BILL NUMBER: SB 712 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 2, 2009
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
Section 44273 of the Health and Safety Code, to amend Sections 25301,
25302, 25620.1, 25620.2, 25620.6, 25620.7, and 25620.15 of the
Public Resources Code, and to amend Sections 392.1 and
454.5 381, 384, 392.1, 399, 454.5, 890, and 895
of the Public Utilities Code, relating to the Public
Utilities Commission public ut ilities
.
LEGISLATIVE COUNSEL'S DIGEST
SB 712, as amended, 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.
Existing law requires the State Energy Resources Conservation and
Development Commission to develop, implement, and administer a
program, titled the Public Interest Energy Research, Development, and
Demonstration Program, to include a full range of research,
development, and demonstration activities that are not adequately
provided for by competitive and regulated energy markets. Certain
statutes, however, refer to the program as the Public Interest
Research, Development, and Demonstration Program and the fund
established for implementation and administration of the program is
the Public Interest Research, Development, and Demonstration Fund.
This bill would change statutory references to the program to
refer to it as the Public Interest Energy Research, Development, and
Demonstration Program and would change the name of the fund
established for implementation and administration of the program to
the Public Interest Energy Research, Development, and Demonstration
Fund.
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 44273 of the Health
and Safety Code is amended to read:
44273. (a) The Alternative and Renewable Fuel and Vehicle
Technology Fund is hereby created in the State Treasury, to be
administered by the commission. The moneys in the fund, upon
appropriation by the Legislature, shall be expended by the commission
to implement the Alternative and Renewable Fuel and Vehicle
Technology Program in accordance with this chapter.
(b) Notwithstanding any other provision of law, the sum of ten
million dollars ($10,000,000) shall be transferred annually from the
Public Interest Energy Research, Development, and
Demonstration Fund created by Section 384 of the Public Utilities
Code to the Alternative and Renewable Fuel and Vehicle Technology
Fund. Prior to the award of any funds from this source, the
commission shall make a determination that the proposed project will
provide benefits to electric or natural gas ratepayers based upon the
commission's adopted criteria.
(c) Beginning with the integrated energy policy report adopted in
2011, and in the subsequent reports adopted thereafter, pursuant to
Section 25302 of the Public Resources Code, the commission shall
include an evaluation of research, development, and deployment
efforts funded by this chapter. The evaluation shall include all of
the following:
(1) A list of projects funded by the Alternative and Renewable
Fuel and Vehicle Technology Fund.
(2) The expected benefits of the projects in terms of air quality,
petroleum use reduction, greenhouse gas emissions reduction,
technology advancement, and progress towards achieving these
benefits.
(3) The overall contribution of the funded projects toward
promoting a transition to a diverse portfolio of clean, alternative
transportation fuels and reduced petroleum dependency in California.
(4) Key obstacles and challenges to meeting these goals identified
through funded projects.
(5) Recommendations for future actions.
SECTION 1. SEC. 2. 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 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. SEC. 3. Section 25302 of the
Public Resources Code is amended to read:
25302. (a) Beginning November 1, 2003, and every two
years thereafter On or before November 1 of each
odd-numbered year , 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,
(d) On or before November 1 of each
even-numbered year, 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
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 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. 4. Section 25620.1 of the Public
Resources Code is amended to read:
25620.1. (a) The commission shall develop, implement, and
administer the Public Interest Energy Research,
Development, and Demonstration Program that is hereby created. The
program shall include a full range of research, development, and
demonstration activities that, as determined by the commission, are
not adequately provided for by competitive and regulated markets. The
commission shall administer the program consistent with the policies
of this chapter.
(b) The general goal of the program is to develop, and help bring
to market, energy technologies that provide increased environmental
benefits, greater system reliability, and lower system costs, and
that provide tangible benefits to electric utility customers through
the following investments:
(1) Advanced transportation technologies that reduce air pollution
and greenhouse gas emissions beyond applicable standards, and that
benefit electricity and natural gas ratepayers.
(2) Increased energy efficiency in buildings, appliances,
lighting, and other applications beyond applicable standards, and
that benefit electric utility customers.
(3) Advanced electricity generation technologies that exceed
applicable standards to increase reductions in greenhouse gas
emissions from electricity generation, and that benefit electric
utility customers.
