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All but one Republican voted against the bill, joined by 3 dissenting Democrats (Canciamilla, Florez & Reyes). All of the bill's yes votes came from Democrats. Six Democrats were recorded as not voting (Jackson, Liu, Matthews, Nakano, Pavley & Thomson). The Assembly vote was 42-32 (detailed vote tally with names, below).
Assemblywoman Oropeza, a member of the Assembly Committee on Energy Costs & Availability, voted for the bill in committee last week, where it passed on a nearly party line vote, then went to the Assembly Appropriations committee where it received similar treatment. The bill reached the full Assembly late yesterday.
The "yes" votes by Assemblymembers Lowenthal and Havice capped tense efforts to round up sufficient votes to pass the bill which, supporters say, could help SCE avoid bankruptcy.
In essence, the bill lets SCE issue ratepayer backed revenue bonds that would be paid off by large and medium size businesses. Supporters say homeowners and smaller businesses won't pay the cost, but critics say by impacting larger businesses, consumers and workers will ultimately pay and the net effect could push CA into an economic slowdown or a recession.
SCE's energy related debts ballooned after wholesale energy costs skyrocketed under a partial deregulation scheme enacted by the CA legislature several years ago and are now estimated at roughly $3.9 billion. The ratepayer backed bonds would repay roughly $2.9 billion of SCE's debt to banks and alternative energy suppliers. SCE would have to devise a way to repay the remaining $1 billion owed to energy producers and marketers, which some critics say might induce some creditors to try to push SCE into an involuntary bankruptcy.
LBReport.com posts below the official vote tallies on the bill, naming the legislators who voted yes and no on the Assembly floor, Assembly committees and Senate floor.
The Assembly-passed version of the bill must now be reconciled with the version passed in July by the 40-member CA Senate on a 22-17 vote. On that vote, LB CA Senator Betty Karnette, a Democrat, voted yes (we post the full tally of the CA Senate vote below).
The bill (with the Assembly's amendments) has now been sent back to the Senate, which could agree to Assembly amendments, or delete some, or make new amendments, triggering more bruising public votes in the CA Senate and (if changes are made) the Assembly.
The Foundation for Taxpayer and Consumer Rights, led by consumer activist Harvey Rosenfield (who previously led Prop 103, the CA insurance regulation initiative to victory) blasted the vote.
The group vowed to reverse the legislature's action at the ballot box and issued a statement which we reproduce verbatim, below:
As expected, the California Assembly late last night ordered a massive bailout of S. California Edison by its ratepayers after weeks of intense lobbying by Gov. Davis, Assembly Democrat leadership, and a $2 million per month lobbying effort by Edison and the energy companies it owes money to.
The bailout got 42 votes, all but one of which were Democrats; one Republican (Kelley) voted for the bill. The bill now goes back to the Senate, which must approve it by next Friday, when the Legislature is scheduled to adjourn.
Representatives of the Foundation for Taxpayer and Consumer Rights (FTCR), which has established a "war room" in a Sacramento hotel to fight the bailout, noted that the present version of the bill excluded residential ratepayers for the moment, placing its much of its $4 billion cost on small businesses.
"Edison reaped the rewards of deregulation, it should bear the consequences, not the innocent ratepayers. The Assembly Democrats' outrageous betrayal of the public on behalf of their utility benefactors will be brought to the voters' attention next year," said Harvey Rosenfield of FTCR in a statement released this morning.
"But the ultimate decision will be made by the Senate. In the next week before the Legislature adjourns, there will be a massive assault by the special interest lobbyists to shift the cost of the bailout over to residential ratepayers. The People of California must make sure their elected representatives in the Senate protect their constituents, not Edison and the energy companies."
Plan Will Hit Residential Ratepayers
Here are the chief features of the Edison plan:
Second Bailout in Five Years
If enacted, the Edison bailout would be the second paid for by ratepayers in the last five years. "In 1996, the Legislature ordered ratepayers to bail out Edison's pre-1996 debts so it could compete in a 'deregulated' marketplace. Now it is ordering ratepayers to bail Edison out of the losses it sustained in the deregulated marketplace. The first bailout cost us $10 billion. This bailout will cost $4.1 billion. The public is always the deep pocket for the stupidity and greed of Edison's management," said Harvey Rosenfield. "If the Legislature passes this, the voters will take matters into their own hands at the ballot box." The group's internet site contains news alerts that pointedly count down the number of days until "Judgment Day" -- the November 5, 2002 election.
Meanwhile, the veteran SF based consumer group TURN (The Utility Reform Network) issued the following statement:
ASSEMBLY RATE PLAN INCLUDES THREAT OF HIGHER RATES
September 6, 2001, San Francisco--The Edison bailout bill passed by the
State Assembly today could result in ratepayers paying inflated rates for
ten years or more. Consumer advocates strenuously opposed the bill, which requires large customers to finance the bailout through rates. In exchange for their contributions to Edison's solvency, large customers would be permitted to contract with electricity providers directly rather than purchase power through the State Department of Water Resources (DWR).
