BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 895 Hearing Date: 6/30/2015
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|Author: |Rendon |
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|Version: |2/26/2015 As Introduced |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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SUBJECT: Utility rate refunds: energy crisis litigation
DIGEST: This bill prohibits the California Public Utilities
Commission (CPUC) 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
requires the proceeds of any claims arising from that crisis be
deposited into the Ratepayer Relief Fund for appropriation by
the Legislature.
ANALYSIS:
Existing law:
1)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.
(Government Code §16428.15)
2)Requires that any energy settlement agreement 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. (Government Code
§16428.3)
3)Authorizes funds deposited in the Ratepayer Relief Fund to be
appropriated by the Legislature for purposes that benefit
AB 895 (Rendon) Page 2 of ?
ratepayers. (Government Code §16428.3)
This bill:
1)Prohibits the CPUC 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.
2)Requires the proceeds of any claims arising from that crisis
be deposited into the Ratepayer Relief Fund for appropriation
by the Legislature.
Background
In the latter half of the 1990s, the state restructured its
electricity markets to provide more competition. These efforts
were codified in AB 1890 (Brulte, Chapter 854, Statutes of
1996). Soon thereafter, in 2000 and 2001, the state experienced
extraordinary wholesale electricity prices in what has become
known as the California electricity crisis. Pacific Gas and
Electric declared bankruptcy; Southern California Edison nearly
did so.
Subsequent investigation revealed numerous instances of illegal
market manipulation on the part of electricity suppliers. The
state - through the CPUC and the now-defunct Energy Oversight
Board and, subsequently, the Attorney General - has been party
to litigation related to the energy crisis. The U.S. Supreme
Court recently ruled that energy companies can be sued under
state antitrust laws for illegally manipulating natural gas
prices during California's 2000-2002 energy crisis. As a
result, there will likely be additional claims relating to the
energy crisis, as well as, potentially, additional judgements
and settlements that compensate the state.
In the past, proceeds of claims arising from the energy crisis
have been handled differently. In some instances, the CPUC has
directed settlement monies be returned directly to ratepayers.
In one instance, however, the CPUC settled with parties to allow
in-kind payments to fund installation of electric vehicle
charging infrastructure.
This bill requires that the proceeds of any claims arising from
that crisis be deposited into the Ratepayer Relief Fund for
appropriation by the Legislature. The requirement appropriately
AB 895 (Rendon) Page 3 of ?
leaves the Legislature in charge appropriations of the proceeds
of claims related to the energy crisis.
Prior/Related Legislation
AB 1890 (Brulte, Chapter 854, Statutes of 1996) established a
competitive deregulated electricity market in California.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
ASSEMBLY VOTES:
Assembly Floor (79-0)
Assembly Appropriations Committee (17-0)
Assembly Utilities and Commerce Committee (15-0)
SUPPORT:
California Manufacturers & Technology Association
The Utility Reform Network
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: Ratepayers should directly benefit from
any proceeds resulting from litigation related to the energy
crisis. This bill helps ensure this benefit occurs, unless the
Legislature - rather than the CPUC - determines the money should
be used for other purposes.
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