BILL ANALYSIS Ó
AB 895
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Date of Hearing: May 20, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
895 (Rendon) - As Introduced February 26, 2015
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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
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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.
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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
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