"This is a frightening plan," said TURN's Senior Attorney Mike Florio.
"When direct access resulted in the big customers paying higher prices,
they came running back to the state begging for protection under the rate
freeze. Now that market prices are back down they want to broker their own deals again- and leave the rest of us paying for those expensive, long-term contracts." Florio said small customers could face another round of "stranded cost" collections if they are forced to pay the costs of excess electricity for which DWR has already contracted. Florio said the bill is technically unworkable and he termed the exit fees the large commercial and industrial customers might be required to pay "inadequate."
Edison's lobbying succeeded in removing everything the company didn't like from previous versions of the legislation. Under the bill, neither SoCal Edison nor its parent company Edison International would make a significant contribution to the utility's financial recovery. In fact, it guarantees Edison healthy profits for years to come and continues current subsidies for nuclear power. In contrast, the bill provides no tangible benefits for consumers."Fate of $4 Billion Tax Increase on Ratepayers Now in Senate's Hands
"Well I am very pleased it passed the Assembly last night. We're making progress. And now the next task is to find a way to reconcile the differences between the Assembly version and Senate version. Just as I thanked the Senate for its leadership in passing a bill before the recess, I'm very grateful to the Assembly for continuing our progress, and now we have to work out the difference but I think in then end we will do so."...When you have a company that wants to stay creditworthy and whose creditworthiness maintains about 3,000 additional megawatts of people providing co-generation, solar, wind, alternative energy on the grid - I think it's incumbent upon us to work as hard as we can to try and keep them solvent and still not give away the store. So, I think we've struck the right balance. Hopefully Edison will find it satisfactory. But I want to make it clear - we're not doing this for Edison. We're doing it for ourselves, so we can get people who really understand how to buy power, back in the power buying business. Rather than have us do it, we're trying to learn on the fly. I think we've done a fairly good job given all the pressures. But over the long haul, the state will be much better served having utilities buy power than the state.
"I'd always like to see things move a little quicker than they do, but I believe we will still act in a timely enough fashion that the bonds will be sold and the General Fund will be replenished. As a matter-of-fact I am confident that the bonds will be sold in a timely fashion and general fund replenished. Would I prefer that we move quicker? Yes. And we will work hard to try and get the PUC and others to accelerate their timetable.
"I'm hopeful that we get the MOU ratified by a week from today, the last day of the session. I think that's entirely doable now, since it's passed both houses albeit in different forms. Our goal will be to get that done before the Legislature recesses."
SCE, through its Executive VP of External Affairs Robert Foster, issued the following written statement in response to Assembly passage of the bill:
"The bill approved today by the Assembly still leaves Southern California Edison at risk by providing only $2.9 billion of the $3.9 billion needed. Nevertheless, we are encouraged by the progress made by the Assembly toward creating a workable framework to get state out of the power procurement business and restore Southern California Edison to creditworthiness. We are hopeful that the amended bill will receive careful attention in the Senate."
Below are the Assembly Sept. 6 recorded floor vote, recent committee votes, and the July Senate floor vote:
| Alquist | Correa | Koretz | Steinberg |
| Aroner | Diaz | Longville | Strom-Martin |
| Calderon | Dutra | Lowental | Vargas |
| Cardenas | Firebaugh | Migden | Washington |
| Cardoza | Frommer | Nation | Wayne |
| Cedillo | Goldberg | Negrete McLeod | Wesson |
| Chan | Havice | Oropeza | Wiggins |
| Chavez | Horton | Papan | Wright |
| Chu | Keeley | Salinas | Mr. Speaker (Hertzberg) |
| Cohn | Kehoe | Shelley | |
| Corbett | Kelley | Simitian |
| Aanestad | Cogdill | Leach | Pescetti |
| Ashburn | Cox | Leonard | Reyes |
| Bates | Daucher | Leslie | Richmann |
| Bogh | Dickerson | Maddox | Runner |
| Briggs | Florez | Maldonado | Strickland |
| Campbell, B. | Harman | Mountjoy | Wyland |
| Campbell, J. | Hollingsworth | Pacheco, Robt. | Wyman |
| Canciamilla | La Suer | Pacheco, Rod | Zettel |
| Jackson | Matthews | Pavley |
| Liu | Nakano | Thomson |
VOTES - ROLL CALL
MEASURE: SBX2 78
AUTHOR: Polanco
TOPIC: Electric Utility Rate Stabilization Act of 20
DATE: 09/04/2001
LOCATION: ASM. APPR.
MOTION: Committee amendments.
(AYES 14. NOES 6.) (PASS)
AYES **** Migden Alquist Aroner Cedillo Corbett Correa Goldberg Papan Pavley Simitian Thomson Keeley Wiggins Wright NOES **** Bates Ashburn Daucher Robert Pacheco Runner Zettel ABSENT, ABSTAINING, OR NOT VOTING ********************************* Maldonado
VOTES - ROLL CALL
MEASURE: SBX2 78
AUTHOR: Polanco
TOPIC: Electric Utility Rate Stabilization Act of 20
DATE: 08/27/2001
LOCATION: ASM. E. C. & A.
