BILL NUMBER: SB 477	CHAPTERED
	BILL TEXT

	CHAPTER   275
	FILED WITH SECRETARY OF STATE   AUGUST 15, 1997
	APPROVED BY GOVERNOR   AUGUST 15, 1997
	PASSED THE SENATE   AUGUST 7, 1997
	PASSED THE ASSEMBLY   AUGUST 4, 1997
	AMENDED IN ASSEMBLY   AUGUST 4, 1997
	AMENDED IN SENATE   MARCH 19, 1997
	AMENDED IN SENATE   MARCH 6, 1997

INTRODUCED BY  Senator Peace
   (Principal coauthors:  Senators Brulte, Sher, and Solis)
   (Principal coauthors: Assembly Members Keeley, Kuykendall, and
Leonard)
   (Coauthors:  Senators Burton, Costa, Dills, Hughes, Johnson,
Kelley, Leslie, McPherson, Mountjoy, and Watson)
   (Coauthors:  Assembly Members Alby, Alquist, Baca, Bordonaro,
Campbell, Cunneen, Frusetta, Granlund, Hertzberg, Honda, Kuehl,
Machado, Murray, Papan, Perata, Runner, Shelley, Takasugi, Torlakson,
Villaraigosa, Wayne, Wildman, and Wright)

                        FEBRUARY 20, 1997

   An act to amend Sections 63010 and 63025.1 of the Government Code,
and to amend Sections 366, 367, 396, 454, 840, 841, 842, and 843 of,
to add Sections 365.5, 366.5, 391, 392.1, 394.1, 394.2, 394.25,
394.27, 394.3, 394.4, 394.5, 394.6, 394.7, 394.8, and 394.9 to, and
to repeal and add Sections 392 and 394 of, the Public Utilities Code,
relating to public utilities, and declaring the urgency thereof, to
take effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 477, Peace.  Public utilities:  electrical restructuring.
   (1) The existing restructuring of the electrical services industry
provides for the authorization of direct transactions between
electricity suppliers and end use customers, subject to
implementation of a nonbypassable charge.
   Existing law provides for the issuance of rate reduction bonds for
the recovery of transition costs, as defined, by electrical
corporations, pursuant to the restructuring of the electrical
services industry.
   This bill would revise the definitions of "special purpose trust"
and "transition property" for purposes of the issuance of the rate
reduction bonds, would set forth the method for creating and
perfecting a consensual security interest in transition property, and
would make various technical changes in these provisions.
   (2) Existing law establishes various consumer protections,
including the requirement that each entity, other than an electrical
corporation, offering electrical service to residential and small
commercial customers within the service territory of an electrical
corporation register with the Public Utilities Commission, and
provide specified information to the commission.  These provisions
would be repealed on January 1, 2002.
   This bill would make legislative findings and declarations
regarding the need for restructuring of the electrical industry.
   The bill would extend the consumer protection provisions
indefinitely, would include electrical corporations, as well as
unregulated affiliates and subsidiaries, within the purview of these
requirements, and would exempt a public agency that aggregates
electrical services pursuant to existing law within its jurisdiction
from these requirements.
   The bill would expand the registration provisions to require
additional information and payment of a registration fee, as
specified, and would direct the commission to require any electrical
corporation or entity that requires a deposit or advance payment
prior to rendering electrical services to procure a performance bond
prior to registration.  This bill would set forth specified criteria
for approval, denial, suspension, and revocation of registration.
   The bill would require the commission to adopt rules that contain
various standards of conduct for the entities that are required to be
registered, and would provide specified rights and remedies for
consumers who deal with the registered entities, and sanctions for
those entities that violate the applicable provisions.  It would
require the commission to annually determine the costs of
administering the registration program, and other facets of consumer
protection directly related to the direct access transactions of
registered entities.
   The bill would also require, as specified, the commission to
compile and regularly update information on competitive market
options to be available to consumers, and require the commission to
issue public alerts about unauthorized or fraudulent companies
attempting to do business in the state.  It would impose additional
consumer protections, including requiring the commission to maintain
a list of residential customers who do not wish to be solicited.
   This bill would reorganize existing law provisions relating to
voluntary aggregation of customer electrical loads.
   Under existing law, a public utility may not change any rate or
alter a classification, contract, practice, or rule unless a showing
is made before the commission and a finding is made that the change
is justified.  The utility is required to furnish its affected
customers with notice of its application for approval of the new rate
containing, among other information, the mailing address of the
commission to which customer inquiries may be made.
   This bill would require the notice to also include the e-mail
address of the commission, if it is available.
   (3) Since existing law makes any public utility, as defined, and
any corporation other than a public utility, that violates the Public
Utilities Act guilty of a misdemeanor, and these provisions of the
bill would be within the act, this bill would impose a state-mandated
local program by creating a new crime.
  (4) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   (5) This bill would declare that it is to take effect immediately
as an urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  The Legislature finds and declares both of the
following:
   (a) The setting of utility rates, as well as modifications to
existing rates, must be approved by the Public Utilities Commission.

   (b) As deregulation will increasingly enable utility customers to
make choices about their utility providers, customers must be given
ample time to consider the impact of any changes to existing rates
and the ability, if they desire, to communicate quickly with
decisionmakers at the Public Utilities Commission about any concerns
regarding those rates.
  SEC. 2.  Section 63010 of the Government Code is amended to read:
   63010.  For purposes of this division, the following words and
terms shall have the following meanings unless the context clearly
indicates or requires another or different meaning or intent:
   (a) "Act" means the Bergeson-Peace Infrastructure and Economic
Development Bank Act.
   (b) "Bank" means the California Infrastructure and Economic
Development Bank.
   (c) "Board" or "bank board" means the Board of Directors of the
California Infrastructure and Economic Development Bank.
   (d) "Bond purchase agreement" means a contractual agreement
executed between the bank and a sponsor, or a special purpose trust
authorized by the bank or a sponsor, or both, whereby the bank or
special purpose trust authorized by the bank agrees to purchase bonds
of the sponsor for retention or sale.
   (e) "Bonds" means bonds, including structured, senior, and
subordinated bonds or other securities; loans; notes, including bond,
revenue, tax or grant anticipation notes; commercial paper; floating
rate, and variable maturity securities; and any other evidences of
indebtedness or ownership, including certificates of participation or
beneficial interest, asset backed certificates, or lease-purchase or
installment purchase agreements, whether taxable or excludable from
gross income for federal income taxation purposes.
   (f) "Cost," as applied to a project or portion thereof financed
under this division, means all or any part of the cost of
construction, renovation, and acquisition of all lands, structures,
real or personal property, rights, rights-of-way, franchises,
licenses, easements, and interests acquired or used for a project;
the cost of demolishing or removing any buildings or structures on
land so acquired, including the cost of acquiring any lands to which
the buildings or structures may be moved; the cost of all machinery,
equipment, and financing charges; interest prior to, during, and for
a period after, completion of construction, renovation, or
acquisition, as determined by the bank; provisions for working
capital; reserves for principal and interest and for extensions,
enlargements, additions, replacements, renovations, and improvements;
the cost of architectural, engineering, financial and legal
services, plans, specifications, estimates, administrative expenses,
and other expenses necessary or incidental to determining the
feasibility of any project or incidental to the construction,
acquisition, or financing of any project, and transition costs in the
case of an electrical corporation.
   (g) "Electrical corporation" has the meaning set forth in Section
218 of the Public Utilities Code.
   (h) "Executive director" means the Executive Director of the
California Infrastructure and Economic Development Bank appointed
pursuant to Section 63021.
   (i) "Facilities" means real and personal property, structures,
conveyances, equipment, thoroughfares, buildings, and supporting
components thereof that are directly related to providing the
following:
   (1) "City streets" includes any street, avenue, boulevard, road,
parkway, drive, or other way that is any of the following:
   (A) An existing municipal roadway.
   (B) Is shown upon a plat approved pursuant to law and includes the
land between the street lines, whether improved or unimproved, and
may comprise pavement, bridges, shoulders, gutters, curbs,
guardrails, sidewalks, parking areas, benches, fountains, plantings,
lighting systems, and other areas within the street lines, as well as
equipment and facilities used in the cleaning, grading, clearance,
maintenance, and upkeep thereof.
   (2) "County highways" includes any county highway as defined in
Section 25 of the Streets and Highways Code, that includes the land
between the highway lines, whether improved or unimproved, and may
comprise pavement, bridges, shoulders, gutters, curbs, guardrails,
sidewalks, parking areas, benches, fountains, plantings, lighting
systems, and other areas within the street lines, as well as
equipment and facilities used in the cleaning, grading, clearance,
maintenance, and upkeep thereof.
   (3) "Drainage and flood control" includes ditches, canals, levees,
pumps, dams, conduits, pipes, storm sewers, and dikes necessary to
keep or direct water away from people, equipment, buildings, and
other protected areas as may be established by lawful authority, as
well as the acquisition, improvement, maintenance, and management of
floodplain areas and all equipment used in the maintenance and
operation of the foregoing.
   (4) "Educational facilities" includes libraries, child care
facilities, including, but not limited to, day care facilities, and
employment training facilities.
   (5) "Environmental mitigation measures" includes required
construction or modification of public infrastructure and purchase
and installation of pollution control and noise abatement equipment.

   (6) "Parks and recreational facilities" includes local parks,
recreational property and equipment, parkways and property.
   (7) "Port facilities" includes docks, harbors, ports of entry,
piers, ships, small boat harbors and marinas, and any other
facilities, additions, or improvements in connection therewith.
   (8) "Communications" includes facilities for telephone and
telecommunications service.
   (9) "Public transit" includes air and rail transport of goods,
airports, guideways, vehicles, rights-of-way, passenger stations,
maintenance and storage yards, and related structures, including
public parking facilities, equipment used to provide or enhance
transportation by bus, rail, ferry, or other conveyance, either
publicly or privately owned, that provides to the public general or
special service on a regular and continuing basis.
   (10) "Sewage collection and treatment" includes pipes, pumps, and
conduits that collect wastewater from residential, manufacturing, and
commercial establishments, the equipment, structures, and facilities
used in treating wastewater to reduce or eliminate impurities or
contaminants, and the facilities used in disposing of, or
transporting, remaining sludge, as well as all equipment used in the
maintenance and operation of the foregoing.
