BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 1524 Hearing Date: 6/16/2015
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|Author: |Committee on Utilities and Commerce |
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|Version: |3/16/2015 As Introduced |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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SUBJECT: Electricity: energy crisis litigation
DIGEST: This bill extends, by two years, the authority of
Attorney General (AG) to represent the Department of Finance
(Finance) and to exercise the powers of the now-defunct
Electricity Oversight Board (EOB) in any litigation related to
the 2000-02 energy crisis.
ANALYSIS:
Existing law requires the AG, until January 1, 2016, to
represent Finance and to succeed to all rights, claims, powers,
and entitlements of the EOB in any litigation or settlement to
obtain ratepayer recovery for the effects of the 2000-02 energy
crisis and prohibits the AG from expending the proceeds of any
settlements of those claims, with certain exceptions. (Public
Utilities Code §343)
This bill extends, from January 1, 2016 to January 1, 2018, the
sunset date on current law that authorizes the AG to represent
Finance and to exercise the powers of the EOB in any litigation
related to the 2000-02 energy crisis in any litigation or
settlement to obtain ratepayer recovery for the effects of the
2000-02 energy crisis.
Background
The EOB was created by 1996 legislation that deregulated
California's wholesale electricity industry. The EOB's primary
mission was to oversee the California Independent System
Operator (CAISO) and the Power Exchange (PX), which, for a time,
AB 1524 (Committee on Utilities and Commerce) Page 2 of ?
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's primary duty at that time was to act as a market
monitor, oversee the state's electricity market and initiate
proceedings at Federal Energy Regulatory Commission (FERC) in
response to market manipulation. The EOB was a participant in
over 400 proceedings at FERC and was a litigant in over 100
cases in the federal courts of appeal. Through 2005-06, the EOB
had been a party to settlements of over $1 billion for various
overcharges stemming from the energy crisis.
Among the many developments associated with the energy crisis
was the bankruptcy of the PX in March 2001 and the replacement
of the EOB by an appointed CAISO stakeholder board with
gubernatorial appointees. The EOB was ultimately defunded in
2008 but the Legislature did not assign a successor agency to
assume its responsibilities.
Since EOB's demise, the Legislature has authorized the AG to
represent Finance and EOB in any litigation or settlement to
obtain ratepayer recovery for the effects of the 2000-02 energy
crisis. Under current law, this authority would sunset on
January 1, 2016.
More work to be done. This bill would extend the sunset on the
AG's authority by two years. Such an extension is appropriate:
the AG likely has more work to do. As described in prior
analyses of this bill, 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 for which the AG
will need to represent Finance and exercise the powers of the
EOB.
Prior/Related Legislation
SB 1533 (Padilla, Chapter 226, Statutes of 2012) extended, from
January 1, 2013 to January 1, 2016, the authority of the AG to
represent Finance and to succeed the EOB in any litigation or
settlement to obtain electricity ratepayer relief as a result of
the 2000-2002 energy crisis.
AB 1524 (Committee on Utilities and Commerce) Page 3 of ?
AB 1457 (Huber, 2012) would have eliminated the EOB from statute
and provided the AG with the authority extended by this bill.
AB 1457 died in the Assembly Appropriations Committee.
AB 1390 (Committee on Utilities & Commerce, Chapter 179,
Statutes of 2011) established the authority of the AG to
represent Finance and to succeed the EOB in any litigation or
settlement to obtain electricity ratepayer relief as a result of
the 2000-2002 energy crisis.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
ASSEMBLY VOTES:
Assembly Floor (74-0)
Assembly Appropriations Committee (17-0)
Assembly Judiciary Committee (10-0)
Assembly Utilities and Commerce Committee(14-0)
SUPPORT:
None received
ARGUMENTS IN SUPPORT: A recent decision of the U.S. Supreme
Court will likely result in additional state litigation related
to the 2000-2002 energy crisis; therefore, the need for the AG
to represent the state in such litigation continues.
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