MOTION: Do pass as amended and be re-referred to the Committee on
Appropriations.
(AYES 11. NOES 7.) (PASS)
AYES **** Wright Canciamilla Diaz Dutra Keeley Leonard Oropeza Reyes Steinberg Vargas Wesson NOES **** Pescetti Briggs John Campbell Dickerson Florez Richman Zettel ABSENT, ABSTAINING, OR NOT VOTING ********************************* Bill Campbell Jackson
VOTES - ROLL CALL
MEASURE: SBX2 78
AUTHOR: Polanco
TOPIC: Electric Utility Rate Stabilization Act of 20
DATE: 07/20/2001
LOCATION: SEN. FLOOR
MOTION: Senate 2nd Reading SB78 Polanco
(AYES 22. NOES 17.) (PASS)
| Alarcon | Alpert | Bowen | Burton |
| Chesbro | Dunn | Figueroa | Karnette |
| Kuehl | Murray | O'Connell | Ortiz |
| Peace | Perata | Polanco | Scott |
| Sher | Soto | Speier | Torlakson |
| Vasconcellos | Vincent |
| Ackerman | Battin | Brulte | Costa |
| Escutia | Haynes | Johannessen | Johnson |
| Machado | Margett | McClintock | McPherson |
| Monteith | Morrow | Oller | Poochigian |
| Romero |
BILL NUMBER: SBX2 78 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY SEPTEMBER 5, 2001
AMENDED IN ASSEMBLY AUGUST 30, 2001
AMENDED IN ASSEMBLY AUGUST 27, 2001
AMENDED IN SENATE JULY 20, 2001
AMENDED IN SENATE JULY 17, 2001
INTRODUCED BY Senators Polanco and Sher
MAY 17, 2001
An act to add Chapter 5.6 (commencing with Section 25465) to
Division 15 of the Public Resources Code), to amend Sections 341.5,
359, 367, 368, 369, 377, 379, 1731, and 9601 of, to add Sections
365.1, 365.2, 365.3, 367.2, 454.10, and 454.11 to, and to add
Article 15.5 (commencing with Section 399.10) and Article 16
(commencing with Section 399.20) to Chapter 2.3 of Part 1
Section 399.10), Article 16 (commencing with Section 399.20),
and Article 17 (commencing with Section 399.30) of Division 1
of, to repeal Section 361 of, to repeal Article 4 (commencing with
Section 355) of Chapter 2.3 of Part 1 of Division 1 of, and to repeal
and add Section 330 of, the Public Utilities Code, and to amend
Sections 80002, 80010, and 80110 of the Water Code, relating to
public utilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 78, as amended, Polanco. Electric Utility Rate Stabilization
Act of 2001.
(1) Existing provisions of the Public Utilities Act restructuring
the electrical industry establish a process for the recovery by
electrical corporations regulated by the Public Utilities Commission
of uneconomic transition costs for a certain period of time, and
requires the commission to establish a mechanism for recovery of
these costs.
This bill would also provide for recovery by a specified
electrical corporation of qualified costs, as defined, subject to
verification by the commission and the state auditor and approval by
the commission, if the electrical corporation and its holding company
enter into a specified binding and enforceable agreement with the
state for performance of various requirements including, the sale to
retail end-use customers of and the application of cost-based rates
to all electricity produced by generation assets owned by the
corporation, dedication of certain generation output to the state,
conveyance of certain lands to a trust, application of
revenues from electricity market stabilization bonds to repay
specified debt, confirmation of specified payments relating to
qualified facilities, restriction on paying a distribution to
shareholders of cash, liquid assets, or property, termination of
certain actual or potential litigation, agreement to resume
procurement of full electricity requirements for its service area as
soon as it is given at least an investment grade rating by one or
more nationally recognized rating agencies or January 1, 2003,
whichever is sooner, providing an irrevocable option to the state
with specified requirements to purchase transmission facilities owned
by the electrical corporation at fair market value, not to
exceed 2 times the net book value, and agreement to administer
any power procurement contract as the Department of Water Resources
may request. The bill would also require the electrical corporation
to agree in the agreement that a specified tax refund be applied to
reduce or eliminate past debt of the electrical corporation.
The bill would require the commission, on or before January 1,
2002, to determine the allocation of electricity to be provided by
the Department of Water Resources under its power procurement
contracts to the customers of each electrical corporation. The bill
would require each electrical corporation to file a procurement plan
with the commission within a specified period after the commission
determines that allocation of electricity. The bill would require
the commission to review and adopt the procurement plan, as
specified.