   (11) "Solid-waste collection and disposal" includes vehicles,
vehicle-compatible waste receptacles, transfer stations, recycling
centers, sanitary landfills, and waste conversion facilities
necessary to remove solid waste, except that which is hazardous as
defined by law, from its point of origin.
   (12) "Water treatment and distribution" includes facilities in
which water is purified and otherwise treated to meet residential,
manufacturing, or commercial purposes and the conduits, pipes, and
pumps that transport it to places of use.
   (13) "Defense conversion" includes, but is not limited to,
facilities necessary for successfully converting military bases
consistent with an adopted base reuse plan.
   (14) "Public safety facilities" includes, but is not limited to,
police stations, fire stations, court buildings, jails, juvenile
halls, and juvenile detention facilities.
   (15) "State highways" includes any state highway as described in
Chapter 2 (commencing with Section 230) of Division 1 of the Streets
and Highways Code, and the related components necessary for safe
operation of the highway.
   (j) "Financial assistance" in connection with a project, includes,
but is not limited to, any combination of grants, loans, the
proceeds of bonds issued by the bank or special purpose trust,
insurance, guarantees or other credit enhancements or liquidity
facilities, and contributions of money, property, labor, or other
things of value, as may be approved by resolution of the board or the
sponsor, or both; the purchase or retention of bank bonds, the bonds
of a sponsor for their retention or for sale by the bank, or the
issuance of bank bonds or the bonds of a special purpose trust used
to fund the cost of a project for which a sponsor is directly or
indirectly liable, including, but not limited to, bonds, the security
for which is provided in whole or in part pursuant to the powers
granted by Section 63025; bonds for which the bank has provided a
guarantee or enhancement, including, but not limited to, the purchase
of the subordinated bonds of the sponsor, the subordinated bonds of
a special purpose trust, or the retention of the subordinated bonds
of the bank pursuant to Chapter 4 (commencing with Section 63060); or
any other type of assistance deemed appropriate by the bank or the
sponsor, except that no direct loans shall be made to nonpublic
entities other than in connection with the issuance of rate reduction
bonds pursuant to a financing order.
   For purposes of this subdivision, "grant" does not include grants
made by the bank except when acting as an agent or intermediary for
the distribution or packaging of financing available from federal,
private, or other public sources.
   (k) "Financing order" has the meaning set forth in Section 840 of
the Public Utilities Code.
   (l) "Guarantee trust fund" means the California Infrastructure
Guarantee Trust Fund.
   (m) "Infrastructure bank fund" means the California Infrastructure
and Economic Development Bank Fund.
   (n) "Loan agreement" means a contractual agreement executed
between the bank or a special purpose trust and a sponsor that
provides that the bank or special purpose trust will loan funds to
the sponsor and that the sponsor will repay the principal and pay the
interest and redemption premium, if any, on the loan.
   (o) "Participating party" means any person, company, corporation,
partnership, firm, or other entity or group of entities engaged in
business within the state and that applies for financing from the
bank in conjunction with a sponsor for the purpose of implementing a
project.  However, in the case of a project relating to the financing
of transition costs or the acquisition of transition property, or
both, on the request of an electrical corporation, the participating
party shall be deemed to be the same entity as the sponsor for the
financing.
   (p) "Project" means designing, acquiring, planning, permitting,
entitling, constructing, improving, extending, restoring, financing,
and generally developing facilities within the state or financing
transition costs  or the acquisition of transition property, or both,
upon approval of a financing order by the Public Utilities
Commission, as provided in Article 5.5 (commencing with Section 840)
of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code.
   (q) "Rate reduction bonds" has the meaning set forth in Section
840 of the Public Utilities Code.
   (r) "Revenues" means all receipts, purchase payments, loan
repayments, lease payments, and all other income or receipts derived
by the bank or a sponsor from the sale, lease, or other financing
arrangement undertaken by the bank, a sponsor or a participating
party, including, but not limited to, all receipts from a bond
purchase agreement, and any income or revenue derived from the
investment of any money in any fund or account of the bank or a
sponsor and any receipts derived from transition property.  Revenues
shall not include moneys in the General Fund of the state.
   (s) "Special purpose trust" means a trust, partnership, limited
partnership, association, corporation, nonprofit corporation, or
other entity authorized under the laws of the state to serve as an
instrumentality of the state to accomplish public purposes and
authorized by the bank to acquire, by purchase or otherwise, for
retention or sale, the bonds of a sponsor or of the bank made or
entered into pursuant to this division and to issue special purpose
trust bonds or other obligations secured by these bonds or other
sources of public or private revenues.  Special purpose trust also
means any entity authorized by the bank to acquire transition
property or to issue rate reduction bonds, or both, subject to the
approvals by the bank and powers of the bank as are provided by the
bank in its resolution authorizing the entity to issue rate reduction
bonds.
   (t) "Sponsor" means any subdivision of the state or local
government including departments, agencies, commissions, cities,
counties, nonprofit corporations formed on behalf of a sponsor,
special districts, assessment districts, and joint powers authorities
within the state or any combination of these subdivisions that has,
or proposes to acquire, an interest in a project and that makes
application to the bank for financial assistance in connection with a
project in a manner prescribed by the bank.  In addition, an
electrical corporation shall be deemed to be the sponsor as well as
the participating party for any project relating to the financing of
transition costs and the acquisition of transition property on the
request of the electrical corporation.
   (u) "State" means the State of California.
   (v) "Transition costs" has the meaning set forth in Section 840 of
the Public Utilities Code.
   (w) "Transition property" has the meaning set forth in Section 840
of the Public Utilities Code.
  SEC. 3.  Section 63025.1 of the Government Code is amended to read:

   63025.1.  The bank board may do or delegate the following to the
executive director:
   (a) Sue and be sued in its own name.
   (b) As provided in Chapter 5 (commencing with Section 63070),
issue bonds and authorize special purpose trusts to issue bonds,
including, at the option of the board, bonds bearing interest that is
taxable for the purpose of federal income taxation, to pay all or
any part of the cost of any project.
   (c) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out the
purposes of this division.
   (d) Employ attorneys, financial consultants, and other advisers as
may, in the bank's judgment, be necessary in connection with the
issuance and sale, or authorization of special purpose trusts for the
issuance and sale, of any bonds, notwithstanding Sections 11042 and
11043.
   (e) Contract for engineering, architectural, accounting, or other
services of appropriate state agencies as may, in its judgment, be
necessary for the successful development of a project.
   (f) Pay the reasonable costs of consulting engineers, architects,
accountants, and construction, land use, recreation, and
environmental experts employed by any sponsor or participating party
if, in the bank's judgment, those services are necessary for the
successful development of a project.
   (g) Acquire, take title to, and sell by installment sale or
otherwise, lands, structures, real or personal property, rights,
rights-of-way, franchises, easements, and other interests in lands
that are located within the state, or transition property as the bank
may deem necessary or convenient for the financing of the project,
upon terms and conditions that it considers to be reasonable.
   (h) Receive and accept from any source including, but not limited
to, the federal government, the state, or any agency thereof, loans,
contributions, or grants, in money, property, labor, or other things
of value, for, or in aid of, a project, or any portion thereof.
   (i) Make secured loans to any sponsor or participating party in
connection with the financing of a project in accordance with an
agreement between the bank and the sponsor or a participating party.
However, no loan shall exceed the total cost of the project as
determined by the sponsor or the participating party and approved by
the bank.
   (j) Make secured loans to any sponsor or participating party in
accordance with an agreement between the bank and the sponsor or
participating party to refinance indebtedness incurred by the sponsor
or participating party in connection with projects undertaken and
completed prior to any agreement with the bank or expectation that
the bank would provide financing.
   (k) Mortgage all or any portion of the bank's interest in a
project and the property on which any project is located, whether
owned or thereafter acquired, including the granting of a security
interest in any property, tangible or intangible.
   (l) Assign or pledge all or any portion of the bank's interests in
transition property and the revenues therefrom, or assets, things of
value, mortgages, deeds of trust, bonds, bond purchase agreements,
loan agreements, indentures of mortgage or trust, or similar
instruments, notes, and security interests in property, tangible or
intangible and the revenues therefrom, of a sponsor or a
participating party to which the bank has made loans, and the
revenues therefrom, including payment or income from any interest
owned or held by the bank, for the benefit of the holders of bonds.
   (m) Receive or serve as a conduit for the making of grants, and
provide for contributions, guarantees, insurance, credit enhancements
or liquidity facilities, or other financial enhancements to a
sponsor or a participating party as financial assistance for a
project.
   (n) Lease the project being financed to a sponsor or a
participating party, upon terms and conditions that the bank deems
proper but shall not be leased at a loss; charge and collect rents
therefor; terminate any lease upon the failure of the lessee to
comply with any of the obligations thereof; include in any lease, if
desired, provisions that the lessee shall have options to renew the
lease for a period or periods, and at rents determined by the bank;
purchase any or all of the project; or, upon payment of all the
indebtedness incurred by the bank for the financing of the project,
the bank may convey any or all of the project to the lessee or
lessees.
   (o) Charge and equitably apportion among sponsors and
participating parties the bank's administrative costs and expenses
incurred in the exercise of the powers and duties conferred by this
division.
   (p) Issue, obtain, or aid in obtaining, from any department or
agency of the United States, from other agencies of the state, or
from any private company, any insurance or guarantee to, or for, the
payment or repayment of interest or principal, or both, or any part
thereof, on any loan, lease, or obligation or any instrument
evidencing or securing the same, made or entered into pursuant to
this division.
   (q) Notwithstanding any other provision of this division, enter
into any agreement, contract, or any other instrument with respect to
any insurance or guarantee; accept payment in the manner and form as
provided therein in the event of default by a sponsor or a
participating party; and issue or assign any insurance or guarantee
as security for the bank's bonds.
