BILL NUMBER: AB 1890 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JULY 19, 1995
AMENDED IN ASSEMBLY JULY 11, 1995
AMENDED IN ASSEMBLY JUNE 19, 1995
AMENDED IN ASSEMBLY APRIL 25, 1995
INTRODUCED BY Assembly Member Conroy
(Principal coauthor: Assembly Member Martinez)
FEBRUARY 24, 1995
An act to add Section 702.1 to the Public Utilities Code, relating
to public utilities, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1890, as amended, Conroy. Public utilities: restructuring.
Under existing law, the Public Utilities Commission is vested with
regulatory authority over public utilities.
This bill would require that the commission's decision to
restructure the electrical services industry in California, and the
orders implementing that decision, comply with specified criteria,
and would state findings and declarations in that regard.
This bill would declare that it is to take effect immediately as an
urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares that:
(a) The Public Utilities Commission in its Order Instituting
Rulemaking and Order Instituting Investigation (OIR 94-04-031 and OII
94-04-032, commonly referred to as "The Blue Book") set forth a
proposed policy statement on restructuring California's electric
services industry and reforming its regulatory policy.
(b) The Public Utilities Commission determined that the people of
the State of California pay some of the highest energy rates in the
nation.
(c) The high rates paid by California ratepayers are primarily due
to an existing regulatory structure comprised of policies that are
fragmented, outdated, arcane, and overly complex, engendering a lack
of competitiveness among utilities, providing weak incentives to
utilities to operate and invest efficiently, and is administratively
burdensome and acts as a barrier to public participation.
(d) In 1994, the Legislature passed Assembly Concurrent Resolution
No. 143 (Resolution Chapter 148 of the Statutes of 1994) which sets
forth general terms that reflect the state's ongoing policy concerns
with which proposed electric restructuring policies should comply.
The criteria included achieving significant rate reductions,
establishing performance standards for utilities that assure their
performance is among the most efficient in the nation, promoting fair
competition and customer choice, protecting public health and
complying with all federal and state law, reducing regulation costs
and burdens, and ensuring safety and reliability of the utility grid.
SEC. 2. Section 702.1 is added to the Public Utilities Code, to
read:
702.1. (a) The commission's decision to restructure the electric
services industry and the order, or orders, implementing that
decision shall comply with the following criteria:
(1) The order shall establish a definite period for the transition
to a restructured electrical services industry no later than January
1, 1997. The transition period shall establish a suitable timeframe
for changing the present operating practices and conventions of the
electric services industry to operating practices and conventions
appropriate to the restructured competitive industry.
(2) (A) With respect to transition costs the order shall establish
and implement a methodology for determining transition costs
associated with the restructuring of the electric services industry.
(B) The methodology shall do all of the following:
(i) Determine what constitutes a noneconomic utility asset.
(ii) Determine the value of the noneconomic utility assets.
(iii) Prescribe a fair, just, and equitable allocation of the
value of the noneconomic assets among all consumer classes.
(iv) Prescribe a reasonable amortization period for the recovery
of the amounts from all consumer classes.
(v) Prescribe a mechanism to be used to recover the costs.
(3) The order shall ensure that reductions in the cost of
electricity that result from restructuring are not entirely offset by
charges for recovering transition costs. Accordingly, the
amortization period over which the costs will be recovered, together
with the collection mechanism used for recovering those costs, shall
not result in annual transition cost payments from any consumer class
that exceed 50 percent of the estimated annual reduction in the cost
of electricity for that class, which is attributable to
restructuring.
(3) Transition costs shall be amortized and recovered in a manner
that, in the judgment of the commission, maximizes the public
benefits of restructuring. Accordingly, the commission may decide
either to accelerate the recovery of transition costs over a shorter
period of time or to extend the recovery period for a longer period
of time. In no event, however, shall annual transition costs exceed
the estimated reduction in the cost of electricity that is
attributable to restructuring.
(b) The commission shall provide that consumer bills for electric
services be unbundled, and show separately, among other items, the
cost of electricity, the cost of transmission and distribution
charges, itemized transition cost recovery charges, and charges for
public benefit programs.
(c) The commission shall not order the restructuring of the
electric services industry unless it determines that the proposed
restructuring shall provide retail consumers the opportunity to
purchase electricity at prices no greater than would have been the
case without restructuring. This subdivision applies solely to
the price of electricity and does not include charges for
transmission and distribution services, for transition costs, or for
public benefit programs.
(d) Prior to issuing a restructuring order, the commission shall
enumerate the various public benefit programs currently required by
statute or regulation, shall identify the cost of each program
enumerated, and shall separately list the enumerated costs on bills
to customers. These programs currently authorized by the Legislature
or the commission, or both, shall be reevaluated and reauthorized no
later than January 1, 1999.
(e) The commission shall establish a methodology that shall
provide residential and small business consumers with the opportunity
to share in the benefits of a restructured electrical services
industry either by providing for the relative ease of aggregation for
small business and residential customers in a geographical area
consistent with the area of the franchise or other method to be
determined consistent with the requirements of the restructured
electric services industry established by statute or regulation.
(f) In conjunction with the commission's ultimate goal of
implementing direct access, the commission shall develop proposed
tariffs consistent with this goal. The proposed tariffs shall
provide for direct nondiscriminatory open access transmission to all
retail buyers of electric energy who choose to purchase electricity
from any third party power producer.
(g) For purposes of this section:
(1) "Public benefit programs" means all social, economic, and
environmental programs currently funded through rates charged to
customers receiving electrical services in the State of California.
(2) "Transition period" means the period required for the
electrical services industry to convert from a command and control
system to a system employing competitive market practices.
(3) "Transition costs" means those costs determined to arise as a
result of the restructuring of the electrical services industry.
(h) This section shall become inoperative on January 1, 2003, and
as of that date is repealed, unless a later enacted statute that is
chaptered on or before January 1, 2003, deletes or extends that date.
SEC. 3. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to facilitate the transition of the current regulatory
utility structure to a new utility structure which will have a
profound and immediate impact on the people and State of California,
it is necessary that this act take effect immediately.