The bill would require the commission, until December 15, 2006, to
approve an irrevocable financing order, as defined, for the recovery
by the electrical corporation of an electrical corporation debt
repayment set-aside to repay electric market stabilization bonds,
which bonds may not exceed qualified costs of $2,500,000,000 for net
undercollected costs and $400,000,000 for interest on those
uncollected costs. The bill would require the electrical corporation
debt repayment set-aside established pursuant to these provisions to
be paid exclusively by customers in the electrical corporation's
service territory with a maximum peak demand exceeding 20 kilowatts,
based on the usage of the prior year excluding specified standby
service. The bill would enact various other related provisions in
that regard, including authorizing the issuance of electricity market
stabilization bonds by a financing entity, as defined, secured by
the debt repayment set-aside, and requiring commission approval of
those bonds. The bill would prohibit revenues derived from the
issuance of electricity market stabilization bonds to be expended on
debt or charges imposed on the electrical corporation by the
independent Power Exchange, the Independent System Operator, or
wholesale electricity suppliers for energy purchased on or before
January 18, 2001. The bill would exempt specified customer load
provided by customer generation, as defined, from having to pay for
the qualified costs.
(2) Existing law requires the commission to identify certain
generation-related costs of electrical corporations that are
uneconomic under the restructuring of the electrical industry, and
provides for recovery of those uneconomic costs by the electrical
corporations from customers in a specified manner.
This bill would provide that these and certain related provisions
shall not on or after January 1, 2002 be applicable to an electrical
corporation that has entered into a specified agreement with the
state.
(3) The Public Utilities Act provides for the continued regulation
by the commission of the facilities for the generation of
electricity owned by any public utility prior to January 1, 1997, but
pursuant to Chapter 2 of the 2001-02 First Extraordinary Session,
also prohibits any disposal of a facility of this nature prior to
January 1, 2006.
This bill would enact new provisions authorizing the commission to
require an electrical corporation to make direct investments in
generation facilities, and providing for the commission to approve
rates sufficient to support that investment. The bill would prohibit
the commission, on or before January 1, 2006, from reducing a
specified electrical corporation's authorized rate of return on
equity below a certain level, if the electrical corporation has
entered into the specified binding and enforceable agreement with the
state described above in (1).
(4) Existing law requires the Public Utilities Commission to
authorize direct transactions between electricity suppliers and
end-use customers.
This bill would permit a residential end-use customer to purchase
electric power from an electric service provider if the power is 80%
from a renewable energy source as approved by the State Energy
Resources Conservation and Development Commission, and the
residential user pays a fee to the Department of Water Resources
equivalent to the department's net unavoidable cost of power
procurement that is directly attributable to that customer.
The bill would also authorize, commencing January 1, 2003, a
retail end-use customer to elect service from an electric service
provider upon payment of a fee to the Department of Water Resources
equivalent to the department's net unavoidable cost of power
procurement that is directly attributable to that customer, and
payment of an exit fee, except as specified, equivalent to the
excess, if any, of the customer's proportionate share of total actual
procurement costs, including financing costs and proportionate share
of administrative costs associated with these provisions, incurred
by the department during the period the customer purchased power from
the department, over the revenues collected by the department from
the customer during that period of time. The bill would authorize a
retail end-use customer to elect to purchase power through a direct
transaction during an open enrollment period without being subject to
the fees described above. The bill would require the Public
Utilities Commission to adopt regulations regarding the ability of
direct transaction customers to become electrical corporation
customers. The bill would exempt from having to pay exit fees
certain retail end-use customers who were parties to direct
transaction contracts commencing before specified dates. The bill
would also provide for new customer generation, as specified.
(5) Existing law authorizes the Public Utilities Commission to
establish rates for public utilities.
The bill would require the commission to establish the Ratepayer
Benefit Account with separate subaccounts for the electrical
corporation that has entered into the agreement described in
paragraph (1). The bill would require that 50% of the first one
billion dollars, and 100% of all additional dollars, recovered by the
electrical corporation from any litigation or agreement relative to
the charging, either directly or indirectly, of excessive costs for
power by electric power generators, suppliers, and marketers, and
excessive costs for natural gas charged, either directly or
indirectly, to natural gas suppliers or marketers prior to January
18, 2001, be credited to the account. The bill would require that
any refunds, reimbursements, or other financial penalties ordered by
the commission in a specified proceeding to be paid with respect to
the electrical corporation to be credited to the Ratepayer Benefit
Account. The bill would require that moneys credited to the
Ratepayer Benefit Account subaccount be held in trust on behalf of
the ratepayers.
(6) Provisions of the Public Utilities Act restructuring the
electrical industry establish a process for the recovery by
electrical corporations of uneconomic costs during a transition
period that began on January 1, 1998, and ends for an electrical
corporation on the earlier of March 31, 2002, or the date that the
electrical corporation fully recovers its uneconomic costs. Existing
law imposes a rate freeze and a rate reduction during the transition
period to remain in effect until March 31, 2002, unless the
electrical corporation fully recovers its uneconomic costs at an
earlier date. The electrical corporation is at risk for those costs
not recovered during that time period. Existing law requires the
Public Utilities Commission to establish an effective mechanism that
ensures the recovery of transition costs.
This bill would exempt from that assignment of the risk of
unrecovered costs an electrical corporation that has entered into an
agreement as described in (1) with the state. The bill would require
the commission to establish an effective mechanism that ensures
recovery of qualified costs, as defined, from customers, as
specified, in the service territory in which the electrical
corporation provided electric service as of January 15, 2001.
