BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1097 (Strickland)
Hearing Date: 05/17/2010 Amended: 05/11/2010
Consultant: Brendan McCarthy Policy Vote: EU&C 8-2
SB 1097 (Strickland), Page 2
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BILL SUMMARY: SB 1097 requires electric and natural gas
utilities to accept the transfer of electricity or natural gas
systems serving master-metered mobile home parks, provided that
certain criteria are met. The bill requires utilities to
designate a representative to work with mobile home park owners
on potential transfers. The bill requires the Public Utilities
Commission to monitor and facilitate proposed transfers. The
bill allows mobile home park owners to bring complaints before
the Commission related to the transfer process.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Oversight of potential $250 $525 $525 Special
*
transfers
Increased energy costs Unknown Various
to 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.
The owners of many mobile home parks constructed prior to 1997
provide electricity and/or natural gas service to park
residents. These mobile home parks are "master-metered", such
that there is only a single meter for the park. (Parks
constructed after 1997 must be individually metered.)
Under current law, master-metered mobile home park operators pay
a discounted rate for electricity and natural gas. The park
owners are authorized to charge park residents the same retail
electricity and natural gas rates that all other similar
ratepayer pay. The "differential" between the rate charged to
the park operator and the rates paid by the park residents is
set by the Public Utilities Commission. The differential is
designed to provide sufficient revenue to park operators to
compensate them for the cost of providing service, to allow them
SB 1097 (Strickland), Page 3
to maintain the system, and to provide system upgrades within
the park.
Under current law, master-metered mobile home park owners are
authorized to transfer their electricity or natural gas system
to the local investor owned utility. In order for a transfer to
take place, the park owner and the utility must agree on the
terms of the transfer. There are several additional criteria in
the law that must be met for a transfer to take place. For
example, the system must be capable of providing a safe and
reliable source of gas or electric service.
Few transfers have taken place between park owners and utilities
- potentially due to disagreements over the transfer price
between park owners and utilities.
SB 1097 requires utilities to accept the transfer of a mobile
home park master-metered system, provided specified criteria are
met. The required criteria include the existing requirements
that the park system is capable of providing safe and reliable
service, that the system meets the Public Utilities Commission's
general orders, and that the system is capable of meeting the
expected load. The bill adds an additional criterion that
natural gas systems meet specified federal safety standards.
Upon notice of intent to transfer a system, the bill requires
utilities to designate a representative to oversee the transfer
process. The bill raises the existing fee charged by the
utilities to the park owners for an inspection of the system,
from $150 to $200. The bill requires the utility to provide
information to the Commission on the proposed transfer. The bill
also requires the Commission to monitor and facilitate any
proposed transfer.
In cases where a park owner and the local utility use mediation
to attempt to resolve disputes over the proposed transfer (which
is allowed under current law), the bill requires the Commission
to hire an independent consultant to evaluate the system
inspection and proposed valuation of the system. The costs of
hiring the consultant would be born by the utility.
The bill allows the Commission to extend the process for
approving transfers. The bill allows park owners to bring a
complaint against a utility for violating the statutory
requirements relating to proposed transfers.
SB 1097 (Strickland), Page 4
The Commission estimates that it will need four additional
positions to review proposed transfers, manage complaints made
by park owners, and manage outside consultants hired to evaluate
master-metered system valuations. (Some portion of these costs
may be reimbursed by utilities.)
In addition to the direct cost to the Commission to implement
the bill, there may be indirect costs to state agencies as
electricity consumers. (State agencies make up about 15 percent
of the state's electricity market.) Because the bill requires
the transfer of master-meter systems to the utilities, the
utilities may be required to accept the transfer of systems that
need substantial upgrades. Given the relatively small number of
tenants in any given park and the potential for substantial
upgrades in at least some parks, the cost of potential system
upgrades may be shared by all utility ratepayers. In such a
case, state agencies would share in those costs. The extent of
these costs is unknown.
AB 1108 (Fuentes) requires the transfer of all master-metered
electric and natural gas systems in mobile home parks to the
utilities. That bill is on the committee's Suspense File.