BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 790|
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UNFINISHED BUSINESS
Bill No: SB 790
Author: Leno (D)
Amended: 8/30/11
Vote: 21
SENATE ENERGY, UTILITIES & COMM. COMMITTEE : 6-4, 5/3/11
AYES: Berryhill, Corbett, DeSaulnier, Pavley, Rubio,
Simitian
NOES: Padilla, Fuller, Strickland, Wright
NO VOTE RECORDED: De Le�n
SENATE APPROPRIATIONS COMMITTEE : 6-2, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Runner
NO VOTE RECORDED: Emmerson
SENATE FLOOR : 24-12, 6/2/11
AYES: Alquist, Berryhill, Blakeslee, Corbett, Correa, De
Le�n, DeSaulnier, Evans, Gaines, Hancock, Harman,
Hernandez, Huff, Kehoe, Leno, Lieu, Lowenthal, Pavley,
Price, Rubio, Simitian, Steinberg, Wolk, Yee
NOES: Anderson, Calderon, Cannella, Dutton, Emmerson,
Fuller, La Malfa, Padilla, Strickland, Walters, Wright,
Wyland
NO VOTE RECORDED: Liu, Negrete McLeod, Runner, Vargas
ASSEMBLY FLOOR : 60-12, 9/8/11 - See last page for vote
SUBJECT : Electricity: community choice aggregation
SOURCE : Marin Energy Authority
CONTINUED
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Sierra Club California
San Francisco Public Utilities Commission
DIGEST : This bill revises and expands the definition of
Community Choice Aggregation (CCA), require the California
Public Utilities Commission (PUC) to initiate a Code of
Conduct rulemaking, and allow CCAs to receive Public
Purpose funds to administer energy efficiency programs.
Assembly Amendments (1) make clarifying and technical
changes to the Senate version of the bill, and (2)
determine that this act shall be known, and may be cited,
as the Charles McGlashan Community Choice Aggregation Act.
ANALYSIS : Existing law:
1.Allows cities and counties to procure and sell
electricity within their community via a direct access
arrangement called for CCA.
2.Requires electric utilities to cooperate fully with CCAs
that investigate, pursue, or implement CCA programs.
This bill:
1.Memorializes a late-County Supervisor by naming this act.
2.Expands the entities defined as CCAs to include the Kings
River Conservation District, the Sonoma County Water
Agency, and any California public agency possessing
statutory authority to generate and deliver electricity
at retail within its designated jurisdiction.
3.Requires PUC to consider the impact if it finds that an
electrical corporation has violated the requirement to
cooperate fully with a community choice aggregator.
4.Establishes a time period by which the PUC must resolve
complaints against an electric utility which allege a
violation of statutes and rules governing electric
utilities that require the utility to cooperate with
CCAs.
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5.Affirms that the PUC shall not allow cost shifting of
nonbypassable charges from CCA customers to utility
ratepayers and specifies that a CCA is solely responsible
for all generation procurement activities on behalf of
its customers, except where other generation procurement
arrangements are expressly authorized by statute.
6.Modifies the PUC's current authority to establish
procurement requirements from its current requirement in
proportion to the costs recovered from ratepayers to
instead require fair and equitable distribution of costs.
7.Requires PUC, by March 2012 to establish a code of
conduct to ensure that an electrical corporation does not
market against a CCA except through an independent
marketing division.
Background
CCAs are governmental entities formed by cities and
counties to serve the energy requirements of their local
residents and businesses. The state Legislature has
expressed the state's policy to permit and promote CCAs by
enacting AB 117 (Migden, 2001) which authorized the
creation of CCAs, described essential CCA program elements,
required the state's IOUs to provide certain services, and
established methods to protect existing utility customers
from liabilities that they might otherwise incur when a
portion of the IOU's customers transfer their energy
services to a CCA.
Cities and counties have become increasingly involved in
implementing energy efficiency programs, advocating for
their communities in power plant and transmission line
siting cases, and developing distributed generation and
renewable resource energy supplies. The CCA program takes
these efforts one step further by enabling communities to
purchase power on behalf of the community.
Although adopted several years ago, to date only one region
has been successful in implementing a CCA. Several cities
joined together in Marin County and formed, under a joint
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powers authority, "Marin Clean Energy." The CCA program
is new in California and there is little experience with
such a program anywhere. The CPUC has sought to anticipate
every contingency on the one hand and permit some
flexibility on the other with the expectation that the IOUs
and CCAs may be able to tailor operational arrangements
according to circumstances in ways that promote program
efficiency and fairness. The CPUC must adopt rules for the
IOU in order that it may provide adequate service to the
CCA and its customers while simultaneously protecting IOU
bundled customers and grid reliability. Nothing in the
statute directs the CPUC to regulate the CCA's program
except to the extent that its program elements may affect
utility operations and the rates and services to other
customers.
Deregulation . California's experiment with deregulation
was launched in 1996 when the Legislature passed AB 1890
(Brulte, 1996), to restructure the electric industry. One
of the key features of electrical restructuring was the
authorization of retail competition within IOU service
areas. AB 1890 ended the service monopoly of utilities and
authorized retail customers to purchase energy directly
from suppliers. These transactions are known as "direct
access." Community aggregation is a form of direct access
where, for example, a city may act as a purchasing agent on
behalf of its residents.
Before the energy crisis in 2001, non-IOU providers (direct
access providers) had enrolled customers but then failed to
provide the power ordered. The customers returned to the
IOUs for service but the utilities did not have the
electric generation resources to serve those customers
because they had left IOU service. In response the
Legislature mandated that the IOUs maintain resource
adequacy for current customers and those customers that
could return to IOU service. This experience has guided
the CCA law and rules adopted by the CPUC which are the
subject of this bill.