The bill would allow the commission, notwithstanding any other
provision of law, to establish rates that enable the electrical
corporation to recover, on a timely basis, consistent with the
electrical corporation having achieving
and maintaining an investment grade rating a
rating for outstanding unsecured debt of at least one rating above
the lowest investment grade rating by one or more nationally
recognized rating agencies , all reasonable costs of producing
power and ancillary services from utility retained generation
dedicated to the service of bundled service customers.
(7) The Public Utilities Act requires retail suppliers of electric
services to disclose sources of electrical generation, as
prescribed, and requires that those retail suppliers report specified
information to the State Energy Resources Conservation and
Development Commission (Energy Commission).
This bill would create the California Renewables Portfolio
Standards Program, which would establish a portfolio standard of
electricity from eligible renewable energy resources, as defined,
that a retail seller, as defined, would be required to purchase or
generate.
(8) Existing law provides that a violation of the Public Utilities
Act is a crime.
This bill, by enacting new requirements relative to an electrical
corporation, would thereby impose a state-mandated local program.
(9) Existing law providing for the restructuring of the electrical
industry provides for creation of a Power Exchange to provide an
efficient competitive auction for power that meets the loads of all
exchange customers at efficient prices.
This bill would repeal these provisions. The bill would make
other changes to various electrical restructuring provisions and
would add legislative findings in that regard.
(10) Existing law permits the Department of Water Resources
through rates and charges to recover its electric procurement costs
and to repay bonds, as specified.
This bill would make all rates, charges, and fees established by
the Public Utilities Commission to recover the department's costs, as
defined, nonbypassable, except as specified. The bill would make
these rates, charges, and fees disconnectible to the same extent as
rates, charges, and fees payable to an electrical corporation. The
bill would require the commission for customer rates established by
the commission after the effective date of this act, in allocating
the department's financing costs, as defined, to customer rates for
department power purchases, to allocate those costs at a uniform rate
per kilowatthour of department-procured electricity consumed by all
bundled service customers.
(11) This bill would enact other related provisions.
(12) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) The wholesale electricity market in California is grossly
dysfunctional, characterized by an abuse of seller market power that
has resulted in unjust and unreasonable wholesale prices for
electricity.
(b) As a result of the state's dysfunctional wholesale market,
residential and business consumers have endured the largest single
retail rate increase in the state's history, the state's largest
electrical corporation is bankrupt, a second electrical corporation
is on the verge of insolvency, and reliable electricity service has
been jeopardized.
(c) Regulatory jurisdiction to ensure just and reasonable
wholesale prices rests wholly with the Federal Energy Regulatory
Commission (FERC).
(d) Although state policymakers, including state and federal
legislative leaders, the Governor, and governors of other western
states, have requested FERC to impose regional price caps to achieve
just and reasonable wholesale prices, FERC has refused to do so.
(e) The current financial condition of the electrical corporations
doing business in this state, and the unstable condition of the
electric utility market in California is unsustainable.
(f) It is in the state's interest to have functional creditworthy
utilities providing essential electricity service to California
consumers at just and reasonable rates.
(g) The burden of restoring a utility's creditworthiness should
not be borne by the state's ratepayers alone, but should be achieved
through contributions from the utility's shareholders, creditors, and
ratepayers.
(h) For making a substantial contribution toward making a utility
a creditworthy entity, ratepayers should receive tangible benefits
equivalent to the value of their contribution in making a utility
creditworthy.
(i) It is the intent of the Legislature, through the enactment of
the act adding this section, to do all of the following:
(1) Set the conditions under which an electrical corporation may
become creditworthy and meet its obligations to serve consumers with
reliable electricity service at just and reasonable rates.
(2) Provide guidance to electrical corporations and the Public
Utilities Commission for the prospective procurement of electricity
by an electrical corporation.
(3) Ensure that each electrical corporation whose customers are
currently being served by the Department of Water Resources resumes
responsibility for procurement needs that are not being met by the
Department of Water Resources on January 1, 2003, or the date of
restoration of its credit rating to investment grade.
(4) Direct the Public Utilities Commission to review each
electrical corporation's procurement plan in a manner that assures
creation of a diversified procurement portfolio, assures just and
reasonable electricity rates, provides certainty to the electrical
corporation in order to enhance its financial stability and
creditworthiness, and eliminates the need, with specified exceptions,
for after-the-fact reasonableness review of an electrical
corporation's prospective electricity procurement performed
consistent with an approved procurement plan.
SEC. 2. Chapter 5.6 (commencing with Section 25465) is added to
Division 15 of the Public Resources Code, to read:
CHAPTER 5.6. CALIFORNIA RENEWABLES PORTFOLIO STANDARDS PROGRAM
25465. For purposes of this chapter, the following terms have the
following meanings.
(a) "Eligible renewable energy resource" means an electric
generating facility or solar thermal energy system that reduces the
consumption of electricity through the use of renewable resources and
that meets all of the following criteria:
(1) Uses wind, solar, geothermal, or biomass as its primary fuel.