   (r) Enter into any agreement or contract, execute any instrument,
and perform any act or thing necessary or convenient to, directly or
indirectly, secure the bank's bonds, the bonds issued by a special
purpose trust, or a sponsor's obligations to the bank or to a special
purpose trust, including, but not limited to, bonds of a sponsor
purchased by the bank or a special purpose trust for retention or
sale, with funds or moneys that are legally available and that are
due or payable to the sponsor by reason of any grant, allocation,
apportionment or appropriation of the state or agencies thereof, to
the extent that the Controller shall be the custodian at any time of
these funds or moneys, or with funds or moneys that are or will be
legally available to the sponsor, the bank, or the state or any
agencies thereof by reason of any grant, allocation, apportionment,
or appropriation of the federal government or agencies thereof; and
in the event of written notice that the sponsor has not paid or is in
default on its obligations to the bank or a special purpose trust,
direct the Controller to withhold payment of those funds or moneys
from the sponsor over which it is or will be custodian and to pay the
same to the bank or special purpose trust or their assignee, or
direct the state or any agencies thereof to which any grant,
allocation, apportionment or appropriation of the federal government
or agencies thereof is or will be legally available to pay the same
upon receipt by the bank or special purpose trust or their assignee,
until the default has been cured and the amounts then due and unpaid
have been paid to the bank or special purpose trust or their
assignee, or until arrangements satisfactory to the bank or special
purpose trust have been made to cure the default.
   (s) Enter into any agreement or contract, execute any instrument,
and perform any act or thing necessary, convenient, or appropriate to
carry out any power expressly given to the bank by this division,
including, but not limited to, agreements for the sale of all or any
part, including principal, interest, redemption rights or any other
rights or obligations, of bonds of the bank or of a special purpose
trust, liquidity agreements, contracts commonly known as interest
rate swap agreements, forward payment conversion agreements, futures
or contracts providing for payments based on levels of, or changes
in, interest rates or currency exchange rates, or contracts to
exchange cash-flows or a series of payments, or contracts, including
options, puts or calls to hedge payments, rate, spread, currency
exchange, or similar exposure, or any other financial instrument
commonly known as a structured financial product.
   (t) Purchase, with the proceeds of the bank's bonds, transition
property or bonds issued by, or for the benefit of, any sponsor in
connection with a project, pursuant to a bond purchase agreement or
otherwise.  Bonds or transition property purchased pursuant to this
part may be held by the bank, pledged or assigned by the bank, or
sold to public or private purchasers at public or negotiated sale, in
whole or in part, separately or together with other bonds issued by
the bank, and notwithstanding any other provision of law, may be
bought by the bank at private sale.
   (u) Enter into purchase and sale agreements with all entities,
public and private, including state and local government pension
funds, with respect to the sale or purchase of bonds or transition
property.
   (v) Invest any moneys held in reserve or sinking funds, or any
moneys not required for immediate use or disbursement, in obligations
that are authorized by law for the investment of trust funds in the
custody of the Treasurer.
   (w) Authorize a special purpose trust or trusts to purchase or
retain, with the proceeds of the bonds of a special purpose trust,
transition property or bonds issued by, or for the benefit of, any
sponsor in connection with a project or issued by the bank or a
special purpose trust, pursuant to a bond purchase agreement or
otherwise.  Bonds or transition property purchased pursuant to this
title may be held by a special purpose entity, pledged or assigned by
a special purpose entity, or sold to public or private purchasers at
public or negotiated sale, in whole or in part, with or without
structuring, subordination or credit enhancement, separately or
together with other bonds issued by a special purpose trust, and
notwithstanding any other provision of law, may be bought by the bank
or by a special purpose trust at private sale.
   (x) Approve the issuance of any bonds, notes, or other evidences
of indebtedness by the California Economic Development and Financing
Authority, established pursuant to Section 15712, and the Rural
Economic Development Infrastructure Panel, established pursuant to
Section 15373.7.
   (y) Approve the issuance of rate reduction bonds by an entity
other than the bank or a special purpose trust to acquire transition
property upon approval of the transaction in a financing order by the
Public Utilities Commission, as provided in Article 5.5 (commencing
with Section 840) of Chapter 4 of Part 1 of Division 1 of the Public
Utilities Code.
  SEC. 4.  Section 365.5 is added to the Public Utilities Code, to
read:
   365.5.  Nothing in this chapter shall prevent the commission from
exercising its authority to investigate a process for certification
and regulation of the rates, charges, terms, and conditions of
default service.  If the commission determines that a process for
certification and regulation of default service is in the public
interest, the commission shall submit its findings and
recommendations to the Legislature for approval.
  SEC. 5.  Section 366 of the Public Utilities Code is amended to
read:
   366.  (a) The commission shall take actions as needed to
facilitate direct transactions between electricity suppliers and end
use customers.  Customers shall be entitled to aggregate their
electric loads on a voluntary basis, provided that each customer does
so by a positive written declaration.  If no positive declaration is
made by a customer, that customer shall continue to be served by the
existing electrical corporation or its successor in interest.
   (b) Aggregation of customer electrical load shall be authorized by
the commission for all customer classes, including, but not limited
to small commercial or residential customers.  Aggregation may be
accomplished by private market aggregators, cities, counties, special
districts or on any other basis made available by market
opportunities and agreeable by positive written declaration by
individual consumers.
   (c) If a public agency seeks to serve as a community aggregator on
behalf of residential customers, it shall be obligated to offer the
opportunity to purchase electricity to all residential customers
within its jurisdiction.
  SEC. 6.  Section 366.5 is added to the Public Utilities Code, to
read:
   366.5.  (a) No change in the aggregator or supplier of electric
power for any small commercial customer may be made until one of the
following means of confirming the change has been completed.
   (1) Independent third-party telephone verification.
   (2) Receipt of a written confirmation received in the mail from
the consumer after the consumer has received an information package
confirming the agreement.
   (3) The customer signs a document fully explaining the nature and
effect of the change in service.
               (4) The customer's consent is obtained through
electronic means, including but not limited to, computer
transactions.
   (b) No change in the aggregator or provider of electric power for
any residential customer may be made until the change has been
confirmed by an independent third-party verification company, as
follows:
   (1) The third-party verification company shall meet each of the
following criteria:
   (A) Be independent from the entity that seeks to provide the new
service.
   (B) Not be directly or indirectly managed, controlled, or
directed, or owned wholly or in part, by an entity that seeks to
provide the new service or by any corporation, firm, or person who
directly or indirectly manages, controls, or directs, or owns more
than 5 percent of the entity.
   (C) Operate from facilities physically separate from those of the
entity that seeks to provide the new service.
   (D) Not derive commission or compensation based upon the number of
sales confirmed.
   (2) The entity seeking to verify the sale shall do so by
connecting the resident by telephone to the third-party verification
company or by arranging for the third-party verification company to
call the customer to confirm the sale.
   (3) The third-party verification company shall obtain the customer'
s oral confirmation regarding the change, and shall record that
confirmation by obtaining appropriate verification data.  The record
shall be available to the customer upon request.  Information
obtained from the customer through confirmation shall not be used for
marketing purposes.  Any unauthorized release of this information is
grounds for a civil suit by the aggrieved resident against the
entity or its employees who are responsible for the violation.
   (4) Notwithstanding paragraphs (1), (2), and (3), an aggregator or
provider of electric power shall not be required to comply with
these provisions when the customer directly calls an aggregator or
provider of electric power to change service providers.  However, an
aggregator or provider of electric power shall not avoid the
verification requirements by asking a customer to contact an
aggregator or provider of electric power directly to make any change
in the service provider.
   (c) Any aggregator or provider of electric power offering
electricity service to residential and small commercial customers
that violates the verification procedures described in this section
shall be liable to the aggregator or provider of electric power
offering electricity services previously selected by the customer in
an amount equal to all charges paid by the customer after the
violation.
   (d) A change in provider of electric power by an aggregator is not
a change in provider of electric power for purposes of this section.

   (e) Public agencies are exempt from this section to the extent
they are serving customers within their jurisdiction.
   (f) An electrical corporation is exempt from this section for
customers which default to the service of the electrical corporation.

  SEC. 7.  Section 367 of the Public Utilities Code is amended to
read:
   367.  The commission shall identify and determine those costs and
categories of costs for generation-related assets and obligations,
consisting of generation facilities, generation-related regulatory
assets, nuclear settlements, and power purchase contracts, including,
but not limited to, restructurings, renegotiations or terminations
thereof approved by the commission, that were being collected in
commission-approved rates on December 20, 1995, and that may become
uneconomic as a result of a competitive generation market, in that
these costs may not be recoverable in market prices in a competitive
market, and appropriate costs incurred after December 20, 1995, for
capital additions to generating facilities existing as of December
20, 1995, that the commission determines are reasonable and should be
recovered, provided that these additions are necessary to maintain
the facilities through December 31, 2001.  These uneconomic costs
shall include transition costs as defined in subdivision (f) of
Section 840, and shall be recovered from all customers or in the case
of fixed transition amounts, from the customers specified in
subdivision (a) of Section 841, on a nonbypassable basis and shall:
   (a) Be amortized over a reasonable time period, including
collection on an accelerated basis, consistent with not increasing
rates for any rate schedule, contract, or tariff option above the
levels in effect on June 10, 1996; provided that, the recovery shall
not extend beyond December 31, 2001, except as follows:
   (1) Costs associated with employee-related transition costs as set
forth in subdivision (b) of Section 375 shall continue until fully
collected; provided, however, that the cost collection shall not
extend beyond December 31, 2006.
   (2) Power purchase contract obligations shall continue for the
duration of the contract.  Costs associated with any buy-out,
buy-down, or renegotiation of the contracts shall continue to be
collected for the duration of any agreement governing the buy-out,
buy-down, or renegotiated contract; provided, however, no power
purchase contract shall be extended as a result of the buy-out,
buy-down, or renegotiation.
   (3) Costs associated with contracts approved by the commission to
settle issues associated with the Biennial Resource Plan Update may
be collected through March 31, 2002; provided that only 80 percent of
the balance of the costs remaining after December 31, 2001, shall be
eligible for recovery.
   (4) Nuclear incremental cost incentive plans for the San Onofre
nuclear generating station shall continue for the full term as
authorized by the commission in Decision 96-01-011 and Decision
96-04-059; provided that the recovery shall not extend beyond
December 31, 2003.
   (5) Costs associated with the exemptions provided in subdivision
(a) of Section 374 may be collected through March 31, 2002, provided
that only fifty million dollars ($50,000,000) of the balance of the
costs remaining after December 31, 2001, shall be eligible for
recovery.
   (6) Fixed transition amounts, as defined in subdivision (d) of
Section 840, may be recovered from the customers specified in
subdivision (a) of Section 841 until all rate reduction bonds
associated with the fixed transition amounts have been paid in full
by the financing entity.
