BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1390
                                                                  Page  1

          Date of Hearing:   May 4, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

           AB 1390 (Committee on Utilities and Commerce) - As Introduced:  
                                 February 23, 2011 

          Policy Committee:                              
          UtilitiesVote:15-0 (Consent)

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:               

           SUMMARY  


          This bill requires the Attorney General (AG), until January 1, 
          2013, to succeed the Electricity Oversight Board (EOB) in any 
          litigation or settlement to obtain electricity ratepayer relief 
          as a result of the 2000-2002 energy crisis.


           FISCAL EFFECT  

          Minor savings in litigation-related costs of recovery of certain 
          ratepayer recovery funds currently held in escrow. (See below.)

           COMMENTS  

           Background and Purpose  . The EOB was created by AB 1890 (Brulte), 
          Chapter 854, Statutes of 1996, which deregulated California's 
          wholesale electricity industry. As a result of the energy crisis 
          ten years ago, one of the EOB's primary duties was to initiate 
          proceedings at the Federal Energy Regulatory Commission (FERC) 
          in response to market manipulation. The EOB was been a 
          participant in over 400 proceedings at FERC and has been a 
          litigant in over 100 cases in the federal courts of appeal. 

          The EOB ceased operations on April 1, 2008 and was defunded in 
          2008-09. Until that time, the EOB was one of the complainants in 
          the Energy Crisis cases, along with the Public Utilities 
          Commission (PUC), the AG, PG&E, Southern California Edison, and 
          SDG&E (collectively, the "Cal Parties"). The Cal Parties brought 
          the Energy Crisis cases against approximately 65 energy sellers, 








                                                                  AB 1390
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          have now settled with over half of the sellers, and continue to 
          negotiate settlement with remaining sellers. In 2004, the Cal 
          Parties, including the EOB, entered into an escrow agreement 
          with JP Morgan Chase Bank to handle all future settlements. 
          Under that agreement, the signatures of all Cal Parties 
          (including EOB) are required to issue effective escrow 
          instructions for the purpose of disbursing funds resulting from 
          settlements with individual Energy Crisis-era sellers. JP Morgan 
          will not disburse funds from those accounts without a signature 
          from the EOB or a court order. At present, therefore, the Cal 
          Parties have no access to the approximately $70M in those 
          accounts. This bill allows the AG to sign for the EOB, 
          facilitating settlement of these Energy Crisis Claims.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081