(4) Advanced electricity technologies that reduce or eliminate
consumption of water or other finite resources, increase use of
renewable energy resources, or improve transmission or distribution
of electricity generated from renewable energy resources.
(c) To achieve the goals established in subdivision (b), the
commission shall adopt a portfolio approach for the program that does
all of the following:
(1) Effectively balances the risks, benefits, and time horizons
for various activities and investments that will provide tangible
energy or environmental benefits for California electricity
customers.
(2) Emphasizes innovative energy supply and end use technologies,
focusing on their reliability, affordability, and environmental
attributes.
(3) Includes projects that have the potential to enhance
transmission and distribution capabilities.
(4) Includes projects that have the potential to enhance the
reliability, peaking power, and storage capabilities of renewable
energy.
(5) Demonstrates a balance of benefits to all sectors that
contribute to the funding under Section 399.8 of the Public Utilities
Code.
(6) Addresses key technical and scientific barriers.
(7) Demonstrates a balance between short-term, mid-term, and
long-term potential.
(8) Ensures that prior, current, and future research not be
unnecessarily duplicated.
(9) Provides for the future market utilization of projects funded
through the program.
(10) Ensures an open project selection process and encourages the
awarding of research funding for a diverse type of research as well
as a diverse award recipient base and equally considers research
proposals from the public and private sectors.
(11) Coordinates with other related research programs.
(d) The term "award," as used in this chapter, may include, but is
not limited to, contracts, grants, interagency agreements, loans,
and other financial agreements designed to fund public interest
energy research, demonstration, and development projects or
programs.
SEC. 5. Section 25620.2 of the Public
Resources Code is amended to read:
25620.2. (a) To ensure the efficient implementation and
administration of the Public Interest Energy Research,
Development, and Demonstration Program, the commission shall do both
of the following:
(1) Develop procedures for the solicitation of award applications
for project or program funding, and to ensure efficient program
management.
(2) Evaluate and select programs and projects, based on merit,
that will be funded under the program.
(b) The commission shall adopt regulations to implement the
program, in accordance with the following procedures:
(1) Prepare a preliminary text of the proposed regulation and
provide a copy of the preliminary text to any person requesting a
copy.
(2) Provide public notice of the proposed regulation to any person
who has requested notice of the regulations prepared by the
commission. The notice shall contain all of the following:
(A) A clear overview explaining the proposed regulation.
(B) Instructions on how to obtain a copy of the proposed
regulations.
(C) A statement that if a public hearing is not scheduled for the
purpose of reviewing a proposed regulation, any person may request,
not later than 15 days prior to the close of the written comment
period, a public hearing conducted in accordance with commission
procedures.
(3) Accept written public comments for 30 calendar days after
providing the notice required in paragraph (2).
(4) Certify that all written comments were read and considered by
the commission.
(5) Place all written comments in a record that includes copies of
any written factual support used in developing the proposed
regulation, including written reports and copies of any transcripts
or minutes in connection with any public hearings on the adoption of
the regulation. The record shall be open to public inspection and
available to the courts.
(6) Provide public notice of any substantial revision of the
proposed regulation at least 15 days prior to the expiration of the
deadline for public comments and comment period using the procedures
provided in paragraph (2).
(7) Conduct public hearings, if a hearing is requested by an
interested party, that shall be conducted in accordance with
commission procedures.
(8) Adopt any proposed regulation at a regularly scheduled and
noticed meeting of the commission. The regulation shall become
effective immediately unless otherwise provided by the commission.
(9) Publish any adopted regulation in a manner that makes copies
of the regulation easily available to the public. Any adopted
regulation shall also be made available on the Internet. The
commission shall transmit a copy of an adopted regulation to the
Office of Administrative Law for publication, or, if the commission
determines that printing the regulation is impractical, an
appropriate reference as to where a copy of the regulation may be
obtained.
(10) Notwithstanding any other provision of law, this subdivision
provides an interim exception from the requirements of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code for regulations required to implement Sections
25620.1 and 25620.2 that are adopted under the procedures specified
in this subdivision.
(11) This subdivision shall become inoperative on January 1, 2012,
unless a later enacted statute deletes or extends that date.