   (b) Be based on a calculation mechanism that nets the negative
value of all above market utility-owned generation-related assets
against the positive value of all below market utility-owned
generation related assets.  For those assets subject to valuation,
the valuations used for the calculation of the uneconomic portion of
the net book value shall be determined not later than December 31,
2001, and shall be based on appraisal, sale, or other divestiture.
The commission's determination of the costs eligible for recovery and
of the valuation of those assets at the time the assets are exposed
to market risk or retired, in a proceeding under Section 455.5, 851,
or otherwise, shall be final, and notwithstanding Section 1708 or any
other provision of law, may not be rescinded, altered or amended.
   (c) Be limited in the case of utility-owned fossil generation to
the uneconomic portion of the net book value of the fossil capital
investment existing as of January 1, 1998, and appropriate costs
incurred after December 20, 1995, for capital additions to generating
facilities existing as of December 20, 1995, that the commission
determines are reasonable and should be recovered, provided that the
additions are necessary to maintain the facilities through December
31, 2001.  All "going forward costs" of fossil plant operation,
including operation and maintenance, administrative and general, fuel
and fuel transportation costs, shall be recovered solely from
independent Power Exchange revenues or from contracts with the
Independent System Operator, provided that for the purposes of this
chapter, the following costs may be recoverable pursuant to this
section:
   (1) Commission-approved operating costs for particular
utility-owned fossil powerplants or units, at particular times when
reactive power/voltage support is not yet procurable at market-based
rates in locations where it is deemed needed for the reactive
power/voltage support by the Independent System Operator, provided
that the units are otherwise authorized to recover market-based rates
and provided further that for an electrical corporation that is also
a gas corporation and that serves at least four million customers as
of December 20, 1995, the commission shall allow the electrical
corporation to retain any earnings from operations of the reactive
power/voltage support plants or units and shall not require the
utility to apply any portions to offset recovery of transition costs.
  Cost recovery under the cost recovery mechanism shall end on
December 31, 2001.
   (2) An electrical corporation that, as of December 20, 1995,
served at least four million customers, and that was also a gas
corporation that served less than four thousand customers, may
recover, pursuant to this section, 100 percent of the uneconomic
portion of the fixed costs paid under fuel and fuel transportation
contracts that were executed prior to December 20, 1995, and were
subsequently determined to be reasonable by the commission, or 100
percent of the buy-down or buy-out costs associated with the
contracts to the extent the costs are determined to be reasonable by
the commission.
   (d) Be adjusted throughout the period through March 31, 2002, to
track accrual and recovery of costs provided for in this subdivision.
  Recovery of costs prior to December 31, 2001, shall include a
return as provided for in Decision 95-12-063, as modified by Decision
96-01-009, together with associated taxes.
   (e) (1) Be allocated among the various classes of customers, rate
schedules, and tariff options to ensure that costs are recovered from
these classes, rate schedules, contract rates, and tariff options,
including self-generation deferral, interruptible, and standby rate
options in substantially the same proportion as similar costs are
recovered as of June 10, 1996, through the regulated retail rates of
the relevant electric utility, provided that there shall be a
firewall segregating the recovery of the costs of competition
transition charge exemptions such that the costs of competition
transition charge exemptions granted to members of the combined class
of residential and small commercial customers shall be recovered
only from these customers, and the costs of competition transition
charge exemptions granted to members of the combined class of
customers, other than residential and small commercial customers,
shall be recovered only from these customers.
   (2) Individual customers shall not experience rate increases as a
result of the allocation of transition costs.  However, customers who
elect to purchase energy from suppliers other than the Power
Exchange through a direct transaction, may incur increases in the
total price they pay for electricity to the extent the price for the
energy exceeds the Power Exchange price.
   (3) The commission shall retain existing cost allocation
authority, provided the firewall and rate freeze principles are not
violated.
  SEC. 8.  Section 391 is added to the Public Utilities Code, to
read:
   391.  The Legislature finds and declares all of the following:
   (a) Electricity is essential to the health, safety, and economic
well-being of all California consumers.
   (b) The restructuring of the electricity industry will create a
new electricity market with new marketers and sellers offering new
goods and services, many of which may not be readily evaluated by the
average consumer.
   (c) It is important that these customers be protected from unfair
marketing practices and that market participants demonstrate their
creditworthiness and technical expertise in order to engage in power
sales to these members of the public.
   (d) Larger commercial and industrial customers are sophisticated
energy consumers that have adequate civil remedies and are adequately
protected by existing commercial law, as demonstrated by the absence
of significant amounts of contract litigation between commercial and
industrial natural gas users and natural gas marketers in
California.
   (e) It is important to create a market structure that will not
unduly burden new entrants into the competitive electric market, or
California may not receive the full benefits of reduced electricity
costs through competition.
   (f) It is appropriate to create a system of registration and
consumer protection for the electric industry, designed to ensure
sufficient protection for residential and small commercial consumers
while simplifying entry into the market for responsible entities
serving larger, more sophisticated customers.
   (g) It is the intent of the Legislature that:
   (1) Electricity consumers be provided with sufficient and reliable
information to be able to compare and select among products and
services provided in the electricity market.
   (2) Consumers be provided with mechanisms to protect themselves
from marketing practices that are unfair or abusive.
   (3) Pursuant to the authority granted to the commission in this
part as to registration and consumer protection matters, the
commission shall balance the need to maximize competition by reducing
barriers to entry into the small retail electricity procurement
market with the need to protect small consumers against deceptive,
unfair, or abusive business practices, or insolvency of the entity
offering retail electric service.
   (h) It is the intent of the Legislature in enacting this act to
further the policies of AB 1890 (Chapter 854, Statutes of 1996)
relating to electric industry restructuring.
  SEC. 9.  Section 392 of the Public Utilities Code is repealed.
  SEC. 10.  Section 392 is added to the Public Utilities Code, to
read:
   392.  (a) (1) Electrical corporations shall disclose each
component of the electrical bill as follows:
   (A) The total charges associated with transmission and
distribution, including that portion comprising the research,
environmental, and low-income funds.
   (B) The total charges associated with generation, including the
competition transition charge.
   (2) Electrical corporations shall provide conspicuous notice that
if the customer elects to purchase electricity from another provider
that customer will continue to be liable for payment of the
competition transition charge.  This paragraph does not prohibit the
commission from requiring additional information.
   (b) Prior to the implementation of the competition transition
charge, electric corporations, in conjunction with the commission,
shall devise and implement a customer education program informing
customers of the changes to the electric industry.  The program shall
provide customers with information necessary to help them make
appropriate choices as to their electric service.  The education
program shall be subject to approval by the commission.
   (c) The standard bill format developed by the commission pursuant
to subdivision (e) of Section 394.4 shall also apply to electrical
corporations.
  SEC. 11.  Section 392.1 is added to the Public Utilities Code, to
read:
   392.1.  (a) The commission shall compile and regularly update the
following information:  names and contact numbers of registered
providers, information to assist consumers in making service choices,
and the number of customer complaints against specific providers in
relation to the number of customers served by those providers and the
disposition of those complaints.  To facilitate this function,
registered entities shall file with the commission information
describing the terms and conditions of any standard service plan made
available to residential and small commercial customers.  The
commission shall adopt a standard format for this filing.  The
commission shall maintain and make generally available a list of
entities offering electrical services operating in California.  This
list shall include all registered providers and those providers not
required to be registered who request the commission to be included
in the list.  The commission shall, upon request, make this
information available at no charge.  Notwithstanding any other
provision of law, public agencies which are registered entities shall
be required to disclose their terms and conditions of service
contracts only to the same extent that other registered entities
would be required to disclose the same or similar service contracts.

   (b) The commission shall issue public alerts about companies
attempting to provide electric service in the state in an
unauthorized or fraudulent manner as defined in subdivision (b) of
Section 394.25.
   (c) The commission shall direct the Office of Ratepayer Advocates
to collect and analyze information provided pursuant to subdivision
(a) for purposes of preparing easily understandable informational
guides or other tools to help residential and small commercial
customers understand how to evaluate competing electric service
options.  In implementing these provisions, the commission shall
direct the Office of Ratepayer Advocates to pay special attention to
ensuring that customers, especially those with
limited-English-speaking ability or other disadvantages when dealing
with marketers, receive correct, reliable, and easily understood
information to help them make informed choices.  The Office of
Ratepayer Advocates shall not make specific recommendations or rank
the relative attractiveness of specific service offerings of
registered providers of electric services.
  SEC. 12.  Section 394 of the Public Utilities Code is repealed.
  SEC. 13.  Section 394 is added to the Public Utilities Code, to
read:
   394.  (a) Each entity offering electrical service to residential
and small commercial customers shall register with the commission,
unless it is an electrical corporation as defined in Section 218, or
a public agency offering electrical service to residential and small
commercial customers within its own political jurisdiction, or within
the service territory of a local publicly owned electric utility.
   For purposes of this section the term "entity" shall include the
unregulated affiliates and subsidiaries of an electrical corporation,
as defined in Section 218.  As a precondition to registration, the
entity shall provide, under oath, declaration, or affidavit, the
following information to the commission:
   (1) Legal name and any other names under which the entity is doing
business in California.
   (2) Current telephone number.
   (3) Current address.
   (4) Agent for service of process.
   (5) State and date of incorporation, if any.
   (6) Number for a customer contact representative, or other
personnel for receiving customer inquiries.
   (7) Brief description of the nature of the service being provided.

   (8) Disclosure of any civil, criminal, or regulatory sanctions or
penalties imposed within the 10 years immediately prior to
registration, against the company or any officer or director of the
company pursuant to any state or federal consumer protection law or
regulation, and of any felony convictions of any kind against the
company or any officer or director of the company.
   (9) Proof of financial viability.  The commission shall develop
uniform standards for determining financial viability and shall
publish those standards for public comment no later than March 31,
1998.  In determining the financial viability of the entity, the
commission shall take into account the number of customers the
potential registrant expects to serve, the number of kilowatt hours
of electricity it expects to provide, and any other appropriate
criteria in order to ensure that residential and small commercial
customers have adequate recourse in the event of fraud or
nonperformance.
   (10) Proof of technical and operational ability.  The commission
shall develop uniform standards for determining technical and
operational capacity and shall publish those standards for public
comment no later than March 31, 1998.
