BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 790 (Leno)
Hearing Date: 05/26/2011 Amended: 05/11/2011
Consultant: Brendan McCarthy Policy Vote: EU&C 6-4
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BILL SUMMARY: SB 790 makes a variety of changes to the law
governing community choice aggregation, whereby cities and
counties may purchase wholesale electricity and deliver it to
some or all of their residents without forming a municipal
utility.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Updating regulations and $325 $325
$325Special *
providing oversight
Costs to state agenciesUnknown Various
due to higher electricity costs
* Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Under current law, electricity service in the state is generally
provided by investor owned utilities or publicly owned
utilities. In addition, electric service providers are allowed
to sell electricity directly to non-residential customers, using
the transmission and distribution system owned by the utilities.
The amount of electricity provided by electric service providers
is capped. In addition, current law allows cities and counties
to elect to provide electricity to some or all of the residents
in their jurisdiction, through a process known as community
choice aggregation. There are procedural requirements on cities
and counties that set up community choice aggregation plans, but
there is no general cap on the amount of electricity service
they may, in aggregate, provide. To date, only one successful
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community choice aggregation plan has been set up. Under
community choice aggregation, customers can opt out of joining
the plan and continue to receive retail electricity service from
their utility.
SB 790 makes a variety of changes to the statutes governing
community choice aggregation, with the intent to make it easier
for local governments to set up community choice aggregation
plans.
The bill authorizes two specific local government agencies and
any other local agency that is authorized to generate and
deliver electricity to enter into community choice aggregation.
The bill requires more sharing of information on customer
electricity demand between incumbent utilities and local
governments considering community choice aggregation. The bill
limits the liability of local governments that participate in
community choice aggregation through a joint powers authority.
The bill specifies how charges imposed on consumers
participating in community choice aggregation for public purpose
programs shall be charged and how those charges can be spent.
The bill requires the Public Utilities Commission to open a
rulemaking to develop a code of conduct for investor owned
utilities when a local government is considering community
choice aggregation. The bill limits the Public Utilities
Commission's ability to impose charges on customers electing to
participate in community choice aggregation, to offset costs
already incurred by their utility (such as for long-term
electricity generation contracts purchased to meet projected
customer demand or resource adequacy requirements).
The Public Utilities Commission indicates that it will need
three additional, ongoing positions to adopt rules and oversee
the implementation of the new requirements, totaling about
$325,000 per year.
In addition to the direct cost to the state from the bill, there
are potential indirect costs to state agencies as electricity
ratepayers. Because the bill changes the rules for allocating
costs between community choice aggregation customers and
customers of the investor owned utilities, it is possible that
there will be some cost shifting between ratepayers. To the
extent that costs are shifted to investor owned utility
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customers, the state will share in those costs. The extent of
this impact is unknown.
The proposed Committee amendments reflect policy amendments
agreed to in the Senate Energy Utilities and Communications
Committee that were inadvertently left out of the most recent
amendments.