Amended in Senate September 1, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 895

Introduced by Assembly Member Rendon

February 26, 2015

An act begin insert to amend Sections 16428.3 and 16428.5 of, and to add Section 16428.25 to, the Government Code, and end insert to amend Section 453.5 of the Public Utilities Code, relating to utility rates.

LEGISLATIVE COUNSEL’S DIGEST

AB 895, as amended, Rendon. Utility rate refunds: energy crisis litigation.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities. 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. When the commission orders rate refunds to be distributed, existing law requires the commission to require the public utility to pay refunds to all current utility customers, and, when practicable, to prior customers, on an equitable pro rata basis without regard as to whether or not the customer is classifiable as a residential or commercial tenant, landlord, homeowner, business, industrial, educational, governmental, nonprofit, agricultural, or any other type of entity.

Existing law establishes the Ratepayer Relief Fund in the State Treasury to benefit electricity and natural gas ratepayers and to fund investigation and litigation costs of the state in pursuing allegations of overcharges and unfair business practices against generators, suppliers, or marketers of electricity or natural gas arising from the energy crisis of 2000-02. Existing law requires that any energy settlement agreement, as defined, entered into by the Attorney General, after reimbursing the Attorney General’s litigation and investigation expenses, direct settlement funds to the following purposes in priority order: (1) to reduce ratepayer costs of those utility ratepayers harmed by the actions of the settling parties; and (2) for deposit in the Ratepayer Relief Fund. Existing law authorizes the moneys deposited in the Ratepayer Relief Fund to be appropriated for certain purposes for the benefit of ratepayers.

This bill would begin insert require the Attorney General or the Public Utilities Commission to enter into an energy settlement agreement solely on a monetary basis and would prohibit the agreement from including nonmonetary compensation in lieu of monetary compensation. The bill would end insert prohibit the begin delete Public Utilities Commission end delete begin insert commission end insert from distributing or expending the proceeds of claims in any litigation or settlement to obtain ratepayer recovery for the effects of the 2000-02 energy crisis and would require that the begin delete proceeds end delete begin insert proceeds, after reimbursing the commission’s litigation and investigation expenses, end insert be deposited into the Ratepayer Relief Fund. begin insert The bill would require the moneys in the fund to be appropriated for those purposes for the benefit of ratepayers. end insert

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

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 16428.25 is added to the end insert begin insert Government
Code end insert begin insert , end insert immediately following Section 16428.2 begin insert , to read: end insert

begin insert

begin insert 16428.25. end insert   

(a) The Attorney General or the Public Utilities
Commission shall enter into an energy settlement agreement solely
on a monetary basis. The energy settlement agreement shall not
include any nonmonetary compensation in lieu of monetary
compensation.

(b) The section does not apply to a settlement agreement entered
into before January 1, 2016.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 16428.3 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

16428.3.  

begin delete (a) end delete begin delete   end delete Any energy settlement agreement entered into
by the Attorney General, after reimbursing the Attorney General’s
litigation and investigation expenses, to the maximum extent
possible, shall direct settlement funds to the following purposes
in priority order:

begin delete

(1)

end delete

begin insert (a) end insert  To reduce ratepayer costs of those utility ratepayers harmed
by the actions of the settling parties. To the extent the ratepayers
of the investor-owned utilities were harmed, the settlement funds
shall be directed to reduce their costs, to the maximum extent
possible, through reduction of rates or the reduction of ratepayer
debt obligations incurred as a result of the energy crisis.

begin delete

(2)

end delete

begin insert (b) end insert  For deposit in the fund.

begin delete

(b) Nothing in this article shall preclude nonmonetary
compensation to the state through an energy settlement agreement,
provided that the allocation of benefits from any nonmonetary
compensation is consistent with paragraph (1) of subdivision (a).

end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 16428.5 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

16428.5.  

Moneys in the fund shall be expended upon
appropriation by the Legislature, for the benefit of ratepayers.
Moneys in the fund begin delete may end delete begin insert shall end insert be appropriated for the following
purposes:

begin delete

(a) To finance energy litigation and investigation expenses of
state entities.

end delete begin delete

(b)

end delete

begin insert (a) end insert  To reduce rates for customers in the affected service areas
of electrical utilities and gas utilities.

begin delete

(c)

end delete

begin insert (b) end insert  To reduce the debt service on bonds issued pursuant to
Division 27 (commencing with Section 80000) of the Water Code.

begin delete SECTION 1. end delete
begin insert SEC. 4. end insert   

Section 453.5 of the Public Utilities Code is amended
to read:

453.5.  

(a) (1) If the commission orders rate refunds to be
distributed, the commission shall require public utilities to pay
refunds to all current utility customers, and, when practicable, to
prior customers, on an equitable pro rata basis without regard as
to whether or not the customer is classifiable as a residential or
commercial tenant, landlord, homeowner, business, industrial,
educational, governmental, nonprofit, agricultural, or any other
type of entity.

(2) For the purposes of this section, “equitable pro rata basis”
means in proportion to the amount originally paid for the utility
service involved, or in proportion to the amount of the utility
service actually received.

(3) This section shall not prevent the commission from
authorizing refunds to residential and other small customers to be
based on current usage.

(b) (1) The commission shall not distribute or expend the
proceeds of claims in any litigation or settlement to obtain ratepayer
recovery for the effects of the 2000-02 energy crisis.

(2) Proceeds of any claims begin insert recovered by the commission end insert arising
out of the energy crisis of begin delete 2000-02 end delete begin insert 2000-02, after reimbursing
the commission’s litigation and investigation expenses, to the
maximum extent possible, end insert shall be deposited into the Ratepayer
Relief Fund established pursuant to begin delete Article 9.5 (commencing with
Section 16428.1) of Chapter 2 of Part 2 of Division 4 of Title 2 end delete
begin insert Section 16428.15 of the Government Code and expended, upon
appropriation, for purposes set forth in Section 16428.5 end insert of the
Government Code.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert This act does not apply to any claims brought by an
electrical corporation, as defined in Section 218 of the Public
Utilities Code, that arise from the energy crisis of 2000-02. end insert