   (b) Any registration filing approved by the commission prior to
the effective date of this section which does not comply in all
respects with the requirements of subdivision (a) of Section 394
shall nevertheless continue in force and effect so long as within 90
days of the effective date of this section the registered entity
undertakes to supplement its registration filing to the satisfaction
of the commission.  Any registration which is not supplemented by the
required information within the time set forth in this subdivision
shall be suspended by the commission and shall not be reinstated
until the commission has found the registration to be in full
compliance with subdivision (a) of Section 394.
   (c) Any public agency offering aggregation services as provided
for in Section 366 solely to retail electric customers within its
jurisdiction which has registered with the commission prior to the
enactment of this section shall have the right to voluntarily
withdraw its registration to the extent that it is exempted from
registration under the provisions of this chapter.
   (d) Before reentering the market, entities whose registration has
been revoked shall file a formal application with the commission
which satisfies the requirements set forth in Section 394.1 and
demonstrates the entity's fitness and ability to comply with all
applicable rules of the commission.
   (e) Registration with the commission is an exercise of the
licensing function of the commission, and does not constitute
regulation of the rates or terms and conditions of service offered by
registered entities.  Nothing in this part authorizes the commission
to regulate the rates or terms and conditions of service offered by
registered entities.
  SEC. 14.  Section 394.1 is added to the Public Utilities Code, to
read:
   394.1.  (a) The registration shall be deemed approved and a
registration number issued no later than 45 days after the required
information has been submitted, unless the commission's executive
director finds, upon review of the information submitted by the
entity or available to the commission, that there is evidence to
support a finding that the entity has committed an act constituting
grounds for denial of registration as specifically set forth in the
operative provisions of this chapter, including, but not limited to,
subdivision (c).
   (b) Upon a finding by the commission's executive director that
there is evidence to support a finding that the entity has committed
an act constituting grounds for denial of registration as set forth
in this section, the commission shall notify the entity in writing,
cause the documents submitted by the entity to be filed as a formal
application for registration, and notice an expedited hearing on the
entity's registration to be held within 30 days of the notification
to the entity of the executive director's finding of evidence to
support denial of registration.  The commission shall, within 45 days
after holding the hearing, issue a decision on the registration
request which shall be based on the findings of fact and conclusions
of law based on the evidence presented at the hearing.  The decision
shall include the findings of fact and the conclusions of law relied
upon.
   (c) The commission may deny an application for registration in
accordance with the provisions of subdivision (b) on the grounds that
the entity or any officer or director of the entity has one or more
of the following:
   (1) Been convicted of a crime as described in paragraph (8) of
subdivision (a) of Section 394.
   (2) Failure to make a sufficient showing with respect to
paragraphs (1) to (10), inclusive, of subdivision (a) of Section 394.

   (3) Knowingly made a false statement of fact in the application
for registration.
   The commission may deny registration pursuant to this subdivision
only if the crime or act is substantially related to the
qualifications, functions, or duties required to provide retail
electric service to end use customers of electricity or the false
statement is material to the registration application.  For purposes
of this subdivision, conviction of a crime shall be established in
the same manner as that set forth in paragraph (1) of subdivision (a)
of Section 480 of the Business and Professions Code.
   (d) The commission shall require entities registered under this
section to update their registration information set forth in
paragraphs (1) to (10), inclusive, of subdivision (a) of Section 394
within 60 days of any material change in the information provided.
Material changes to any other information required pursuant to this
article shall be updated annually.
  SEC. 15.  Section 394.2 is added to the Public Utilities Code, to
read:
   394.2.  (a) The commission shall accept, compile, and attempt to
informally resolve consumer complaints regarding registered entities.
  Where the commission reasonably suspects a pattern of customer
abuses, the commission may, on its own motion, initiate
investigations into the activities of entities offering electrical
service.  Consumer complaints regarding service by a public agency
offering electric service within the political boundary of the public
agency or service territory of a local publicly owned electric
utility shall continue to be resolved by the public agency.  Within
the service territory of a local publicly owned utility, consumer
complaints arising from the violation of direct access rules adopted
by the governing body of the local publicly owned utility shall be
resolved through the local publicly owned utility's consumer
complaint procedures.
   (b) Notwithstanding other provisions, residential and small
commercial customers shall have the option to proceed with a
complaint against a registered entity either through an action filed
in the judicial court system or through a complaint filed with the
commission.  A customer who elects either the judicial or commission
remedies may not raise the same claim in both forums.  The commission
shall have the authority to accept, compile, and resolve
residential, and small commercial consumer complaints, including the
authority to award reparations.  The commission's authority in these
complaint proceedings is limited to adjudication of complaints
regarding residential and small commercial electric service provided
by a registered entity and shall not be expanded to include either an
award of any other damages or regulation of the rates or charges of
the registered entity.
However, a person or entity which takes a conflict to the commission
shall not be precluded from pursuing an appeal of the decision
through the courts as provided for in law.
   (c) In connection with customer complaints or commission
investigations into customer abuses, registered entities shall
provide the commission access to their accounts, books, papers, and
documents related to California transactions as described in Sections
313 and 314, provided the information is relevant to the complaint
or investigation.
   (d) No registered entity may discontinue service to a customer for
a disputed amount if that customer has filed a complaint that is
pending with the commission, and that customer has paid the disputed
amount into an escrow account.
  SEC. 16.  Section 394.25 is added to the Public Utilities Code, to
read:
   394.25.  (a) The commission may enforce the provisions of Sections
2102, 2103, 2104, 2105, 2107, 2108, and 2114 against registered
entities as if those entities were public utilities as defined in
these code sections.  Notwithstanding the above, nothing in this
section shall grant the commission jurisdiction to regulate
registered entities other than as specifically set forth in this
part.  Registered entities shall continue to be subject to the
provisions of Sections 2111 and 2112.  Upon a finding by the
commission's executive director that there is evidence to support a
finding that the entity has committed an act constituting grounds for
suspension or revocation of registration as set forth in subdivision
(b) of Section 394.25, the commission shall notify the entity in
writing and notice an expedited hearing on the suspension or
revocation of the entity's registration to be held within 30 days of
the notification to the entity of the executive director's finding of
evidence to support suspension or revocation of registration.  The
commission shall, within 45 days after holding the hearing, issue a
decision on the suspension or revocation of registration, which shall
be based on findings of fact and conclusions of law based on the
evidence presented at the hearing.  The decision shall include the
findings of fact and the conclusions of law relied upon.
   (b) A registered entity may have its registration suspended or
revoked, immediately or prospectively, in whole or in part, for any
of the following acts:
   (1) Making material misrepresentations in the course of soliciting
customers, entering into service agreements with those customers, or
administering those service agreements.
   (2) Dishonesty, fraud, or deceit with the intent to substantially
benefit the registered entity or its employees, agents, or
representatives, or to disadvantage retail electric customers.
   (3) Where the commission finds that there is evidence that the
entity is not financially or operationally capable of providing the
offered electric service.
   (c) Pursuant to its authority to revoke or suspend registration,
the commission may suspend a registration for a specified period or
revoke the registration, or in lieu of suspension or revocation,
impose a moratorium on adding or soliciting additional customers.
Any suspension or revocation of a registration shall require the
entity to cease serving customers within the boundaries of
investor-owned electric corporations, and the affected customers
shall be served by the electrical corporation until such time as they
may select service from another service provider.  Customers shall
not be liable for the payment of any early termination fees or other
penalties to any entity under the service agreement in the event the
serving electric service provider's registration is suspended or
revoked.
  SEC. 17.  Section 394.27 is added to the Public Utilities Code, to
read:
   394.27.  When a customer files a claim with an electrical
corporation for damages to property resulting from the curtailment of
electric service due to the failure of the electrical corporation to
reasonably provide service or restore service within a reasonable
time after a fire, flood, earthquake, other natural disaster, or act
of God, the electric corporation shall inform the customer that such
claim may be pursued in small claims court or other judicial courts,
depending on the amount of the claim.
  SEC. 18.  Section 394.3 is added to the Public Utilities Code, to
read:
   394.3.  In order to carry out essential elements of a sustainable
and effective consumer protection program in connection with
registered entities offering electrical service to residential and
small commercial customers as intended by the Legislature in this
article, the following shall apply:
   (a) A registration fee of one hundred dollars ($100) shall be
collected from entities required to register under this article, and
the fee proceeds shall be deposited in the Public Utilities
Reimbursement Account established under Section 402.
   (b) The commission shall annually determine the costs of
administering the registration program and other facets of consumer
protection directly related to the direct access transactions of
registered entities, including the cost for the duties imposed
pursuant to subdivision (c) of Section 392.1.  The commission shall
only collect those costs not already being collected elsewhere.
Registrants who fail to submit to the commission required fees or
information upon which fees are calculated within 30 days of billing
shall be subject to a 15-percent penalty.
  SEC. 19.  Section 394.4 is added to the Public Utilities Code, to
read:
   394.4.  Rules that implement the following minimum standards shall
be adopted by the commission for registered entities offering
electrical services to residential and small commercial customers and
the governing body of a public agency offering electrical services
to residential and small commercial customers within its
jurisdiction:
   (a) Confidentiality:  Customer information shall be confidential
unless the customer consents in writing.  This shall encompass
confidentiality of customer specific billing, credit, or usage
information.  This requirement shall not extend to disclosure of
generic information regarding the usage, load shape, or other general
characteristics of a group or rate classification, unless the
release of that information would reveal customer specific
information because of the size of the group, rate classification, or
nature of the information.
   (b) Physical disconnects and reconnects:  Only an electrical
corporation, or a publicly owned electric utility, that provides
physical delivery service to the affected customer shall have the
authority to physically disconnect or reconnect a customer from the
transmission or distribution grid.  Physical disconnection by
electrical corporations subject to the commission's jurisdiction
shall occur only in accordance with protocols established by the
commission.  Physical disconnection by publicly owned electric
utilities shall occur only in accordance with protocols established
by the governing board of the local publicly owned electric utility.

   (c) Change in providers:  Upon adequate notice supplied by a
registered entity to the electric corporation or local publicly owned
electric utility providing physical delivery service, customers who
are eligible for direct access may change their energy supplier.
Energy suppliers may charge for such a change, provided that any fee
or penalty charged by the supplier associated with early termination
of service, shall be disclosed in that contract or applicable tariff.

