BILL NUMBER: SB 712 INTRODUCED
BILL TEXT
INTRODUCED BY Senators Padilla, Benoit, Calderon, Corbett, Cox,
Kehoe, Lowenthal, Simitian, Strickland, Wiggins, and Wright
FEBRUARY 27, 2009
An act to amend Sections 25301 and 25302 of the Public Resources
Code, and to amend Sections 392.1 and 454.5 of the Public Utilities
Code, relating to the Public Utilities Commission.
LEGISLATIVE COUNSEL'S DIGEST
SB 712, as introduced, Padilla. Public Utilities Commission:
Division of Ratepayer Advocates.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities and can establish its own
procedures, subject to statutory limitations or directions and
constitutional requirements of due process. Existing law establishes
a division within the Public Utilities Commission, known as the
Division of Ratepayer Advocates, formerly called the Office of
Ratepayer Advocates, to represent the interests of public utility
customers and subscribers, with the goal of obtaining the lowest
possible rate for service consistent with reliable and safe service
levels.
This bill would conform certain statutory references to the former
Office of Ratepayer Advocates to the division's current name.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 25301 of the Public Resources Code is amended
to read:
25301. (a) At least every two years, the commission shall conduct
assessments and forecasts of all aspects of energy industry supply,
production, transportation, delivery and distribution, demand, and
prices. The commission shall use these assessments and forecasts to
develop energy policies that conserve resources, protect the
environment, ensure energy reliability, enhance the state's economy,
and protect public health and safety. To perform these assessments
and forecasts, the commission may require submission of demand
forecasts, resource plans, market assessments, and related outlooks
from electric and natural gas utilities, transportation fuel and
technology suppliers, and other market participants. These
assessments and forecasts shall be done in consultation with the
appropriate state and federal agencies including, but not limited to,
the Public Utilities Commission, the Office
Division of Ratepayer Advocates, the Air Resources Board, the
Electricity Oversight Board, the Independent System Operator, the
Department of Water Resources, the California Consumer Power and
Conservation Financing Authority, the Department of Transportation,
and the Department of Motor Vehicles.
(b) In developing the assessments and forecasts prepared pursuant
to subdivision (a), the commission shall do all of the following:
(1) Provide information about the performance of energy
industries.
(2) Develop and maintain the analytical capability sufficient to
answer inquiries about energy issues from government, market
participants, and the public.
(3) Analyze and develop energy policies.
(4) Provide an analytical foundation for regulatory and policy
decisionmaking.
(5) Facilitate efficient and reliable energy markets.
SEC. 2. Section 25302 of the Public Resources Code is amended to
read:
25302. (a) Beginning November 1, 2003, and every two years
thereafter, the commission shall adopt an integrated energy policy
report. This integrated report shall contain an overview of major
energy trends and issues facing the state, including, but not limited
to, supply, demand, pricing, reliability, efficiency, and impacts on
public health and safety, the economy, resources, and the
environment. Energy markets and systems shall be grouped and assessed
in three subsidiary volumes:
(1) Electricity and natural gas markets.
(2) Transportation fuels, technologies, and infrastructure.
(3) Public interest energy strategies.
(b) The commission shall compile the integrated energy policy
report prepared pursuant to subdivision (a) by consolidating the
analyses and findings of the subsidiary volumes in paragraphs (1),
(2), and (3) of subdivision (a). The integrated energy policy report
shall present policy recommendations based on an indepth and
integrated analysis of the most current and pressing energy issues
facing the state. The analyses supporting this integrated energy
policy report shall explicitly address interfuel and intermarket
effects to provide a more informed evaluation of potential tradeoffs
when developing energy policy across different markets and systems.
(c) The integrated energy policy report shall include an
assessment and forecast of system reliability and the need for
resource additions, efficiency, and conservation that considers all
aspects of energy industries and markets that are essential for the
state economy, general welfare, public health and safety, energy
diversity, and protection of the environment. This assessment shall
be based on determinations made pursuant to this chapter.
(d) Beginning November 1, 2004, and every two years thereafter,
the commission shall prepare an energy policy review to update
analyses from the integrated energy policy report prepared pursuant
to subdivisions (a), (b), and (c), or to raise energy issues that
have emerged since the release of the integrated energy policy
report. The commission may also periodically prepare and release
technical analyses and assessments of energy issues and concerns to
provide timely and relevant information for the Governor, the
Legislature, market participants, and the public.
(e) In preparation of the report, the commission shall consult
with the following entities: the Public Utilities Commission, the
Office Division of Ratepayer Advocates,
the State Air Resources Board, the Electricity Oversight Board, the
Independent System Operator, the Department of Water Resources, the
California Consumer Power and Conservation Financing Authority, the
Department of Transportation, and the Department of Motor Vehicles,
and any federal, state, and local agencies it deems necessary in
preparation of the integrated energy policy report. To assure
collaborative development of state energy policies, these agencies
shall make a good faith effort to provide data, assessment, and
proposed recommendations for review by the commission.
