BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1108 (Fuentes)
Hearing Date: 08/17/2009 Amended: 08/17/2009
Consultant: Brendan McCarthy Policy Vote: EU&C 8-3
AB 1108 (Fuentes)
Page 2
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BILL SUMMARY: This bill requires owners of master-meter
electricity and natural gas systems that serve mobile home parks
and manufactured housing developments to transfer ownership and
operation of those systems to the utilities. The bill requires
the Public Utilities Commission to open a proceeding to develop
procedures and schedules for the transfers.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
PUC regulatory oversight $250 $500
$500Special *
Increased energy costs to Unknown, potentially in the
tens of millions Various
state agencies
* Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense file.
Under current law, master-meter electricity or natural gas
customers (for example, owners of mobile home parks or apartment
buildings) who provide sub-metered service to their tenants are
required to charge their tenants the same rate that the tenant
would pay if he or she were receiving service directly from the
local utility. Master-meter customers pay a discounted rate for
gas or electricity. The difference between the rate paid by the
master-meter customer and the rate paid by the tenants is
supposed to cover the expense of operating the sub-metered
system. Current law makes the master-meter customer responsible
for the maintenance of facilities beyond the master meter.
Under current law, there is a process for the voluntary transfer
of a sub-metered system from the master-meter customer to the
local utility. However, this system is considered to be
cumbersome and has never been used.
AB 1108 (Fuentes)
Page 3
This bill makes existing requirements for master-meter customers
applicable only to owners of apartment buildings or other
multifamily housing. The bill adopts separate requirements for
master-meter owners of mobile home parks or manufactured housing
developments, to be in effect prior to the transfer of
electricity or natural gas systems to a utility.
This bill repeals the existing process for transferring
electrical or natural gas systems from master-meter customers to
a utility.
The bill requires owners of master-metered mobile home parks or
manufactured housing developments to transfer ownership and
operational responsibility for the electricity and/or natural
gas system to the local utility, under the process set out by
the bill or by mutual agreement between the master-meter
customer and the utility. The utility will only be required to
take ownership of those facilities that are necessary for the
provision of service to the tenants. The utility will be
required to provide just compensation to the master-meter
customer for any facilities or property rights that are
transferred.
Under the bill, any costs to a utility for acquiring, improving,
or replacing electricity or natural gas systems will be paid by
ratepayers. The bill does not appear to limit the rate recovery
to the directly affected sub-metered customers. Therefore, the
costs are likely to be shared by all ratepayers of the affected
utility.
The bill requires the Public Utilities Commission to open a
proceeding to develop rules for the extension of utility systems
to provide service directly to sub-metered customers in mobile
home parks and manufactured housing communities as well as the
process for ordering the transfer of facilities or property
rights from master-meter customers to the utilities. The Public
Utilities Commission will establish a procedure for identifying
mobile home parks and manufactured housing communities with
unsafe or substandard systems. The Commission will recommend
schedules for repairing or replacing those systems and
prioritize the transfer to the utilities of those systems that
are unsafe or substandard. The Commission will carry out these
duties in coordination with the Department of Housing and
Community Development and county departments of weights and
measures.
AB 1108 (Fuentes)
Page 4
The Public Utilities Commission estimates that the cost to
establish the proceeding and determine which systems need repair
or transfer would be about $500,000 per year. The Department of
Housing and Community Development indicates that its costs can
be absorbed within existing resources.
In addition to the direct costs to the Public Utilities
Commission, there are likely to be significant indirect costs to
state agencies through higher rates for electricity and natural
gas.
The Public Utilities Commission estimates that there are about
3,000 master-meter electricity and about 3,000 master-meter
natural gas customers. The mobile home park industry estimates
that the bill would affect more than 300,000 individual
residences in the state.
The costs for the utilities to acquire, repair, upgrade, or
replace the electricity and natural gas systems that serve these
residences are unknown. The utilities have estimated that the
cost to fully replace the systems serving all the state's mobile
home parks (which may not be necessary for all parks) could
exceed $1 billion. The costs from these acquisitions, upgrades,
and/or replacements are likely to be spread across all utility
ratepayers, of which state agencies make up a significant
portion.
Staff estimates that state agencies account for about 15 percent
of utility electricity use and about 1 percent of natural gas
use in the state. Depending on the ultimate cost to the
utilities to acquire, repair, and/or replace these existing
systems and the way that the Public Utilities Commission
apportions costs amongst ratepayers, the cost to the state could
be in the tens of millions of dollars over time.