   (d) Written notices:  Notices describing the terms and conditions
of service as described in Section 394.5, service agreements, notices
of late payment, notices of discontinuance of service, and
disconnection notices addressed to residential and small commercial
customers shall be easily understandable, and shall be provided in
the language in which the entity offered the services.
   (e) Billing:  All bills shall have a standard bill format, as
determined by the commission or the governing body, and shall contain
sufficient detail for the customer to recalculate the bill for
accuracy.  Any late fees shall be separately stated.  Each registered
entity shall provide on all customer bills a phone number by which
customers may contact the entity to report and resolve billing
inquiries and complaints.  A registered entity contacted by a
customer regarding a billing dispute shall advise the customer at the
time of the initial contact that the customer may file a complaint
with the commission if its dispute is not satisfactorily resolved by
the registered entity.
   (f) Meter integrity:  An electric customer shall have a reasonable
opportunity to have its meter tested to ensure the reasonable
accuracy of the meter.  The commission or governing body shall
determine who is responsible for the cost of that testing.
   (g) Customer deposits:  Registered entities may require customer
deposits before commencing service, but in no event shall the deposit
be more than the estimated bill for the customer for a three-month
period.
   (h) Additional protections:  The commission or the governing body
may adopt additional residential and small commercial consumer
protection standards which are in the public interest.
  SEC. 20.  Section 394.5 is added to the Public Utilities Code, to
read:
   394.5.  (a) Except for an electrical corporation as defined in
Section 218, or a local publicly owned electric utility as defined in
subdivision (d) of Section 9604 offering electrical service to
residential and small commercial customers within its service
territory, each entity offering electrical service to residential and
small commercial customers shall, prior to the commencement of
service, provide the potential customer with a written notice of the
service describing the price, terms, and conditions of the service.
The notices shall include all of the following:
   (1) A clear description of the price, terms, and conditions of
service, including:
   (A) The price of electricity expressed in a format which makes it
possible for residential and small commercial customers to compare
and select among similar products and services on a standard basis.
The commission shall adopt rules to implement this subdivision.  The
commission shall require disclosure of the total price of electricity
on a cents-per-kilowatthour basis, including the costs of all
electric services and charges regulated by the commission.  The
commission shall also require estimates of the total monthly bill for
the electric service at varying consumption levels, including the
costs of all electric services and charges regulated by the
commission.  In determining these rules, the commission may consider
alternatives to the cent-per-kilowatthour disclosure if other
information would provide the customer with sufficient information to
compare among alternatives on a standard basis.
   (B) Separate disclosure of all recurring and nonrecurring charges
associated with the sale of electricity.
   (C) If services other than electricity are offered, an itemization
of the services and the charge or charges associated with each.
   (2) An explanation of the applicability and amount of the
competition transition charge, as determined pursuant to Sections 367
to 376, inclusive.
   (3) A description of the potential customer's right to rescind the
contract without fee or penalty as described in Section 395.
   (4) An explanation of the customer's financial obligations, as
well as the procedures regarding past due payments, discontinuance of
service, billing disputes, and service complaints.
   (5) The entity's registration number, if applicable.
   (6) The right to change service providers upon written notice,
including disclosure of any fees or penalties assessed by the
supplier for early termination of a contract.
   (7) A description of the availability of low-income assistance
programs for qualified customers and how customers can apply for
these programs.
   (b) The commission may assist registered entities in developing
the notice.  The commission may suggest inclusion of additional
information it deems necessary for the consumer protection purposes
of this section.  On at least a semiannual basis, registered entities
shall provide the commission with a copy of the form of notice
included in standard service plans made available to residential and
small commercial customers as described in subdivision (a) of Section
392.1.
   (c) Any entity offering electric services who declines to provide
those services to a consumer shall, upon request of the consumer,
disclose to that consumer the reason for the denial in writing within
30 days.  At the time service is denied, the entity shall disclose
to the consumer his or her right to make such a request.  Consumers
shall have at least 30 days from the date service is denied to make
such a request.
  SEC. 21.  Section 394.6 is added to the Public Utilities Code, to
read:
   394.6.  For purposes of this article, service territory of a local
publicly owned electric utility means within the boundaries of its
service territory as it existed on December 20, 1995, or within the
boundaries specified in an applicable service territory boundary
agreement entered into pursuant to Article 1 (commencing with Section
8101) of Division 4, or any other provision of law, between an
electrical corporation and the affected local publicly owned electric
utility, or within the boundaries specified in an applicable service
territory boundary agreement between one local publicly owned
electric utility and another local publicly owned electric utility.
Furthermore, for purposes of this article, the boundaries of the
Merced Irrigation District shall be as those boundaries existed on
December 20, 1995, together with the territory of Castle Air Force
Base, which was located outside of the district on that date.
  SEC. 22.  Section 394.7 is added to the Public Utilities Code, to
read:
   394.7.  (a) The commission shall maintain a list of residential
and small commercial customers who do not wish to be solicited by
telephone, by an electric corporation, marketer, broker, or
aggregator for electric service, to subscribe to or change their
electric service provider.  The commission shall not assess a charge
for inclusion of a customer on the list.  The list shall be updated
periodically, but no less than quarterly.
   (b) The list shall include sufficient information for electric
corporations, marketers, brokers, or aggregators of electric service
to identify customers who do not wish to be solicited, including a
customer's address and telephone number.  The list shall be made
accessible electronically from the commission to any party regulated
as an electric corporation or registered at the commission as an
electric marketer, broker, or aggregator of electric service.
   (c) An electric corporation, marketer, broker, or aggregator of
electric service shall not solicit, by telephone, any customer on the
list prepared pursuant to subdivision (a).  Any electric
corporation, marketer, broker, or aggregator of electric service, or
the representative of an electric corporation, marketer, broker, or
aggregator of electric service, who solicits any customer on the list
prepared pursuant to subdivision (a) more than once shall be liable
to the customer for twenty-five dollars ($25) for each contact in
violation of this subdivision.
   (d) This section shall not apply to the telephone verification
required pursuant to Section 366.5.
  SEC. 23.  Section 394.8 is added to the Public Utilities Code, to
read:
   394.8.  Notwithstanding any other provision of this article,
requirements placed on a registered entity shall not apply to
electrical services provided by a local publicly owned electric
utility to customers within the jurisdiction or service territory of
that local publicly owned electric utility.
  SEC. 24.  Section 394.9 is added to the Public Utilities Code, to
read:
   394.9.  Unclaimed refunds ordered by the commission, and any
accrued interest, may be used by the commission to fund additional
consumer protection efforts.
  SEC. 25.  Section 396 of the Public Utilities Code is amended to
read:
   396.  (a) A consumer damaged by a violation of this article by an
entity offering electrical service is entitled to recover all of the
following:
   (1) Actual damages.
   (2) The consumer's reasonable attorney's fees and court costs.
   (3) Exemplary damages, in the amount the court deems proper, for
intentional or willful violations.
   (4) Equitable relief as the court deems proper.
   (b) The rights, remedies, and penalties established by this
article are in addition to the rights, remedies, or penalties
established under any other law.
   (c) Nothing in this article shall abrogate any authority of the
Attorney General to enforce existing law.
  SEC. 26.  Section 454 of the Public Utilities Code is amended to
read:
   454.  (a) Except as provided in Sections 454.1 and 455, no public
utility shall change any rate or so alter any classification,
contract, practice, or rule as to result in any new rate, except upon
a showing before the commission and a finding by the commission that
the new rate is justified.  Whenever any electrical, gas, heat,
telephone, water, or sewer system corporation files an application to
change any rate, other than a change reflecting and passing through
to customers only new costs to the corporation which do not result in
changes in revenue allocation, for the services or commodities
furnished by it, the corporation shall furnish to its customers
affected by the proposed rate change notice of its application to the
commission for approval of the new rate.  This notice requirement
does not apply to any rate change proposed by a corporation pursuant
to an advice letter submitted to the commission in accordance with
commission procedures for this means of submission.  The procedures
for advice letters may include provision for notice to customers or
subscribers on a case-by-case basis, as determined by the commission.
  The corporation may include the notice with the regular bill for
charges transmitted to the customers within 45 days if the
corporation operates on a 30-day billing cycle, or within 75 days if
the corporation operates on a 60-day billing cycle.  If more than one
application to change any rate is filed within a single billing
cycle, the corporation may combine the notices into a single notice
if the applications are separately identified.  The notice shall
state the amount of the proposed rate change expressed in both dollar
and percentage terms for the entire rate change as well as for each
customer classification, a brief statement of the reasons the change
is required or sought, and the mailing, and if available, the e-mail
address of the commission to which any  customer inquiries may be
directed regarding how to participate in, or receive further notices
regarding the date, time, or place of, any hearing on the
application, and the mailing address of the corporation to which any
customer inquiries relative to the proposed rate change may be
directed.
   (b) The commission may adopt rules it considers reasonable and
proper for each class of public utility providing for the nature of
the showing required to be made in support of proposed rate changes,
the form and manner of the presentation of the showing, with or
without a hearing, and the procedure to be followed in the
consideration thereof.  Rules applicable to common carriers may
provide for the publication and filing of any proposed rate change
together with a written showing in support thereof, giving notice of
the filing and showing in support thereof to the public, granting an
opportunity for protests thereto, and to the consideration of, and
action on, the showing and any protests filed thereto by the
commission, with or without hearing.  However, the proposed rate
change does not become effective until it has been approved by the
commission.
   (c) The commission shall permit individual public utility
customers and subscribers affected by a proposed rate change, and
organizations formed to represent their interests, to testify at any
hearing on the proposed rate change, except that the presiding
officer need not allow repetitive or irrelevant testimony and may
conduct the hearing in an efficient manner.
  SEC. 27.  Section 840 of the Public Utilities Code is amended to
read:
   840.  For the purposes of this article, the following terms shall
have the following meanings:
   (a) "Bank" means the California Infrastructure and Economic
Development Bank.
   (b) "Financing entity" means the bank, any special purpose trust,
as defined in Section 63010 of the Government Code, that is
authorized by the bank to issue rate reduction bonds or acquire
transition property, or any other entity authorized by the bank to
issue rate reduction bonds or acquire transition property, or both.
