BILL ANALYSIS �
AB 2334
Page 1
Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2334 (Gray) - As Amended: April 24, 2014
Policy Committee: Utilities and
Commerce Vote: 8-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires the Public Utilities Commission (PUC) to
direct and supervise the establishment of an economic
development pilot program by electrical corporations to provide
electrical rate discounts for businesses located at former
military bases. Specifically, this bill:
1)Requires the pilot program to be implemented at three former
military bases, one each in northern, central, and southern
California.
2)Requires the selection of military bases to be based on local
economic need, including but not limited to unemployment rates
and median income levels lower than state averages.
3)Requires the pilot program to operate for seven years
following its implementation.
4)Requires the PUC to gather and annually report the prior
year's data for each pilot site to the Legislature, including
findings regarding the:
a) Total dollar amount of discounts.
b) Number and types of new businesses created.
c) Number of jobs created.
d) Average salary and benefits of the jobs created.
1)Sunsets January 1, 2024.
FISCAL EFFECT
AB 2334
Page 2
1)Unknown potential cost shifts from newly located businesses to
nonparticipating ratepayers to provide the electricity rate
discount.
2)Ongoing increased costs to the PUC to perform the
administrative and reporting requirements of this bill in the
$150,000 range.
COMMENTS
1)Purpose. According to the author, the state should play a
role in encouraging economic growth at former military bases
by creating an atmosphere to encourage private investments
that will pay off well into the future. This bill creates an
economic development pilot program with a seven year sunset to
allow the state to assess the effectiveness of attracting new
businesses to base-realignment and closure (BRAC) sites by
lowering electricity bills.
2)Background. The PUC currently may authorize electrical
corporations to engage in programs to encourage economic
development, including rate discounts to industries and
businesses located within the boundaries of enterprise zones,
economic incentive areas, or recycling market development
zones. In order to offer the discounts, the electrical
corporation must demonstrate that all ratepayers will derive a
benefit from the program. The costs of providing the rate
discounts may be recovered through the rates.
Generally, the PUC verifies ratepayer benefit by finding the
revenue provided by the new customer exceeds the marginal cost
of serving the customer and that the customer would not have
been attracted to the location if not for the discount.
3)Base-realignment and closure. According to the Department of
Defense, 31 installations have closed in California since
1988. It is estimated that California absorbed 54% of the
nation's overall personnel cuts, losing more than 93,000 jobs
and $9.6 billion in annual revenue between 1988 and 2005.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081
AB 2334
Page 3