IOU Responsibility Does Not End . A critical driver of CCA
and direct access policies is that any CCA or DA customer
can terminate service on a moment's notice and return to
IOU service. Should they do so, or should the DA or CCA
provider fail to provide sufficient power, the IOU is
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always and ultimately responsible to provide that power.
Comments
According to the author's office, SB 790 strengthens
existing law by clarifying, amending and adding key
provisions that enable CCA to function as originally
intended, foster fair market competition, and allow
jurisdictions to pursue CCA without undue barriers and
excessive burdens.
Much has been learned from the experience of communities
that have unsuccessfully attempted community choice
aggregation in the last few years, and from Marin County,
the only county that has succeeded in launching a CCA in
the state of California. That experience has demonstrated
certain deficiencies in existing law that has rendered CCA
excessively difficult to implement and operate. The
California Public Utilities Commission recently found that
utility opposition, coupled with lack of clarity regarding
certain statutory provisions, have forced some CCA efforts
to be abandoned. This has had the damaging effect of
discouraging other communities from considering CCA, thus
impeding the environmental, consumer choice, and economic
benefits associated with community aggregation.
SB 790 seeks to level the playing field for local
governments seeking to establish a CCA program. A genesis
of this bill has been PG&E's atrocious behavior surrounding
the establishment of the Marin Energy Authority and its CCA
program Marin Clean Energy. PG&E representatives attending
local hearings commonly misrepresented how the CCA
mechanism works, commonly stated that taxpayers were liable
for the costs of failed CCA programs despite CPUC decision
08-04-056, and the utility was reprimanded for soliciting
opt-outs from outside the official process and for implying
that to receive public good charge funded energy efficient
benefits, customers must opt out of CCA.
Related Legislation
AB 976 (I. Hall) prohibits a CCA from procuring electricity
or energy services from any entity that provided any
analysis, advice, consultation, or other services to the
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community choice aggregator to aid in its formation.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee, the PUC
estimates additional workload demands of about $430,000.
These costs include two regulatory analysts, one
administrative law judge and one legal analyst, to
implement the bill, which will include reviewing and
certifying CCAs as administrators of energy efficiency and
conservation programs; implementing the new stricter rules
related to utility marketing with regard to a CCA
formation; conducting the complaint review process
regarding CCA formation, conducting proceedings to
implement the new rules for determining direct and indirect
benefits to CCA customers when the utilities are directed
to procure generation resources for system and for local
area reliability; and addressing issues that may arise if
CCAs are no longer local community load aggregators but
expand beyond the local communities into other
jurisdictions. (Public Utilities Reimbursement Account).
SUPPORT : (Verified 9/8/11)
Marin Energy Authority (co-source)
Sierra Club California (co-source)
San Francisco Public Utilities Commission (co-source)
AARP
California State Association of Counties
City and County of San Francisco
City of Arcata
City of Berkeley
City of El Cerrito
City of Petaluma
City of Richmond
City of San Jose
Climate Protection Campaign
Division of Ratepayer Advocates, CPUC
Environment California
Graton Community Services District, County of Sonoma
Kings River Conservation District
League of California Cities
Local Clean Energy Alliance of the Bay Area
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Marin County Board of Supervisors
Marin County Council of Mayors and Council Members
San Francisco Local Agency Formation Commission
Santa Clara County Board of Supervisors
Sonoma County Conservation Action
Sonoma County Regional Climate Protection Authority
Sonoma County Regional Climate Protection Authority
Sonoma County Water Agency
Sustainable Mill Valley
The Utility Reform Network
Town of San Anselmo
Town of Windsor
OPPOSITION : (Verified 9/8/11)
Associated Builders and Contractors of California
San Diego Gas & Electric Company (unless amended)
Sempra Energy (unless amended)
Southern California Gas Company (unless amended)
Southern California Edison (unless amended)
ARGUMENTS IN SUPPORT : Kings River Conservation District
(KRCD) writes in support of this bill, "In our effort to
implement a Community Choice Aggregation (CCA) in the San
Joaquin Valley, KRCD experienced numerous obstacles. SB
790 would promote competition by lifting as many of the
barriers that have prevented local agencies including KRCD
and its surrounding communities from implementing CCA in
their regions. SB 790 would also expand authorization to
implement CCA to limited number of special districts,
including KRCD, which are authorized and qualified to
generate and deliver electricity. SB 790 will help bring
to fruition the consumer choice, environmental and economic
benefits associated with and originally envisioned in
community aggregation programs."
ASSEMBLY FLOOR : 60-12, 9/8/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Cedillo, Chesbro, Conway, Davis, Dickinson, Eng, Feuer,
Fong, Fuentes, Furutani, Beth Gaines, Galgiani, Gatto,
Gordon, Hagman, Hall, Harkey, Hayashi, Roger Hern�ndez,
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Hill, Huber, Hueso, Huffman, Knight, Lara, Bonnie
Lowenthal, Ma, Mendoza, Miller, Mitchell, Monning,
Nestande, Pan, Perea, V. Manuel P�rez, Portantino,
Skinner, Solorio, Torres, Valadao, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Donnelly, Fletcher, Garrick, Grove, Jones, Logue,
Mansoor, Morrell, Nielsen, Norby, Olsen, Silva
NO VOTE RECORDED: Carter, Cook, Gorell, Halderman,
Jeffries, Smyth, Swanson, Wagner
RM:nl 9/9/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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