(2) Improves the resource diversity in the electricity market that
serves the state, and increases the reliability of the state's
electricity system. The commission shall deem an electric generating
facility or solar thermal energy system to satisfy this requirement
if at least one of the following criteria are met:
(A) It is located within or interconnected to the control area of
the California Independent System Operator, the Los Angeles
Department of Water and Power, or the Imperial Irrigation District.
(B) Its power is sold under a direct bilateral contract to a
retail seller and its energy is scheduled into the control area of
the California Independent System Operator, the Los Angeles
Department of Water and Power, or the Imperial Irrigation District.
(C) It meets other fact-based criteria established by the
commission.
(b) "Eligible existing renewable energy resource" means an
electric generating facility that satisfies all criteria in
subdivision (a) and was in existence before January 1, 2001. Any
facility that sells its output to an electrical corporation under a
contract entered into prior to 1996 under the federal Public
Utilities Regulatory Policies Act of 1978 (P.L. 95-617) shall be
considered an eligible existing renewable energy resource.
(c) "Eligible new renewable energy resource" means output from an
electric generating facility that satisfies all criteria in
subdivision (a) and meets at least one of the following criteria:
(1) The facility commenced initial operation on or after January
1, 2001.
(2) The output represents incremental production from repowered or
refurbished existing facilities and project additions completed on
or after January 1, 2001, as measured by the production of
kilowatthours above the five-year average of the kilowatthours
delivered from the project during the five-year period ending
December 31, 2000.
(3) The output represents incremental output above levels
specified in contracts for facilities defined in subdivision (b).
(d) (1) For an electrical corporation, "renewable energy credit"
means a tradable certificate of proof, certified by the commission,
that one kilowatthour of electricity was generated by an eligible
renewable energy resource.
(2) For a local publicly owned electric utility, "renewable energy
credit" means a tradable certificate that one kilowatthour of
electricity was generated by an eligible new renewable energy
resource.
(e) "Biomass" means any of the following:
(1) Agricultural crops and agricultural wastes and residues.
(2) Landfill gas.
(3) Solid wood waste materials including waste pallets, crates,
dunnage, manufacturing and construction wood wastes (other than
pressure-treated, chemically treated or lead-painted wood wastes),
and landscape or right-of-way tree trimmings.
(4) Wood and wood wastes and residues that meet all of the
following requirements:
(A) Have been harvested pursuant to an approved timber harvest
plan prepared in accordance with the Z'berg-Nejedly Forest Practice
Act of 1973 (Chapter 8 (commencing with Section 4511) of Part 2 of
Division 4.
(B) Have been harvested for purposes of forest fire fuel reduction
or forest-stand improvement.
(C) Do not transport or cause the transportation of species known
to harbor insect or disease pests outside zones of infestation or
current quarantine zones, as identified by the Department of Food and
Agriculture or the State Board of Forestry and Fire Protection.
(f) (1) "Retail Seller" means an entity engaged in the retail sale
or provision of electricity to end-use customers, including, but not
limited to, either or both of the following:
(A) An electrical corporation, as defined in Section 218 of the
Public Utilities Code.
(B) An electric service provider as defined in Section 218.3 of
the Public Utilities Code.
(2) "Retail seller" does not include retail load served on site or
under an over-the-fence arrangement consistent with Section 218 of
the Public Utilities Code, or a local publicly owned electrical
utility, as defined in subdivision (d) of Section 9604 of the Public
Utilities Code.
(g) "Portfolio standard" means the specified percentage of
electricity generated by eligible renewable energy resources that a
retail seller is required to purchase in any given year, as
established by the commission pursuant to Section 25465.5.
(h) "Public utility" means an electrical corporation subject to
regulation by the Public Utilities Commission under Section 216 of
the Public Utilities Code.
25465.3. The commission, in consultation with the Public
Utilities Commission, and the Independent System Operator or any
successor entity, shall do all of the following:
(a) Certify eligible new and existing renewable energy resources
that it determines meet the criteria described in subdivisions (a),
(b), and (c) of Section 25465.
(b) Design and implement a system of tradable renewable energy
credits to facilitate and verify compliance by retail sellers and to
ensure that the renewable energy represented by those credits is
counted only once for the purpose of meeting the portfolio standard
of this or any other state or for verifying retail product claims in
this or any other state. The commission may issue credits to the
owners of eligible new renewable energy resources.
(c) Allocate and administer funds from the Renewable Resource
Trust Fund to complement the provisions of this chapter, to support a
diversity of renewable resources and technologies, and to promote
emerging renewable technologies.
25465.5. (a) The commission shall establish a portfolio standard
requiring all retail sellers to purchase or generate a minimum
quantity of output from available eligible new renewable energy
resources as a specified percentage of total kilowatthours sold to
its retail end-use customers. The commission shall establish the
minimum uniform percentage of eligible new renewable energy resources
to be procured by retail sellers according to the following
schedule, and to the extent there is sufficient renewable resource
supply to meet these procurement targets:
(1) At least 1 percent by June 1, 2003.
(2) At least 2 percent by January 1, 2005.
