Resources Agency Weighs in on AB 2006

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

Capitol Update, Aug. 13, 2004 Share this on FacebookTweet thisEmail this to a friend

The California Resources Agency has taken a "oppose unless amended" position on AB 2006 (Fabian Nunez, D-Los Angeles).

In a strongly worded letter dated August 10th, Resources Secretary Mike Chrisman said the speaker’s bill "will increase regulatory uncertainty and market instability, resulting in the delay of construction and acquisition of critically needed resources."

Chrisman also took issue with the bill’s procurement provisions, stating, "without the requirement for a transparent, competitive procurement process, the bill ties the hands of future Commissions, removes existing ratepayer protections and shifts the burden of potential cost overruns onto California consumers."

A spokesperson for Governor Arnold Schwarzenegger said the governor "has been fully briefed" on Chrisman’s position letter and that "he shares that position." Additionally, the spokesperson noted that the "only element necessary for legislative action is direct access and this bill no longer addresses that."

Chrisman’s proposed amendments would significantly alter the bill, stripping away many of its provisions and reinserting language dealing with retail DA. It is considered very unlikely that Nunez would agree to the proposed amendments.

CMTA has an "oppose" position on the bill.

Since the 2000-2001 crisis, California has taken an important step in establishing a robust and competitive wholesale market. AB 57 (Wright, Ch. 835, Stat. 835) created competitive and transparent electricity procurement rules to spur investment in new generation and lower energy costs for both bundled utility and DA customers. To encourage this approach, AB 57 provides upfront utility cost recovery for the wholesale electricity costs incurred in this process. AB 2006 undermines AB 57 by providing new and expansive cost recovery provisions for utility investments in generation that may or may not have been chosen during a competitive solicitation. This would encourage utilities to avoid such solicitations, creating a high degree of doubt whether customers are paying for the most cost-effective resources.

The measure was recently pulled from the Senate Appropriations Committee agenda and referred to the Senate Rules Committee, where it is likely to be amended again before it is sent to the Senate floor for a vote by the full Senate.
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