(f) The commission shall provide the report to the Public
Utilities Commission, the Office Division
of Ratepayer Advocates, the State Air Resources Board, the
Electricity Oversight Board, the Independent System Operator, the
Department of Water Resources, the California Consumer Power and
Conservation Financing Authority, and the Department of
Transportation. For the purpose of ensuring consistency in the
underlying information that forms the foundation of energy policies
and decisions affecting the state, those entities shall carry out
their energy-related duties and responsibilities based upon the
information and analyses contained in the report. If an entity listed
in this subdivision objects to information contained in the report,
and has a reasonable basis for that objection, the entity shall not
be required to consider that information in carrying out its
energy-related duties.
(g) The commission shall make the report accessible to state,
local, and federal entities and to the general public.
SEC. 3. Section 392.1 of the Public Utilities Code is amended 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
Division 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
Division 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
Division of Ratepayer Advocates shall not make
specific recommendations or rank the relative attractiveness of
specific service offerings of registered providers of electric
services.
SEC. 4. Section 454.5 of the Public Utilities Code is amended to
read:
454.5. (a) The commission shall specify the allocation of
electricity, including quantity, characteristics, and duration of
electricity delivery, that the Department of Water Resources shall
provide under its power purchase agreements to the customers of each
electrical corporation, which shall be reflected in the electrical
corporation's proposed procurement plan. Each electrical corporation
shall file a proposed procurement plan with the commission not later
than 60 days after the commission specifies the allocation of
electricity. The proposed procurement plan shall specify the date
that the electrical corporation intends to resume procurement of
electricity for its retail customers, consistent with its obligation
to serve. After the commission's adoption of a procurement plan, the
commission shall allow not less than 60 days before the electrical
corporation resumes procurement pursuant to this section.
(b) An electrical corporation's proposed procurement plan shall
include, but not be limited to, all of the following:
(1) An assessment of the price risk associated with the electrical
corporation's portfolio, including any utility-retained generation,
existing power purchase and exchange contracts, and proposed
contracts or purchases under which an electrical corporation will
procure electricity, electricity demand reductions, and
electricity-related products and the remaining open position to be
served by spot market transactions.
(2) A definition of each electricity product, electricity-related
product, and procurement related financial product, including support
and justification for the product type and amount to be procured
under the plan.
(3) The duration of the plan.
(4) The duration, timing, and range of quantities of each product
to be procured.
(5) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services,
including the format and criteria of that procurement process.
(6) An incentive mechanism, if any incentive mechanism is
proposed, including the type of transactions to be covered by that
mechanism, their respective procurement benchmarks, and other
parameters needed to determine the sharing of risks and benefits.
(7) The upfront standards and criteria by which the acceptability
and eligibility for rate recovery of a proposed procurement
transaction will be known by the electrical corporation prior to
execution of the transaction. This shall include an expedited
approval process for the commission's review of proposed contracts
and subsequent approval or rejection thereof. The electrical
corporation shall propose alternative procurement choices in the
event a contract is rejected.
(8) Procedures for updating the procurement plan.
(9) A showing that the procurement plan will achieve the
following:
(A) The electrical corporation will, in order to fulfill its unmet
resource needs and in furtherance of Section 701.3, until a 20
percent renewable resources portfolio is achieved, procure renewable
energy resources with the goal of ensuring that at least an
additional 1 percent per year of the electricity sold by the
electrical corporation is generated from renewable energy resources,
provided sufficient funds are made available pursuant to Sections
399.6 and 399.15, to cover the above-market costs for new renewable
energy resources.
(B) The electrical corporation will create or maintain a
diversified procurement portfolio consisting of both short-term and
long-term electricity and electricity-related and demand reduction
products.
(C) The electrical corporation will first meet its unmet resource
needs through all available energy efficiency and demand reduction
resources that are cost effective, reliable, and feasible.
(10) The electrical corporation's risk management policy,
strategy, and practices, including specific measures of price
stability.
(11) A plan to achieve appropriate increases in diversity of
ownership and diversity of fuel supply of nonutility electrical
generation.
(12) A mechanism for recovery of reasonable administrative costs
related to procurement in the generation component of rates.
(c) The commission shall review and accept, modify, or reject each
electrical corporation's procurement plan. The commission's review
shall consider each electrical corporation's individual procurement
situation, and shall give strong consideration to that situation in
determining which one or more of the features set forth in this
subdivision shall apply to that electrical corporation. A procurement
plan approved by the commission shall contain one or more of the
following features, provided that the commission may not approve a
feature or mechanism for an electrical corporation if it finds that
the feature or mechanism would impair the restoration of an
electrical corporation's creditworthiness or would lead to a
deterioration of an electrical corporation's creditworthiness:
(1) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services. The
commission shall specify the format of that procurement process, as
well as criteria to ensure that the auction process is open and
adequately subscribed. Any purchases made in compliance with the
commission-authorized process shall be recovered in the generation
component of rates.