(3) At least 5 percent by January 1, 2007.
(4) At least 8 percent by January 1, 2009.
(5) At least 10 percent beginning on January 1, 2010 and
continuing until January 1, 2020.
(6) (A) The commission shall increase the percentage of retail
sales required from eligible new renewable energy resources if an
increase is necessary, in combination with the statewide contribution
of eligible existing renewable energy resources, to produce the
minimum percentages of total statewide retail sales from all eligible
renewable energy resources according to the following schedule:
(i) 10 percent by June 1,2003.
(ii) 12 percent by January 1, 2005.
(iii) 15 percent by January 1, 2007.
(iv) 18 percent by January 1, 2009.
(v) 20 percent by January 1, 2010.
(B) The commission shall notify all retail sellers at least one
year prior to increasing the requirement for procuring eligible new
renewable resources.
(b) Notwithstanding any other requirement of this section, the
commission shall establish a mechanism to ensure that compliance with
the portfolio standard will not result in incremental procurement
costs for retail sellers that exceed one and one half cents ($0.015)
per kilowatthour of eligible renewable energy resource generation in
2001 dollars. The calculation of incremental procurement costs shall
be determined by the price of renewable energy credits established
pursuant to subdivision (b) of Section 25465.3.
(c) Each electrical corporation shall include plans to meet its
obligations pursuant to this section as part of a procurement plan
submitted to the Public Utilities Commission, and the Public
Utilities Commission shall authorize each electrical corporation to
fully recover in rates all reasonable costs of implementing and
administering the California Renewables Portfolio Standard authorized
pursuant to this section.
25465.7. The commission shall commence proceedings for
implementing the California Renewables Portfolio Standard on or
before 90 days after the effective date of this section. The
commission shall adopt final implementing regulations on or before
June 1, 2002.
25465.9. The Department of Water Resources shall make all efforts
it determines to be reasonable to comply with this chapter.
SEC. 2.5. Section 330 of the Public Utilities Code is repealed.
SEC. 3. Section 330 is added to the Public Utilities Code, to
read:
330. (a) The Legislature finds and declares all of the following:
(1) The delivery of electricity over transmission and distribution
systems is currently regulated, and will continue to be regulated to
ensure system safety, reliability, environmental protection, and
fair access for all market participants.
(2) Reliable electric service is of utmost importance to the
safety, health, and welfare of the state's citizenry and economy. It
is the intent of the Legislature that electric industry
restructuring should enhance the reliability of the interconnected
regional transmission systems, and provide strong coordination and
enforceable protocols for all users of the power grid.
(3) It is important that sufficient supplies of electric
generation will be available to maintain the reliable service to the
citizens and businesses of the state.
(4) Reliable electric service depends on conscientious inspection
and maintenance of transmission and distribution systems.
(5) The people of California expect the utilities and the
government of the state to assure safe and reliable electric service
at a just and reasonable price.
(6) The decision of the California Public Utilities
Commission commission in Decision 95-12-063,
modified by Decision 96-01-009, to diminish the obligation of
regulated electric utilities to serve their California customers with
electric energy has severely impacted the delivery of safe and
reliable electric service at a just and reasonable price.
(7) As the direct result of that policy, utilities divested
themselves of facilities essential to their ability to meet their
obligation to serve, including sales of electric generation
facilities to third parties, and transfer of operational control of
transmission facilities to the Independent System Operator (ISO), an
entity subject to dual control by state and federal authorities.
(8) As the direct result of that policy, utilities have been
unable to fully serve their customers with electric energy, and have
been required to acquire electric energy through purchases in
wholesale markets.
(9) As the direct result of that policy, utilities and California
authorities have been unable to maintain electric service stability
or reliability.
(10) Wholesale electricity markets have been characterized by the
existence of seller market power, and will continue to be
characterized in the future by seller market power, until state and
federal authorities act cooperatively to eliminate that market power.
(11) The scope and scale of seller market power have increased
with the utility divestiture of powerplants and transfer of
operational control of the transmission system to the ISO, as has the
cost to utilities and their retail customers.
(12) Prices for electric energy sold for resale, which are under
the jurisdiction of the federal government, have not been just and
reasonable since May 1, 2000, due to the existence and exercise of
seller market power.
(13) Between May 1, 2000, and May 1, 2001, California utilities
and their retail customers have paid at least $8.9 billion in excess
cost due to seller market power.
(14) The wholesale electricity market institutions created by the
commission in Decision 95-12-063, and envisioned by Assembly Bill
1890 (Ch. 854, Stats. 1996) have collapsed, with the result that
there is no transparent day ahead or hour ahead market and no pricing
transparency in wholesale markets at the present time or for the
foreseeable future. Specifically:
(A) The Power Exchange as envisioned by Assembly Bill 1890 is
defunct.
(B) The utilities as load serving entities are unable to
participate in the wholesale markets because sellers do not consider
them creditworthy.
(C) The state, through the Department of Water Resources (DWR),
has been forced to purchase electric energy in place of the
utilities, in a manner characterized by extreme secrecy intended to
reduce collusion and fraud by wholesale sellers.
