BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1090 (Fuller) - Electricity: rates: default time-of-use
pricing.
Amended: April 8, 2014 Policy Vote: EU&C 9-0
Urgency: No Mandate: No
Hearing Date: April 28, 2014 Consultant:
Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1090 would require the CPUC to make explicit
findings regarding impacts to customers living in hot summer
weather before authorizing an electrical corporation to employ
default time-of-use (TOU) pricing.
Fiscal Impact: Annual costs of approximately $220,000 from the
Public Utilities Commission Utilities Reimbursement Account
(special) for two years for a proceeding.
Background: The California Public Utilities Commission (CPUC) is
responsible for setting reasonable rates for utilities. In
efforts to mitigate the impact of the energy crisis in 2000 and
2001 on customer bills, the Legislature adopted a number of
restrictions on the CPUC's rate making abilities and rate
design. Last year, by passing AB 327 (Perea) Chapter 611,
Statutes of 2013, the Legislature removed many of these
statutory restrictions. AB 327 also explicitly allowed the CPUC,
beginning in January 1, 2018, to require or authorize an
electrical corporation to employ default TOU pricing for
residential customers if specific conditions are met, including
that the TOU rate schedule does not cause "unreasonable hardship
for senior citizens or economically vulnerable customers in hot
climate zones." (PUC �745(c)(2))
In response to the passage of AB 327, the CPUC opened a
proceeding on rate design (R. 12-06-013). The scoping memo for
this proceeding was released April 15, 2014. The proceeding will
address a number of issues regarding TOU pricing, including
pilot TOU programs for the summer of 2015 and the possibility of
default TOU pricing beginning in 2018. This proceeding is
anticipated to be completed in the first quarter of 2015.
SB 1090 (Fuller)
Page 1
Proposed Law: This bill would prohibit the CPUC from requiring
or authorizing default TOU pricing unless it makes the following
findings:
Customers located in hot, inland areas will not experience
unreasonable summertime bills, assuming no changes in overall
usage by those customers during peak periods; and
Seasonable bill volatility will not cause hardship for
residential customers living in areas with hot summer weather,
assuming no change in summertime usage or in usage during peak
periods.
Staff Comments: By restricting the use of default TOU pricing,
this bill could impact the open proceeding on rate design. The
CPUC will be holding prehearing conferences in May to determine
the studies they will conduct in order to make decisions on
default TOU rates. Should the CPUC decide to conduct studies
aimed at making the findings as required by this bill - that
customers living in areas with hot summer weather will not
suffer unreasonable summertime bills or hardship because of
seasonal bill volatility assuming no change in customer peak and
overall usage - this bill would have no additional costs. Staff
notes that such an outcome is questionable because, while the
CPUC is statutorily required to consider rate impacts on
vulnerable customers in hot climate zones under �745(c)(2), this
bill explicitly requires the CPUC to look at the impacts
assuming no changes in overall or peak usage. However, one of
the goals of TOU pricing is to encourage changes in overall or
peak usage.
There would also be no costs if the CPUC does not authorize or
require default TOU pricing. However, staff notes that San Diego
Gas and Electric has already indicated interest in establishing
default TOU pricing in 2018.
Thus, most likely scenario at this time, should this bill pass,
is that the CPUC would be required to open a separate proceeding
or extend a phase of the existing proceeding in order to
establish the evidence necessary to make the required findings.
The CPUC anticipates it would need a temporary half-time Public
Utilities Regulatory Analyst V and one Administrative Law Judge
II for two years at an annual cost of approximately $220,000.
SB 1090 (Fuller)
Page 2