BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1390 - Utilities & Commerce Hearing
Date: June 21, 2011 A
As Introduced: February 23, 2011 FISCAL B
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DESCRIPTION
Prior law required the Attorney General (AG), until January 1,
2010, to represent the Department of Finance and to succeed to
all rights, claims, powers, and entitlements of the Electricity
Oversight Board (EOB) in any litigation or settlement to obtain
ratepayer recovery for the effects of the 2000-02 energy crisis
and prohibited the AG from expending the proceeds of any
settlements of those claims, with certain exceptions.
This bill extends that authority until January 1, 2013.
BACKGROUND
The EOB was created by 1996 legislation which deregulated
California's wholesale electricity industry. Its primary
mission was to oversee the California Independent System
Operator (CAISO) and the Power Exchange (PX) which for a time
was the marketplace in which all electricity in the state was
bought and sold. The EOB was given very broad authority over
ensuring reliability of the state's supply of electricity.
The EOB's primary duty at that time was to act as a market
monitor, oversee the state's electricity market and initiate
proceedings at Federal Energy Regulatory Commission (FERC) in
response to market manipulation. The EOB has been a participant
in over 400 proceedings at FERC and has been a litigant in over
100 cases in the federal courts of appeal. Through 2005-06, EOB
had been a party to settlements of over $1 billion for various
overcharges stemming from the energy crisis.
Among the many developments associated with the energy crisis
were the bankruptcy of the PX in March 2001 and the replacement
of the EOB by an appointed CAISO stakeholder board with
gubernatorial appointees. The EOB was ultimately defunded in
2008 but the Legislature did not assign a successor agency to
assume its responsibilities.
COMMENTS
Author's Purpose . The purpose of this committee bill is to
extend the period through which the AG may, on behalf of the
EOB, sign settlements stemming from the 2000-02 energy crisis.
Until defunded in 2008, the EOB was one of the complainants in
several cases stemming from the energy crisis, along with the
CPUC, 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,
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. This bill
allows the AG to sign for the EOB, facilitating settlement of
certain energy crisis claims
At present, therefore, the Cal Parties have no access to the
funds contained in the escrows established under the 2004 escrow
agreement because no one can sign for the EOB. There is
approximately $70M in those accounts. JP Morgan will not
disburse funds from those accounts without a signature from the
EOB or a court order.
ASSEMBLY VOTES
Assembly Floor (70-0)
Assembly Appropriations Committee (17-0)
Assembly Utilities and Commerce Committee
(15-0)
POSITIONS
Sponsor:
Author
California Public Utilities Commission
Support:
California Attorney General
Southern California Edison
Oppose:
None on file
Kellie Smith
AB 1390 Analysis
Hearing Date: June 21, 2011