BILL ANALYSIS
SB 176
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Date of Hearing: June 22, 2009
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Felipe Fuentes, Chair
SB 176 (Simitian) - As Amended: May 12, 2009
SENATE VOTE : 36-0
SUBJECT : Electricity: charges: charitable organizations.
SUMMARY : Extends the sunset date from 2010 to 2015 on a
program that allows an electric service provider to donate free
electric service to a nonprofit charitable organization.
EXISTING LAW :
1)Permits a nonprofit charitable organization to acquire
electric commodity service through a direct transaction with
an electric service provider if electric service is donated
free of charge without compensation.
2)Sunsets the program on January 1, 2010.
3)Suspends the right of retail end-use customers to acquire
direct-access service for electricity from other providers
until the Department of Water Resources (DWR) no longer
supplies power.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to allow a program to continue whereby charities receiving free
electricity will continue to uphold their obligation to pay for
the cost of delivering the electricity to their organizations.
By allowing nonprofit charitable organizations to acquire free
electricity through a direct-access arrangement with an electric
service provider, the cost of energy for nonprofit recipients
will be reduced significantly. Given the services that these
charitable organizations provide, it is fitting to alleviate
some of their operating costs, thus allowing them to continue to
cater to those in need.
1) What is direct-access service : Direct-access service is
where an electricity customer is allowed to choose alternate
providers of electricity, other than their utility. As part of
SB 176
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the restructuring of the electric industry, AB 1890 (Brulte)
Chapter 854, Statutes of 1996, authorized direct access. Due to
concerns raised by the utilities during the energy crisis, the
ability to choose direct-access service was officially suspended
on September 20, 2001. However, PUC rules allow certain
"eligible" customers to begin direct-access service after the
suspension date and switch between bundled service and
direct-access service.
2) But it's chartable : SB 423 (Simitian) Chapter 749, Statutes
of 2006, permitted an electric service provider to donate
electricity to a nonprofit charitable organization. SB 423
ensured that the nonprofit charitable organization paid all
other charges to ensure no cost-shifting to the investor-owned
utilities' other customers.
Electricity is a different commodity than other goods donated to
philanthropic organizations. Electricity is relatively
inelastic, there are very few viable substitutes, and it has
historically been a "regulated" commodity.
As part of the restructuring of the electric industry, AB 1890
(Brulte) Chapter 854, Statutes of 1996, authorized direct
access. While customers were allowed to choose alternate
providers of energy, the investor-owned utilities' (IOUs')
obligation to serve all customers remained and customers large
and small were entitled to remain with, or return to, bundled
IOU service.
In 2001, as part of the state's efforts to resolve the energy
crisis, the Legislature suspended direct access, and the PUC
officially ruled on a suspension on September 20, 2001.
3) What's a party with no guests : AB 423 allowed direct access
service under a very limited and unique circumstance. According
to the author, the impetus of AB 423 was to allow Calpine, an
electricity generator, to donate electricity to two nonprofit
entities, the Emergency Housing Consortium of Santa Clara County
and the Second Harvest Food Bank, in lieu of a cash donation.
Because of the moratorium on direct-access arrangements, these
two nonprofits could not take advantage of the donation. The
author stated that Calpine had a similar arrangement in Houston.
However, neither Calpine nor any other electricity generator
has exercised its option to donate electricity in California
since the passage of AB 423.
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4) AB 413 and SB 626 : Efforts are underway to implement a
broader but limited lifting of the suspension of direct access.
AB 413 (Fuentes) and SB 626 (Kehoe) delete the direct-access
suspension subject to the limitation that the total annual
kilowatthours supplied by all other providers to retail
customers of an IOU shall not exceed the maximum total annual
level of kilowatthours supplied by all electric service
providers within that IOU's service territory for any year
between April 1, 1998 and December 31, 2009.
Both bills also ensure that electric service providers of
direct-access electricity are subject to the same resource
adequacy, renewables portfolio standards, and greenhouse gas
emission reduction laws and regulations as the investor-owned
utilities.
REGISTERED SUPPORT / OPPOSITION :
Support
Shelter Network
Salud Para La Gente
HIP Housing
The Food Bank of Monterey County
Opposition
None on file.
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083