SB 888 Amended - DA Repeal Out, Core-Noncore In

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, May 23, 2003 Share this on FacebookTweet thisEmail this to a friend

The newly-amended version of SB 888, Senator Joseph Dunn's (D-Santa Ana) electricity "re-regulation" bill, no longer repeals direct access (DA). Instead, it establishes a "core-noncore" system, subject to future legislative approval.

The bill effectively kills DA, however, with provisions prohibiting a cap on the DA customer responsibility surcharge (CRS). Specifically, the bill provides for "full recovery" of the DA CRS "on a schedule comparable to the recovery of comparable costs from core customers."

This would invalidate the current CRS cap in which the DA cost obligation is spread over future periods to avoid rate shock for DA customers. The CRS cap is aimed at preserving the viability of DA, as articulated in a recent California Public Utilities Commission (CPUC) decision:

If the CPUC "were to require that DA customers immediately reimburse bundled customers for the entire... [cost] obligation, the required increase in the surcharge on DA customers would seriously threaten the viability of DA as a continuing option."

As it relates to DA, the bill as amended: (1) gives the CPUC guiding principles or "objectives" for the establishment of a core-noncore system; (2) requires the CPUC to submit a detailed implementation plan no later than July 1, 2004; and (3) requires subsequent legislative approval, by Jan. 1, 2005, in order to take effect.

In short, the future viability of DA under this bill is far from assured.

The rest of SB 888's provisions unrelated to DA remain unchanged.

The measure was heard in the Senate Appropriations Committee on Thursday, May 22 and placed on the "suspense" file due to the bill's fiscal impact. The Committee will take up the bill again on Thursday, May 29, with a Senate floor vote the following week. (The deadline for bills to move to the second house is Friday, June 6.)
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