The bank may authorize an entity other than a special purpose trust,
as defined in Section 63010 of the Government Code, to issue rate
reduction bonds only if all of the following conditions are met:
   (1) The bank by resolution has determined that allowing another
entity to issue rate reduction bonds would produce greater overall
ratepayer savings, taking into account all relevant considerations
including, but not limited to, the exclusion of interest on rate
reduction bonds issued by the bank from investors' gross income for
California or federal income tax purposes, or both, earnings on funds
collected and held by the electrical corporation prior to deposit in
a fund or account for the benefit of holders of rate reduction
bonds, and all costs of issuance and other transaction costs.
   (2) The bank submits to the Joint Legislative Budget Committee a
certified copy of the bank's resolution, together with a report
setting forth the basis for the bank's determination that a financing
entity other than the bank or a special purpose trust will produce
greater ratepayer savings and at least 30 days have elapsed from the
date of submission.
   (c) "Financing order" shall mean an order of the commission
adopted in accordance with this article, which shall include, without
limitation, a procedure to require the expeditious approval by the
commission of periodic adjustments to fixed transition amounts
included therein to ensure recovery of all transition costs and the
costs of capital associated with the proposed provision, recovery,
financing, or refinancing thereof, including the costs of issuing,
servicing, and retiring the rate reduction bonds contemplated by the
financing order.  These adjustments shall not impose fixed transition
amounts upon classes of customers who were not subject to the fixed
transition amounts in the pertinent financing order.
   (d) "Fixed transition amounts" means those nonbypassable rates and
other charges, including, but not limited to, distribution,
connection, disconnection, and termination rates and charges, that
are authorized by the commission in a financing order to recover (1)
transition costs, and (2) the costs of providing, recovering,
financing, or refinancing the transition costs through a plan
approved by the commission in the financing order, including the
costs of issuing, servicing, and retiring rate reduction bonds.  If
requested by the electrical corporation in its application for a
financing order, fixed transition amounts shall include nonbypassable
rates and other charges to recover federal and state taxes whose
recovery period is modified by the transactions approved in the
financing order.
   (e) "Rate reduction bonds" means bonds, notes, certificates of
participation or beneficial interest, or other evidences of
indebtedness or ownership, issued pursuant to an executed indenture
or other agreement of a financing entity, the proceeds of which are
used, directly or indirectly, to provide, recover, finance, or
refinance transition costs, and that are directly or indirectly
secured by, or payable from, transition property.
   (f) "Transition costs" means the costs, and categories of costs,
of an electrical corporation for generation-related assets and
obligations, consisting of generation facilities, generation-related
regulatory assets, nuclear settlements, and power purchase contracts,
including, but not limited to, voluntary restructuring,
renegotiations, or terminations thereof approved by the commission,
that were being collected in commission-approved rates on December
20, 1995, and that may become uneconomic as a result of a competitive
generation market in that those costs may not be recoverable in
market prices in a competitive market, and appropriate costs incurred
after December 20, 1995, for capital additions to generating
facilities existing as of December 20, 1995, that the commission
determines are reasonable and should be recovered, provided that
these costs are necessary to maintain the facilities through December
31, 2001.  Transition costs shall also include the costs of
refinancing or retiring of debt or equity capital of the electrical
corporation, and associated federal and state tax liabilities.
   (g) (1) "Transition property" means the property right created
pursuant to this article including, without limitation, the right,
title, and interest of an electrical corporation or its transferee:
   (A) In and to the tariff established pursuant to a financing
order, as adjusted from time to time in accordance with subdivision
(c) of Section 841 and the financing order.
   (B) To be paid the amount that is determined in a financing order
to be the amount that the electrical corporation or its transferee is
lawfully entitled to receive pursuant to the provision of this
article and the proceeds thereof, and in and to all revenues,
collections, claims, payments, money, or proceeds of or arising from
the tariff or constituting fixed transition amounts that are the
subject of a financing order including those nonbypassable rates and
other charges referred to in subdivision (d).
   (C) In and to all rights to obtain adjustments to the tariff
pursuant to the terms of subdivision (c) of Section 841 and the
financing order.
   (2) "Transition property" shall constitute a current property
right notwithstanding the fact that the value of the property right
will depend on consumers using electricity or, in those instances
where consumers are customers of a particular electrical corporation,
the electrical corporation performing certain services.
   (3) For purposes of Sections 63010 and 63025.1 of the Government
Code, "transition property" also shall mean certificates representing
primarily interests in the property
              rights described in paragraphs (1) and (2).
  SEC. 28.  Section 841 of the Public Utilities Code is amended to
read:
   841.  (a) An electrical corporation shall, by June 1, 1997, and
may from time to time thereafter apply to the commission for a
determination that certain transition costs may be recovered through
fixed transition amounts, which would therefore constitute transition
property under this article.  An electrical corporation may request
this determination by the commission in separate proceedings or in an
order instituting investigation or order instituting rulemaking, or
both.  The electrical corporation shall in its application specify
that the residential and small commercial customers as defined in
subdivision (h) of Section 331 would benefit from reduced rates
through the issuance of rate reduction bonds.  The commission shall
designate fixed transition amounts as recoverable in one or more
financing orders if the commission determines, as part of its
findings in connection with the financing order, that the designation
of the fixed transition amounts, and issuance of rate reduction
bonds in connection with some or all of the fixed transition amounts
would reduce rates that residential and small commercial customers
would have paid if the financing order were not adopted.  These
customers shall continue to pay fixed transition amounts after
December 31, 2001, until the bonds are paid in full by the financing
entity.  No electrical corporation shall be found to have acted
imprudently or unreasonably for failing to amend a power purchase
contract where the amendment would modify or waive an existing
requirement that the seller be a qualifying facility pursuant to
federal law.
   (b) The commission may issue financing orders in accordance with
this article to facilitate the provision, recovery, financing, or
refinancing of transition costs.  A financing order may be adopted
only upon the application of an electrical corporation and shall
become effective in accordance with its terms only after the
electrical corporation files with the commission the electrical
corporation's written consent to all terms and conditions of the
financing order.  A financing order may specify how amounts collected
from a customer shall be allocated between fixed transition amounts
and other charges.
   (c) Notwithstanding Section 455.5, Section 1708, or any other
provision of law, except as otherwise provided in this subdivision
with respect to transition property that has been made the basis for
the issuance of rate reduction bonds, the financing orders and the
fixed transition amounts shall be irrevocable and the commission
shall not have authority either by rescinding, altering, or amending
the financing order or otherwise, to revalue or revise for ratemaking
purposes the transition costs, or the costs of providing,
recovering, financing, or refinancing the transition costs, determine
that the fixed transition amounts or rates are unjust or
unreasonable, or in any way reduce or impair the value of transition
property either directly or indirectly by taking fixed transition
amounts into account when setting other rates for the electrical
corporation; nor shall the amount of revenues arising with respect
thereto be subject to reduction, impairment, postponement, or
termination.  Except as otherwise provided in this subdivision, the
State of California does hereby pledge and agree with the owners of
transition property and holders of rate reduction bonds that the
state shall neither limit nor alter the fixed transition amounts,
transition property, financing orders, and all rights thereunder
until the obligations, together with the interest thereon, are fully
met and discharged, provided nothing contained in this section shall
preclude the limitation or alteration if and when adequate provision
shall be made by law for the protection of the owners and holders.
The bank as agent for the state is authorized to include this pledge
and undertaking for the state in these obligations.  Notwithstanding
any other provision of this section, the commission shall approve the
adjustments to the fixed transition amounts as may be necessary to
ensure timely recovery of all transition costs that are the subject
of the pertinent financing order, and the costs of capital associated
with the provision, recovery, financing, or refinancing thereof,
including the costs of issuing, servicing, and retiring the rate
reduction bonds contemplated by the financing order.  The adjustments
shall not impose fixed transition amounts upon classes of customers
who were not subject to the fixed transition amounts in the pertinent
financing order.
   (d) (1) Financing orders issued under this article do not
constitute a debt or liability of the state or of any political
subdivision thereof, other than the financing entity, and do not
constitute a pledge of the full faith and credit of the state or any
of its political subdivisions, other than the financing entity, but
are payable solely from the funds provided therefor under this
article and shall be consistent with Sections 1 and 18 of Article XVI
of the California Constitution.  This subdivision shall in no way
preclude bond guarantees or enhancements pursuant to this article.
All the bonds shall contain on the face thereof a statement to the
following effect:
   "Neither the full faith and credit nor the taxing power of the
State of California is pledged to the payment of the principal of, or
interest on, this bond."
   (2) The issuance of bonds under this article shall not directly,
indirectly, or contingently obligate the state or any political
subdivision thereof to levy or to pledge any form of taxation
therefor or to make any appropriation for their payment.  Nothing in
this section shall prevent, or be construed to prevent, the financing
entity from pledging the full faith and credit of the infrastructure
bank fund to the payment of bonds or issuance of bonds authorized
pursuant to this article.
   (e) The commission shall establish procedures for the expeditious
processing of applications for financing orders, including the
approval or disapproval thereof within 120 days of the electrical
corporation's making application therefor.  The commission shall
provide in any financing order for a procedure for the expeditious
approval by the commission of periodic adjustments to the fixed
transition amounts that are the subject of the pertinent financing
order, as required by subdivision (c).  The procedure shall require
the commission to determine whether the adjustments are required on
each anniversary of the issuance of the financing order, and at the
additional intervals as may be provided for in the financing order,
and for the adjustments, if required, to be approved within 90 days
of each anniversary of the issuance of the financing order, or of
each additional interval provided for in the financing order.
   (f) Fixed transition amounts shall constitute transition property
when, and to the extent that, a financing order authorizing the fixed
transition amounts has become effective in accordance with this
article, and the transition property shall thereafter continuously
exist as property for all purposes with all of the rights and
privileges of this article for the period and to the extent provided
in the financing order, but in any event until the rate reduction
bonds are paid in full, including all principal, interest, premium,
costs, and arrearages thereon.
   (g) Any surplus fixed transition amounts in excess of the amounts
necessary to pay principal, premium, if any, interest and expenses of
the issuance of the rate reduction bonds shall be remitted to the
financing entity and may be used to benefit residential and small
commercial customers if this would not result in a recharacterization
of the tax, accounting, and other intended characteristics of the
financing, including, but not limited to, the following:
   (1) Avoiding the recognition of debt on the electrical corporation'
s balance sheet for financial accounting and regulatory purposes.
