BILL ANALYSIS Ó AB 895 Page 1 Date of Hearing: May 20, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 895 (Rendon) - As Introduced February 26, 2015 ----------------------------------------------------------------- |Policy |Utilities and Commerce |Vote:|15 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill prohibits the Public Utilities Commission (PUC) from distributing proceeds collected from litigation claims to obtain ratepayer recovery for the effects of the 2000 to 2002 energy crisis. Instead, this bill requires all proceeds collected from AB 895 Page 2 litigation claims to be deposited into the Ratepayer Relief Fund to be appropriated by the Legislature for the benefit of ratepayers. FISCAL EFFECT: Unknown future, likely significant, revenues available for Legislature to expend on programs to t benefit ratepayers. To date, energy crisis litigation has gleaned over $5 billion for the state. COMMENTS: 1)Purpose. According to the author, the purpose of this bill is to ensure legislative oversight of the use of ratepayer refunds resulting from electricity crisis litigation. 2)Background. In 1996, the Legislature established a deregulated electricity market. In 2000, a serious drought diminished the supply of inexpensive hydropower. The resulting increased electricity prices, inadequate infrastructure, and the deteriorating financial stability of the investor-owned utilities (IOUs) triggered an electricity crisis. During the crisis, market manipulation resulted in high retail electricity prices and power outages throughout the state. Since then, various lawsuits have sought billions of dollars in refunds. Litigation continues resulting in settlements and judgments in favor of California electric ratepayers. AB 895 Page 3 Currently there are about 10 more contracts subject to litigation. AB 1756, Chapter 228, Statutes of 2003, required any funds paid to the state as a result of energy litigation are to be allocated in the following priority order: 1) to reimburse the state's costs of investigation and litigation; 2) to reduce the costs of ratepayers harmed by the actions of the defendants; and 3) to reduce or pay debt service on the energy bonds issued by the Department of Water Resources The PUC has directed most funds from the energy crisis litigation to ratepayers. However, the PUC spent funds from a recent out-of-court settlement (Dynegy 2012) on developing a statewide electric vehicle charging program, rather than refunding ratepayers. This program is not meeting the milestones specified in the settlement order, raising questions about the supposed benefit to ratepayers and the effectiveness of the current process. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081 AB 895 Page 4