However, after January 1, 2012, the commission is not required to
repeat any procedural step in adopting a regulation that has been
completed before January 1, 2012, using the procedures specified in
this subdivision.
SEC. 6. Section 25620.6 of the Public
Resources Code is amended to read:
25620.6. The commission, in consultation with the Department of
General Services, may purchase insurance coverage necessary to
implement an award. Funding for the purchase of insurance may be made
from money in the Public Interest Energy Research,
Development, and Demonstration Fund created pursuant to Section 384
of the Public Utilities Code.
SEC. 7. Section 25620.7 of the Public
Resources Code is amended to read:
25620.7. (a) The commission may contract for, or through
interagency agreement obtain, technical, scientific, or
administrative services or expertise from one or more entities, to
support the program. Funding for this purpose shall be made from
money in the Public Interest Energy Research, Development,
and Demonstration Fund.
(b) The commission may select the services or expertise described
in subdivision (a), pursuant to Section 25620.5. In the event that
contracts or interagency agreements have been made to multiple
entities and their subcontractors for similar purposes, the
commission may select from among those entities the particular
expertise needed for a specified type of work. Selection of the
particular expertise may be based solely on a review of
qualifications, including the specific expertise required,
availability of the expertise, or access to a resource of special
relevance to the work, including, but not limited to, a database,
model, technical facility, or a collaborative or institutional
affiliation that will expedite the quality and performance of the
work.
SEC. 8. Section 25620.15 of the Public
Resources Code is amended to read:
25620.15. (a) In order to ensure that prudent investments in
research, development, and demonstration of energy efficient
technologies continue to produce substantial economic, environmental,
public health, and reliability benefits, it is the policy of the
state and the intent of the Legislature that funds made available,
upon appropriation, for energy related public interest energy
research, development, and demonstration programs shall be used
to advance science or technology that is not adequately provided by
competitive and regulated markets.
(b) Notwithstanding any other provision of law, money collected
for public interest energy research, development, and
demonstration pursuant to Section 399.8 of the Public Utilities Code
shall be transferred to the Public Interest Energy
Research, Development, and Demonstration Fund. Money collected
between January 1, 2007, and January 1, 2012, shall be used for the
purposes specified in this chapter.
(c) In lieu of the Public Utilities Commission retaining funds
authorized pursuant to Section 381 of the Public Utilities Code for
investments made by electrical corporations in public interest
energy research, development, and demonstration projects for
transmission and distribution functions, up to 10 percent of the
funds transferred to the commission pursuant to subdivision (b) shall
be awarded to electrical corporations for public interest
energy research, development, and demonstration projects for
transmission and distribution functions consistent with the policies
and subject to the requirements of this chapter.
SEC. 9. Section 381 of the Public
Utilities Code is amended to read:
381. (a) To ensure that the funding for the programs described in
subdivision (b) and Section 382 are not commingled with other
revenues, the commission shall require each electrical corporation to
identify a separate rate component to collect the revenues used to
fund these programs. The rate component shall be a nonbypassable
element of the local distribution service and collected on the basis
of usage.
(b) The commission shall allocate funds collected pursuant to
subdivision (a), and any interest earned on collected funds, to
programs that enhance system reliability and provide in-state
benefits as follows:
(1) Cost-effective energy efficiency and conservation activities.
(2) Public interest energy research and development not
adequately provided by competitive and regulated markets.
(3) In-state operation and development of existing and new and
emerging eligible renewable energy resources, as defined in Section
399.12.
(c) The Public Utilities Commission shall order the respective
electrical corporations to collect and spend these funds at the
levels and for the purposes required in Section 399.8.
(d) Each electrical corporation shall allow customers to make
voluntary contributions through their utility bill payments as either
a fixed amount or a variable amount to support programs established
pursuant to paragraph (3) of subdivision (b). Funds collected by
electrical corporations for these purposes shall be forwarded in a
timely manner to the appropriate fund as specified by the commission.
