes, rate
schedules, contract, or tariff options shall not 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.