Energy Legislation in the Final Week

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

Capitol Update, Sept. 18, 2003 Share this on FacebookTweet thisEmail this to a friend

When it comes to energy issues, the final week of the 2003 legislative session was relatively quiet, at least in comparison to years past.

PG&E Bankruptcy

After the failure of SB 772 in the Assembly Utilities and Commerce Committee early in the week, a bill that would have given the California Public Utilities Commission the option to finance Pacific Gas & Electric's emergence from bankruptcy through the issuance of bonds backed by a dedicated-rate component (DRC), Senator Debra Bowen (D-Marina Del Rey) introduced a Senate Resolution on the last day of session, which states the Senate's intent and urges the CPUC to resolve the PG&E bankruptcy at the lowest possible cost to PG&E ratepayers and to evaluate whether the use of securitized financing backed by a DRC will reduce the cost to ratepayers of settling PG&E's bankruptcy. SR 30, which CMTA supported, also states that if the CPUC finds that the use of such financing will reduce the cost to ratepayers it should take appropriate steps to implement such financing, including recommending legislation if necessary.

Edison Cost Recovery

Meanwhile, the much anticipated last minute play by Southern California Edison to get cost recovery legislation approved never materialized.

Edison managed to find an author (Fabian Nunez, D-Los Angeles) and a legislative vehicle (AB 653) but not enough legislative support to get the measure out of the Senate Appropriations Committee. The bill never received a hearing, nor did it gain the key support of the Legislature's two policy committee chairs on energy: Bowen and Assemblywoman Sarah Reyes (D-Fresno).

Edison will no doubt be back at it when the Legislature reconvenes in January, either with the same bill or another vehicle. For them, the key issue is ensuring cost recovery for utility-built generation and power purchase contracts, for the life of the facility or the contracts. For CMTA, the key and overriding concern is ensuring the lowest rates for ratepayers.

At a minimum, any legislation relating to utility cost recovery must ensure that the rates for utility-built and utility-contracted power are the lowest available as established by an open and fair competitive bidding process which is designed and monitored by an independent third party selected by the CPUC. Only through a competitive bidding process can ratepayers be assured that the rates are the lowest available.

The Year That Wasn't

The 2003 legislative session will probably be remembered as the year that wasn't. That is, the year when lots of energy related bills were introduced, many ambitious in scope, but few made it to the Governor's desk.

The most notable example is SB 888, Senator Joseph Dunn’s (D-Santa Ana) so-called electricity “re-regulation” bill. The bill, originally billed as the end of de-regulation but scaled back significantly, failed passage in the Assembly U&C Committee in July. Another major piece of legislation, AB 428 (Keith Richman, R-Northridge), which would have lifted the suspension of direct access and allowed switching between DA and bundled service, also failed passage in July. SB 173 (Dunn), which allows the CPUC to set natural prices, fell short of passage this year. SCA 6 (Jim Battin, R-La Quinta), a proposed constitutional amendment providing for the election of CPUC commissioners is stalled in the Senate but eligible to be taken up again next year.

Meanwhile, some of the issues the Legislature might have been expected to take up this year were dealt with at the CPUC. In July, the CPUC issued a decision retaining the 2.7 cents per kilowatt-hour (kWh) cap on the DA cost responsibility surcharge (CRS) or exit fee. While several senators expressed concerns early in the session about the financing of the cap, no legislation was introduced relating to this issue.

The Legislature also declined to do anything substantive on energy agency organization. AB 808 (Joe Canciamilla, D-Pittsburg), the vehicle for such efforts, is stalled in the Senate Energy, Utilities and Communications Committee. Support for a major reorganization has waned due in part to the unprecedented cooperation between the state's three major energy agencies – the CPUC, the Energy Commission and the Power Authority – and the joint Energy Action Plan. AB 808 is eligible to be taken up next year, and stakeholder meetings are planned for this fall.
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