(2) An incentive mechanism that establishes a procurement
benchmark or benchmarks and authorizes the electrical corporation to
procure from the market, subject to comparing the electrical
corporation's performance to the commission-authorized benchmark or
benchmarks. The incentive mechanism shall be clear, achievable, and
contain quantifiable objectives and standards. The incentive
mechanism shall contain balanced risk and reward incentives that
limit the risk and reward of an electrical corporation.
(3) Upfront achievable standards and criteria by which the
acceptability and eligibility for rate recovery of a proposed
procurement transaction will be known by the electrical corporation
prior to the execution of the bilateral contract for the transaction.
The commission shall provide for expedited review and either approve
or reject the individual contracts submitted by the electrical
corporation to ensure compliance with its procurement plan. To the
extent the commission rejects a proposed contract pursuant to this
criteria, the commission shall designate alternative procurement
choices obtained in the procurement plan that will be recoverable for
ratemaking purposes.
(d) A procurement plan approved by the commission shall accomplish
each of the following objectives:
(1) Enable the electrical corporation to fulfill its obligation to
serve its customers at just and reasonable rates.
(2) Eliminate the need for after-the-fact reasonableness reviews
of an electrical corporation's actions in compliance with an approved
procurement plan, including resulting electricity procurement
contracts, practices, and related expenses. However, the commission
may establish a regulatory process to verify and assure that each
contract was administered in accordance with the terms of the
contract, and contract disputes which may arise are reasonably
resolved.
(3) Ensure timely recovery of prospective procurement costs
incurred pursuant to an approved procurement plan. The commission
shall establish rates based on forecasts of procurement costs adopted
by the commission, actual procurement costs incurred, or combination
thereof, as determined by the commission. The commission shall
establish power procurement balancing accounts to track the
differences between recorded revenues and costs incurred pursuant to
an approved procurement plan. The commission shall review the power
procurement balancing accounts, not less than semiannually, and shall
adjust rates or order refunds, as necessary, to promptly amortize a
balancing account, according to a schedule determined by the
commission. Until January 1, 2006, the commission shall ensure that
any overcollection or undercollection in the power procurement
balancing account does not exceed 5 percent of the electrical
corporation's actual recorded generation revenues for the prior
calendar year excluding revenues collected for the Department of
Water Resources. The commission shall determine the schedule for
amortizing the overcollection or undercollection in the balancing
account to ensure that the 5 percent threshold is not exceeded. After
January 1, 2006, this adjustment shall occur when deemed appropriate
by the commission consistent with the objectives of this section.
(4) Moderate the price risk associated with serving its retail
customers, including the price risk embedded in its long-term supply
contracts, by authorizing an electrical corporation to enter into
financial and other electricity-related product contracts.
(5) Provide for just and reasonable rates, with an appropriate
balancing of price stability and price level in the electrical
corporation's procurement plan.
(e) The commission shall provide for the periodic review and
prospective modification of an electrical corporation's procurement
plan.
(f) The commission may engage an independent consultant or
advisory service to evaluate risk management and strategy. The
reasonable costs of any consultant or advisory service is a
reimbursable expense and eligible for funding pursuant to Section
631.
(g) The commission shall adopt appropriate procedures to ensure
the confidentiality of any market sensitive information submitted in
an electrical corporation's proposed procurement plan or resulting
from or related to its approved procurement plan, including, but not
limited to, proposed or executed power purchase agreements, data
request responses, or consultant reports, or any combination,
provided that the Office Division of
Ratepayer Advocates and other consumer groups that are nonmarket
participants shall be provided access to this information under
confidentiality procedures authorized by the commission.
(h) Nothing in this section alters, modifies, or amends the
commission's oversight of affiliate transactions under its rules and
decisions or the commission's existing authority to investigate and
penalize an electrical corporation's alleged fraudulent activities,
or to disallow costs incurred as a result of gross incompetence,
fraud, abuse, or similar grounds. Nothing in this section expands,
modifies, or limits the State Energy Resources Conservation and
Development Commission's existing authority and responsibilities as
set forth in Sections 25216, 25216.5, and 25323 of the Public
Resources Code.
(i) An electrical corporation that serves less than 500,000
electric retail customers within the state may file with the
commission a request for exemption from this section, which the
commission shall grant upon a showing of good cause.
(j) (1) Prior to its approval pursuant to Section 851 of any
divestiture of generation assets owned by an electrical corporation
on or after the date of enactment of the act adding this section, the
commission shall determine the impact of the proposed divestiture on
the electrical corporation's procurement rates and shall approve a
divestiture only to the extent it finds, taking into account the
effect of the divestiture on procurement rates, that the divestiture
is in the public interest and will result in net ratepayer benefits.
(2) Any electrical corporation's procurement necessitated as a
result of the divestiture of generation assets on or after the
effective date of the act adding this subdivision shall be subject to
the mechanisms and procedures set forth in this section only if its
actual cost is less than the recent historical cost of the divested
generation assets.
(3) Notwithstanding paragraph (2), the commission may deem
proposed procurement eligible to use the procedures in this section
upon its approval of asset divestiture pursuant to Section 851.