BILL ANALYSIS Ó
AB 1524
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1524 (Committee on Utilities and Commerce) - As Introduced March
16, 2015
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| |Judiciary | |10 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill extends the Attorney General's (AG) authority to
represent the Department of Finance (DOF) and exercise all
rights, claims, powers and entitlements of the Electricity
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Oversight Board (EOB) in any litigation or settlement to obtain
ratepayer recovery for the effects of the 2000-02 energy crisis
for two additional years. Currently, the authority will expire
on January 1, 2016.
FISCAL EFFECT:
Minor, absorbable costs.
COMMENTS:
1)Purpose. According to the author, The bill would allow the AG
to continue to do what she is doing under existing authority -
namely, to sign off on financial settlements relating to
claims arising from the 2000-2002 energy crisis.
2)Energy Oversight Board. The EOB was created by 1996
legislation which deregulated California's wholesale
electricity industry. Its primary mission was to oversee the
California Independent System Operator (CAISO) and the Power
Exchange (PX) which for a time was the marketplace in which
all electricity in the state was bought and sold. The EOB was
given very broad authority over ensuring reliability of the
state's supply of electricity. The EOB was defunded in 2008
and has ceased operations.
3)Settling Remaining Claims. Until it was defunded in 2008, the
EOB was one of the complainants in the Energy Crisis cases,
along with the PUC, Attorney General, Pacific Gas & Electric,
Southern California Edison, and San Diego Gas & Electric
(collectively, the "Cal Parties"). The Cal Parties brought
Energy Crisis cases against approximately 65 energy sellers,
and have now settled with over half of the sellers, but
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continue to negotiate settlement with the remaining sellers.
In 2004, the Cal Parties, including EOB, entered into an
escrow agreement with JP Morgan Chase Bank to handle all
future settlements. Under that agreement, the signatures of
all Cal Parties, including the EOB, are required to issue
effective escrow instructions for the purpose of disbursing
funds resulting from settlements with individual Energy
Crisis-era sellers. This bill allows the AG to sign for the
EOB, facilitating the settlement of certain Energy Crisis
claims.
4)Recent Supreme Court decision allows further suits On April
21, 2015, the U.S. Supreme Court by a 7-2 vote ruled that
energy companies can be sued under state antitrust laws for
illegally manipulating natural gas prices during California's
2000-2002 energy crisis. (Oneok, Inc. v. Learjet, Inc. 575
U.S. ___ (2015).) Respondents, led by manufacturers,
hospitals, and other institutions that purchased natural gas
directly from interstate pipelines, sued petitioner interstate
pipelines alleging violations of state antitrust laws that
resulted in driving up wholesale prices of natural gas. The
Court rejected petitioners' argument that federal law, the
Natural Gas Act, preempted respondents' state law claims.
As a result of this decision, there will likely be additional
state law claims relating to the 2000-2002 energy crisis for
which authority of the Attorney General to represent the EOB
will be needed.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
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