SEC. 10. Section 384 of the Public
Utilities Code is amended to read:
384. (a) Funds transferred to the State Energy Resources
Conservation and Development Commission pursuant to this article for
purposes of public interest energy research, development,
and demonstration shall be transferred to the Public Interest
Energy Research, Development, and Demonstration Fund, which is
hereby created in the State Treasury. The fund is a trust fund and
shall contain money from all interest, repayments, disencumbrances,
royalties, and any other proceeds appropriated, transferred, or
otherwise received for purposes pertaining to public interest
research, development, and demonstration. Any appropriations that are
made from the fund shall have an encumbrance period of not longer
than two years, and a liquidation period of not longer than four
years.
(b) Funds deposited in the Public Interest Energy
Research, Development, and Demonstration Fund may be expended for
projects that serve the energy needs of both stationary and
transportation purposes if the research provides an electricity
ratepayer benefit.
(c) The State Energy Resources
Conservation and Development Commission shall report
annually to the appropriate budget committees of the Legislature on
any encumbrances or liquidations that are outstanding at the time the
commission's budget is submitted to the Legislature for review.
SEC. 3. SEC. 11. 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 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 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 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. 12. Section 399 of the Public
Utilities Code is amended to read:
399. (a) This article shall be known, and may be cited, as the
Reliable Electric Service Investments Act.
(b) The Legislature finds and declares that safe, reliable
electric service is of utmost importance to the citizens of this
state, and its economy.
(c) The Legislature further finds and declares that in order to
ensure that the citizens of this state continue to receive safe,
reliable, affordable, and environmentally sustainable electric
service, it is essential that prudent investments continue to be made
in all of the following areas:
(1) To protect the integrity of the electric distribution grid.
(2) To ensure an adequately sized and trained utility workforce.
(3) To ensure cost-effective energy efficiency improvements.
(4) To achieve a sustainable supply of renewable energy.
(5) To advance public interest energy research,
development and demonstration programs not adequately provided by
competitive and regulated markets.
(d) It is the intent of the Legislature to reaffirm, without
requiring revision, California's doctrine, as reflected in regulatory
and judicial decisions, regarding electrical corporations'
reasonable opportunity to recover costs and investments associated
with their electric distribution grid and the reasonable opportunity
to attract capital for investment on reasonable terms.
(e) The Legislature further finds and declares all of the
following:
(1) Acting under applicable constitutional and statutory
authorities, the Public Utilities Commission and the boards of local
publicly owned electric utilities have included in regulated
electricity prices, investments that are essential to maintaining
system reliability, reducing California electricity users' bills, and
mitigating environmental costs of California users' electricity
consumption.
(2) Among the most important of these "system benefits"
investments categories are energy efficiency, renewable energy, and
public interest energy research, development and
demonstration (RD&D).
(3) Energy efficiency investments funded from California's
usage-based charges on electricity distribution help improve
systemwide reliability by reducing demand in times and areas of
system congestion, and at the same time reduce all California
electricity users' costs. These investments also significantly reduce
environmental costs associated with California's electricity
consumption, including, but not limited to, degradation of the state'
s air, water, and land
resources.
(4) California's in-state renewable energy resources help
alleviate supply deficits that could threaten electric system
reliability, reduce environmental costs associated with California's
electricity consumption, and increase the diversity of the
electricity system's fuel mix, reducing electricity users' exposure
to fossil-fuel price volatility.
(5) California's public interest RD&D investments enhance private
and regulated sector investment in electricity system technologies,
and are designed specifically to help ensure sustained improvement in
the economic and environmental performance of the distribution,
transmission, and generation and end-use systems that serve
California electricity users.
(6) California has established a long tradition of recovering
system benefits investments through usage-based electricity charges,
which is reflected in at least two decades of electricity price
regulation by the commission, the boards of local publicly owned
electric utilities, and the mandate of the Legislature in Chapter 854
of the Statutes of 1996 (Assembly Bill 1890 of the 1995-96 Regular
Session of the Legislature) and Chapter 905 of the Statutes of 1997
(Senate Bill 90 of the 1997-98 Regular Session of the Legislature).
(7) Unless the Legislature acts to extend the mandate of this
article for minimum levels of usage based system benefits charges,
California electricity users are at substantial risk of higher
economic and environmental costs and degraded reliability.
SEC. 4. SEC. 13. 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 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.
SEC. 14. Section 890 of the Public
Utilities Code is amended to read:
890. (a) On and after January 1, 2001, there shall be
imposed a surcharge on all natural gas consumed in this state.
