BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 38|
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UNFINISHED BUSINESS
Bill No: SB 38
Author: Padilla (D)
Amended: 8/19/14
Vote: 21
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR : 78-0, 08/27/14 - See last page for vote
SUBJECT : Electrical restructuring
SOURCE : Author
DIGEST : This bill repeals or modifies several sections of the
Public Utilities Code which were added in 1996 as part of
statutes enacted to deregulate electricity.
Assembly Amendments delete the Senate version of this bill,
which dealt with firearms possession, and instead add the
current language.
NOTE: This bill is substantially similar to SB 1195 (Padilla)
which passed the Senate Floor 37-0 on May 5, 2014, and
was gutted and used as part of the water bond package.
ANALYSIS : Existing law states that restructuring of the
electrical industry within the Public Utilities Act provides for
the establishment of an Independent System Operator (ISO) and a
Power Exchange as nonprofit public benefit corporations.
Existing law requires the ISO, within six months after receiving
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approval for its operation by the Federal Energy Regulatory
Commission, to provide a report to the Legislature and the
Electricity Oversight Board containing specified matter.
This bill repeals this reporting requirement, and abolishes the
Power Exchange.
Electrical restructuring makes legislative findings and
declarations in order to provide guidance to the Public
Utilities Commission (PUC) in carrying out restructuring.
This bill repeals those legislative findings and declarations.
Electrical restructuring states the intent of the Legislature
that individual customers not experience rate increases as a
result of the allocation of transition costs, as specified, and
requires the PUC to implement a methodology for calculating
certain Power Exchange energy credits.
This bill repeals this provision.
Electrical restructuring required the PUC to identify and
determine those costs and categories of costs for
generation-related assets and obligations that were being
collected in PUC-approved rates on December 20, 1995, that might
become uneconomic as a result of a competitive generation
market. Electrical restructuring requires each electrical
corporation to propose a cost recovery plan to the PUC for the
recovery of the uneconomic costs of an electrical corporation's
generation-related assets and obligations, requires that the
plan contain specified matter, and requires that the plan 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, provided that rates for
residential and small commercial customers be reduced so that
these customers receive rate reductions of no less than 10% for
1998 continuing through 2002. Electrical restructuring
prohibits the PUC, upon the termination of the 10% rate
reduction for residential and small commercial customers, from
subjecting those residential and small commercial customers to
any rate increase or future rate obligations solely as a result
of the termination of the 10% rate reduction. Electrical
restructuring authorizes an electrical corporation to apply to
the PUC for a determination that certain transition costs, as
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defined, may be recovered through fixed transition amounts,
which constitute transition property, as defined, and provides,
until December 31, 2015, for the issuance of financing orders by
the PUC, and provides for the issuance of rate reduction bonds
utilizing the California Infrastructure and Economic Development
Bank, to be repaid out of rates.
This bill repeals these provisions.
Electrical restructuring requires the PUC to establish an
effective mechanism that ensures recovery of specified
transition costs from all existing and future consumers in the
service territory in which the utility provided electricity
services as of December 20, 1995, except that the costs shall
not be recoverable for new customer load or incremental load of
an existing customer where the load is being met through a
direct transaction and the transaction does not otherwise
require the use of transmission or distribution facilities owned
by the utility.
This bill provides that competition transition charges that are
authorized by the PUC prior to January 1, 2015, continue to
apply to all existing and future consumers in the service
territory in which the utility provided electricity services as
of December 20, 1995, subject to the exception described above.
Electrical restructuring directed the PUC to authorize direct
transactions between electricity suppliers and end-use
customers, subject to implementation of nonbypassable charges,
as specified. Other provisions reference these charges as a
nonbypassable charge, while other provisions reference these
charges as an obligation to pay uneconomic costs, as specified.
This bill replaces the various references to the specified
statutory charges with "competition transition charges."
Electrical restructuring requires any electrical corporation
serving agricultural customers with multiple meters to conduct
research based on a statistically valid sample of those
customers and meters to determine the typical simultaneous peak
load of those customers and to report the results to those
customers and the PUC by July 1, 2001. Electrical restructuring
requires the PUC to consider the research results in setting
future electrical distribution rates for those customers.
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This bill repeals this provision.
Electrical restructuring requires the PUC to allow recovery of
reasonable employee related transition costs incurred and
projected for severance, retraining, early retirement,
outplacement, and related expenses for the employees in order to
mitigate potential negative impacts on utility personnel
directly affected by restructuring.
This bill repeals this provision.
Existing law requires, for an electric generating facility sold
by an electrical corporation in a transaction initiated prior to
December 31, 2001, and approved by the PUC by December 31, 2002,
that the selling utility contract with the purchaser for the
selling utility, an affiliate, or a successor corporation to
operate and maintain the facility for at least two years, and
authorizes the PUC to require these conditions for transactions
initiated on or after January 1, 2002.
This bill repeals this provision.
Existing law, enacted as part of restructuring, prescribes how
energy prices paid to nonutility electrical generators, known as
qualifying facilities under federal law, by an electrical
corporation based on the commission's "short run avoided cost
energy methodology" are to be determined, subject to applicable
contractual terms. Existing law authorizes a nonutility
electrical generator using renewable fuels that entered into a
contract with an electrical corporation prior to December 31,
2001, specifying fixed energy prices for five years of
electrical output to negotiate a contract of an additional five
years of fixed energy payments upon expiration of the initial
five-year term, at a price to be determined by the PUC.
This bill repeals this provision.
This bill repeals a provision authorizing an electrical
corporation that was also a gas corporation that served fewer
than 4,000,000 customers as of December 20, 1995, to file a rate
cap mechanism that includes a Fuel Price Index Mechanism, as
specified, which authorization became inoperative on December
31, 2001.
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Comments
This is a code clean-up bill revises and repeals sections of
current law regarding deregulation which has largely been made
obsolete as a result of the energy crisis, suspension of direct
access, and related budget and regulatory actions.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR : 78-0, 8/27/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Roger Hernández, Holden,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, John A.
Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Harkey, Vacancy
JG:d 8/27/14 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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