   (2) Treating the rate reduction bonds as debt of the electrical
corporation or its affiliates for federal income tax purposes.
   (3) Treating the transfer of the transition property by the
electrical corporation as a true sale for bankruptcy purposes.
   (4) Avoiding any adverse impact of the financing on the electrical
corporation's credit rating.
  SEC. 29.  Section 842 of the Public Utilities Code is amended to
read:
   842.  (a) Financing entities may issue rate reduction bonds upon
approval by the commission in the pertinent financing orders.  Rate
reduction bonds shall be nonrecourse to the credit or any assets of
the electrical corporation, other than the transition property as
specified in the pertinent financing order.
   (b) Electrical corporations may sell and assign all or portions of
their interest in transition property to an affiliate.  Electrical
corporations or their affiliates may sell or assign their interests
to one or more financing entities that make that property the basis
for issuance of rate reduction bonds to the extent approved in the
pertinent financing orders.  Electrical corporations, their
affiliates, or financing entities may pledge transition property as
collateral, directly or indirectly, for rate reduction bonds to the
extent approved in the pertinent financing orders providing for a
security interest in the transition property, in the manner as set
forth in Section 843.  In addition transition property may be sold or
assigned by (1) the financing entity or a trustee for the holders of
rate reduction bonds in connection with the exercise of remedies
upon a default, or (2) any person acquiring the transition property
after a sale or assignment pursuant to this subdivision.
   (c) To the extent that any interest in transition property is so
sold or assigned, or is so pledged as collateral, the commission
shall authorize the electrical corporation to contract with the
financing entity that it will continue to operate its system to
provide service to its customers, will collect amounts in respect of
the fixed transition amounts for the benefit and account of the
financing entity, and will account for and remit these amounts to or
for the account of the financing entity.  Contracting with the
financing entity in accordance with that authorization shall not
impair or negate the characterization of the sale, assignment, or
pledge as an absolute transfer, a true sale, or security interest, as
applicable.
   (d) Notwithstanding Section 1708 or any other provision of law,
any requirement under this article or a financing order that the
commission take action with respect to the subject matter of a
financing order shall be binding upon the commission, as it may be
constituted from time to time, and any successor agency exercising
functions similar to the commission and the commission shall have no
authority to rescind, alter, or amend that requirement in a financing
order.  The approval by the commission in a financing order of the
issuance by an electrical corporation or a financing entity of rate
reduction bonds shall include the approvals, if any, as may be
required by Article 5 (commencing with Section 816) and Section
701.5.  Nothing in Section 701.5 shall be construed to prohibit the
issuance of rate reduction bonds upon the terms and conditions as may
be approved by the commission in a financing order.  Section 851
shall not be applicable to the transfer or pledge of transition
property, the issuance of rate reduction bonds, or related
transactions approved in a financing order.
  SEC. 30.  Section 843 of the Public Utilities Code is amended to
read:
   843.  (a) A security interest in transition property is valid, is
enforceable against the pledgor and third parties, subject to the
rights of any third parties holding security interests in the
transition property perfected in the manner described in this
section, and attaches when all of the following have taken place:
   (1) The commission has issued the financing order authorizing the
fixed transition amounts included in the transition property.
   (2) Value has been given by the pledgees of the transition
property.
   (3) The pledgor has signed a security agreement covering the
transition property.
   (b) A valid and enforceable security interest in transition
property is perfected when it has attached and when a financing
statement has been filed in accordance with Chapter 4 (commencing
with Section 9401) of Division 9 of the Commercial Code naming the
pledgor of the transition property as "debtor" and identifying the
transition property.  Any description of the transition property
shall be sufficient if it refers to the financing order creating the
transition property.  A copy of the financing statement shall be
filed with the commission by the electrical corporation that is the
pledgor or transferor of the transition property, and the commission
may require the electrical corporation to make other filings with
respect to the security interest in accordance with procedures it may
establish, provided that the filings shall not affect the perfection
of the security interest.
   (c) A perfected security interest in transition property is a
continuously perfected security interest in all revenues and proceeds
arising with respect thereto, whether or not the revenues or
proceeds have accrued.  Conflicting security interests shall rank
according to priority in time of perfection.  Transition property
shall constitute property for all purposes, including for contracts
securing rate reduction bonds, whether or not the revenues and
proceeds arising with respect thereto have accrued.
   (d) Subject to the terms of the security agreement covering the
transition property and the rights of any third parties holding
security interests in the transition property perfected in the manner
described in this section, the validity and relative priority of a
security interest created under this section is not defeated or
adversely affected by the commingling of revenues arising with
respect to the transition property with other funds of the electrical
corporation that is the pledgor or transferor of the transition
property, or by any security interest in a deposit account of that
electrical corporation perfected under Division 9 (commencing with
Section 9101) of the Commercial Code into which the revenues are
deposited.  Subject to the terms of the security agreement, upon
compliance with the requirements of subdivision (g) of Section 9302
of the Commercial Code, the pledgees of the transition property shall
have a perfected security interest in all cash and deposit accounts
of the electrical corporation in which revenues arising with respect
to the transition property have been commingled with other funds, but
the perfected security interest shall be limited to an amount not
greater than the amount of the revenues with respect to the
transition property received by the electrical corporation within 12
months before (1) any default under the security agreement or (2) the
institution of insolvency proceedings by or against the electrical
corporation, less payments from the revenues to the pledgees during
that 12-month period.
   (e) If an event of default occurs under the security agreement
covering the transition property, the pledgees of the transition
property, subject to the terms of the security agreement, shall have
all rights and remedies of a secured party upon default under
Division 9 (commencing with Section 9101) of the Commercial Code, and
shall be entitled to foreclose or otherwise enforce their security
interest in the transition property, subject to the rights of any
third parties holding prior security interests in the transition
property perfected in the manner provided in this section.  In
addition, the commission may require, in the financing order creating
the transition property, that, in the event of default by the
electrical corporation in payment of revenues arising with respect to
the transition property, the commission and any successor thereto,
upon the application by the pledgees or transferees, including
transferees under Section 844, of the transition property, and
without limiting any other remedies available to the pledgees or
transferees by reason of the default, shall order the sequestration
and payment to the pledgees or transferees of revenues arising with
respect to the transition property.  Any order shall remain in full
force and effect notwithstanding any bankruptcy, reorganization, or
other insolvency proceedings with respect to the debtor, pledgor, or
transferor of the transition property.  Any surplus in excess of
amounts necessary to pay principal, premium, if any, interest, costs,
and arrearages on the rate reduction bonds, and other costs arising
under the security agreement, shall be remitted to the debtor or to
the pledgor or transferor.
   (f) Section 5451 of the Government Code shall not apply to any
pledge of transition property by a financing entity.  Sections 9204
and 9205 of the Commercial Code shall apply to a pledge of transition
property by an electrical corporation, an affiliate of an electrical
corporation, or a financing entity.
   (g) This section sets forth the terms by which a consensual
security interest can be created and perfected in the transition
property.  Unless otherwise ordered by the commission with respect to
any series of rate reduction bonds on or prior to the issuance of
the series, there shall exist a statutory lien as provided in this
subdivision.  Upon the effective date of the financing order, there
shall exist a first priority lien on all transition property then
existing or thereafter arising pursuant to the terms of the financing
order.  This lien shall arise by operation of this section
automatically without any action on the part of the electrical
corporation, any affiliate thereof, the financing entity, or any
other person.  This lien shall secure all obligations, then existing
or subsequently arising, to the holders of the rate reduction bonds
issued pursuant to the financing order, the trustee or representative
for the holders, and any other entity specified in the financing
order.  The persons for whose benefit this lien is established shall,
upon the occurrence of any defaults specified in the financing
order, have all rights and remedies of a secured party upon default
under Division 9 (commencing with Section 9101) of the Commercial
Code, and shall be entitled to foreclose or otherwise enforce this
statutory lien in the transition property.  This lien shall attach to
the transition property regardless of who shall own, or shall
subsequently be determined to own, the transition property including
any electrical corporation, any affiliate thereof, the financing
entity, or any other person.  This lien shall be valid, perfected,
and enforceable against the owner of the transition property and all
third parties upon the effectiveness of the financing order without
any further public notice; provided, however, that any person may,
but shall not be required to, file a financing statement in
accordance with subdivision (b).  Financing statements so filed may
be "protective filings" and shall not be evidence of the ownership of
the transition property.
   A perfected statutory lien in transition property is a
continuously perfected lien in all revenues and proceeds arising with
respect thereto, whether or not the revenues or proceeds have
accrued.  Conflicting liens shall rank according to priority in time
of perfection.  Transition property shall constitute property for all
purposes, including for contracts securing rate reduction bonds,
whether or not the revenues and proceeds arising with respect thereto
have accrued.
   In addition, the commission may require, in the financing order
creating the transition property, that, in the event of default by
the electrical corporation in payment of revenues arising with
respect to transition property, the commission and any successor
thereto, upon the application by the beneficiaries of the statutory
lien, and without limiting any other remedies available to the
beneficiaries by reason of the default, shall order the sequestration
and payment to the beneficiaries of revenues arising with respect to
the transition property.  Any order shall remain in full force and
effect notwithstanding any bankruptcy, reorganization, or other
insolvency proceedings with respect to the debtor, pledgor, or
transferor of the transition property.  Any surplus in excess of
amounts necessary to pay principal, premium, if any, interest, costs,
and arrearages on the rate reduction bonds, and other costs arising
in connection with the documents governing the rate reduction bonds,
shall be remitted to the debtor or to the pledgor or transferor.
  SEC. 31.  The education trust created by Decision No. 97-03-069
shall continue until December 31, 2001.
   The Public Utilities Commission shall determine the funding level
necessary to carry out the functions of the trust.  Any amounts not
covered by the funding allocation made in Decision No. 97-03-069
shall be paid for by utility electrical corporations in proportion to
their share of revenues for regulated distribution services, and
recovered through rates pursuant to Section 376.
  SEC. 32.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
   Notwithstanding Section 17580 of the Government Code, unless
otherwise specified, the provisions of this act shall become
operative on the same date that the act takes effect pursuant to the
California Constitution.
  SEC. 33.  This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  The facts constituting the necessity are:
   In order to provide for the safety and reliability of electrical
services to Californians at the lowest possible rates and at the
earliest possible time, it is necessary for this act to take effect
immediately.