BILL ANALYSIS Ó SB 1090 Page 1 SENATE THIRD READING SB 1090 (Fuller) As Amended August 18, 2014 Majority vote SENATE VOTE :37-0 UTILITIES & COMMERCE 14-0 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |Ayes:|Patterson, Bonilla, |Ayes:|Gatto, Bigelow, | | |Buchanan, Chávez, Dahle, | |Bocanegra, Bradford, Ian | | |Fong, Beth Gaines, | |Calderon, Campos, | | |Garcia, Roger Hernández, | |Donnelly, Eggman, Gomez, | | |Jones, Mullin, Quirk, | |Holden, Jones, Linder, | | |Rendon, Skinner | |Pan, Quirk, | | | | |Ridley-Thomas, Wagner, | | | | |Weber | ----------------------------------------------------------------- SUMMARY : Requires the California Public Utilities Commission (PUC) to explicitly consider whether hardship will be caused to customers living in hot, inland areas before imposing default time-of-use (TOU) rates. Specifically, this bill : 1)States the PUC shall not require or authorize an electrical corporation to employ default TOU pricing for residential customers unless it has explicitly considered whether hardship will be caused on the following: a) Customers located in hot, inland areas, assuming no changes in overall usage by those customers during peak periods. b) Residential customers living in areas with hot summer weather, as a result of seasonal bill volatility, assuming no change in summertime usage or in usage during peak periods. EXISTING LAW : 1)Requires that all rates for any service or product charged by an electrical corporation be just and reasonable. (Public SB 1090 Page 2 Utilities Code Section 451) 2)Permits the PUC to authorize an electrical corporation to offer residential customers the option of receiving service pursuant to time-variant pricing, as defined, and to participate in other demand reduction response programs, but prohibits the PUC from authorizing an electrical corporation to employ mandatory or default time-variant pricing for any residential customer, except that beginning January 1, 2018, the PUC may require or authorize an electrical corporation to employ default time-of-use pricing for residential customers, subject to specified limitations and conditions. (Public Utilities Code Section 745) FISCAL EFFECT : According to the Assembly Appropriations Committee, absorbable costs to the PUC. COMMENTS : The author notes "while we are hopeful that rate reform will help my constituents and others in the inland areas of the state with regard to heavy air-conditioning bills, we are still very concerned about the potential hardships of default time-of-use rates on very hot climates in which there may be little ability to adjust electricity usage. This bill continues and is consistent with the rate reform process, which stemmed in part from the concerns of the Central Valley over high summer electricity bills. SB 1090 extends rate reform to require the PUC to do a more thorough examination of the impact of one part of that reform, the potential for default time-of-use rates, in terms of the hardships which may be caused in hot climates." Impact of TOU rates on residential customers. The investor-owned utilities (IOUs) currently offer TOU rates as a voluntary option for residential customers. As previously mentioned, the PUC may order the IOUs to establish default TOU rates for residential customers after January 2018. Once default TOUs are implemented, residential customers would be automatically switched to these rates unless they take action to affirmatively notify the utility company to opt-out. This bill requires the PUC to explicitly consider whether hardship will be caused on customers located in hot, inland areas, assuming no changes in overall usage by those customers in peak periods. This bill also requires the PUC to consider residential customers living in areas with hot summer weather, as a result of seasonal bill volatility, assuming no change in SB 1090 Page 3 summertime usage or in usage during peak periods. Analysis Prepared by : DaVina Flemings / U. & C. / (916) 319-2083 FN: 0004946