The commission shall establish a surcharge on all
natural gas consumed in this state to fund low-income
assistance programs required by Sections 739.1, 739.2, and 2790 and
cost-effective energy efficiency and conservation activities and
public interest energy research and development authorized
by Section 740 and not adequately provided by the competitive and
regulated markets. Upon implementation of this article, funding for
those programs shall be removed from the rates of gas utilities.
(b) (1) Except as specified in Section 898, a public utility gas
corporation, as defined in subdivision (b) of Section 891, shall
collect the surcharge imposed pursuant to subdivision (a) from any
person consuming natural gas in this state who receives gas service
from the public utility gas corporation.
(2) A public utility gas corporation is relieved from liability to
collect the surcharge insofar as the base upon which the surcharge
is imposed is represented by accounts which have been found to be
worthless and charged off in accordance with generally accepted
accounting principles. If the public utility gas corporation has
previously paid the amount of the surcharge it may, under regulations
prescribed by the State Board of Equalization, take as a deduction
on its return the amount found to be worthless and charged off. If
any accounts are thereafter collected in whole or in part, the
surcharge so collected shall be paid with the first return filed
after that collection. The commission may by regulation promulgate
other rules with respect to uncollected or worthless accounts as it
determines to be necessary to the fair and efficient administration
of this part.
(c) Except as specified in Section 898, all persons consuming
natural gas in this state that has been transported by an interstate
pipeline, as defined in subdivision (c) of Section 891, shall be
liable for the surcharge imposed pursuant to subdivision (a).
(d) The commission shall annually determine the amount of money
required for the following year to administer this chapter and fund
the natural gas related programs described in subdivision (a) for the
service territory of each public utility gas corporation.
(e) The commission shall annually establish a surcharge rate for
each class of customer for the service territory of each public
utility gas corporation. A customer of an interstate gas pipeline, as
defined in Section 891, shall pay the same surcharge rate as the
customer would pay if the customer received service from the public
utility gas corporation in whose service territory the customer is
located. The commission shall determine the total volume of retail
natural gas transported within the service territory of a utility gas
provider, that is not subject to exemption pursuant to Section 896,
for the purpose of establishing the surcharge rate.
(f) The commission shall allocate the surcharge for gas used by
all customers, including those customers who were not subject to the
surcharge prior to January 1, 2001.
(g) The commission shall notify the State Board of Equalization of
the surcharge rate for each class of customer served by an
interstate pipeline in the service territory of a public utility gas
corporation.
(h) The State Board of Equalization shall notify each person who
consumes natural gas delivered by an interstate pipeline of the
surcharge rate for each class of customer within the service
territory of a public utility gas corporation.
(i) The surcharge imposed pursuant to subdivision (a) shall be in
addition to any other charges for natural gas sold or transported for
consumption in this state. Effective on July 1, 2001, the
The surcharge imposed pursuant to this article
shall be identified as a separate line item on the bill of a customer
of a public utility gas corporation.
(j) Notwithstanding subdivision (a), public utility gas
corporations shall continue to collect in rates those costs of
programs described in subdivision (a) of Section 890 that are
uncollected prior to the operative date of this article.
SEC. 15. Section 895 of the Public
Utilities Code is amended to read:
895. Notwithstanding Section 13340 of the Government Code, moneys
in the Gas Consumption Surcharge Fund are continuously appropriated,
without regard to fiscal years, as follows:
(a) To the commission or an entity designated by the commission to
fund programs described in subdivision (a) of Section 890. If the
commission designates the State Energy Resources Conservation and
Development Commission to receive funds for public interest
energy research and development, both of the following shall
apply:
(1) The Controller shall transfer funds to a separate subaccount
within the Public Interest Energy Research, Development,
and Demonstration Fund to pay the State Energy Resources Conservation
and Development Commission for its costs in carrying out its duties
and responsibilities under this article.
(2) The State Energy Resources Conservation and Development
Commission may administer the program pursuant to Chapter 7.1
(commencing with Section 25620) of Division 15 of the Public
Resources Code.
(b) To pay the commission for its costs in carrying out its duties
and responsibilities under this article.
(c) To pay the State Board of Equalization for its costs in
administering this article.