(D) The ISO has become a significant buyer of last resort through
out-of-market purchases for energy when the utilities and the DWR
refuse to pay excessive prices, or when sellers withhold energy from
forward markets through failures to bid.
(15) The existence of seller market power in the California
wholesale electric markets affecting California has been formally
found and determined by the Federal Energy Regulatory Commission
(FERC).
(16) Federal authorities have been unwilling to take effective
action to relieve wholesale prices or mitigate seller market power,
contrary to their legal obligation.
(17) In order to restore the credit and operational capability of
the utilities and to enable the DWR to make purchases at market-power
driven prices, the commission has increased retail electric rates by
an annual amount of over $7 billion since January 4, 2001, so that
electric rates in California are among the highest in the nation.
(18) Since January 2001, California has been beset by actual and
threatened blackouts due to supply withholding by wholesale sellers,
who use both direct and indirect means to make electric energy
unavailable.
(19) The reduction in reliability is directly related to the
faulty, now partially collapsed market structure and institutions
created by commission Decision 95-12-063, and as codified by Assembly
Bill 1890.
(20) The state has a duty to its people to assure the reliability
of the electricity supply system, which has been undermined by the
orders of the commission in Decision 95-12-063.
(21) The expectations and assumptions that the policy changes
embodied in Assembly Bill 1890 would result in consumer benefits,
enhanced reliability, lower rates, and technological innovation have
proven illusory.
(22) Many owners of powerplants located within the
California ISO control area are not required to consider
the local need for power before purporting to schedule their supplies
for export to other control areas. Most generators in other control
areas throughout the western interconnection are controlled by
vertically-integrated utilities with an obligation to assure adequate
service to the customers within their respective service
territories.
(23) It is essential to the public health, safety, and welfare of
the people of the state that the ISO have control over the unit
commitment and dispatch of powerplants located within the ISO control
area in order to assure the provision of reliable service to the
customers located therein.
(24) Fully empowering state entities, including the commission,
the utilities, the ISO, and the DWR, to overcome seller market power,
reduce prices for electric energy, and restore grid reliability is
in the public interest.
(b) The purpose of this chapter is to return electrical
corporations to creditworthiness sufficient to enable them to invest
in generation and procure energy at reasonable and competitive costs.
The Legislature finds this purpose is in the public interest.
SEC. 4. Section 341.5 of the Public Utilities Code is amended to
read:
341.5. (a) The Independent System Operator bylaws shall contain
provisions that identify those matters specified in subdivision (b)
of Section 339 as matters within state jurisdiction. The bylaws
shall also contain provisions which state that California's bylaws
approval function with respect to the matters specified in
subdivision (b) of Section 339 shall not preclude the Federal Energy
Regulatory Commission from taking any action properly within its
jurisdiction necessary to address undue discrimination or other
violations of the Federal Power Act (16 U.S.C.A.
U.S.C. Sec. 791a et seq.) or to exercise any other
commission responsibility under the Federal Power Act.
(b) Any necessary bylaw changes to implement the provisions of
Sections 335, 337, 338, 339, or subdivision (a) of this section, or
changes required pursuant to an agreement as contemplated by
subdivision (a) of this section with a participating state for a
regional organization, shall be effective upon approval of the
respective governing boards and the Oversight Board and acceptance
for filing by the Federal Energy Regulatory Commission.
SEC. 5. Article 4 (commencing with Section 355) of Chapter 2.3 of
Part 1 of Division 1 of the Public Utilities Code is repealed.
SEC. 6. Section 359 of the Public Utilities Code is amended to
read:
359. (a) It is the intent of the Legislature to improve
reliability, to support mutual assistance among load serving
entities, to achieve equitable pricing policies in the western
states, and to improve the access of consumers served by the
Independent System Operator to functional and transparent markets.
(b) The preferred means by which the objectives described in
subdivision (a) should be realized is through the adoption of a
regional compact or other comparable agreement among cooperating
party states.
(c) The agreement described in subdivision (b) should provide for
all of the following:
(1) An equitable process for the appointment or confirmation by
party states of members of the governing board of the regional
organization.
(2) Mechanisms by which each party state, jointly or separately,
can oversee effectively the actions of the Independent System
Operator as those actions relate to the assurance of electricity
system reliability within the party state and to matters that affect
electricity sales to the retail customers of the party state or
otherwise affect the general welfare of the electricity consumers and
the general public of the party state.
(3) The adherence by publicly owned and investor-owned utilities
located in party states to enforceable standards and protocols to
protect the reliability of the interconnected regional transmission
and distribution systems.
SEC. 7. Section 361 of the Public Utilities Code is repealed.
SEC. 7.5. Section 365.1 is added to the Public Utilities Code, to
read:
365.1. The actions of the commission pursuant to this chapter
shall be consistent with the findings and declarations contained in
Section 330.
SEC. 8. Section 365.2 is added to the Public Utilities Code, to
read:
365.2. (a) Notwithstanding any other provision of law, the right
of retail end-use customers to enter into new contracts for direct
transactions shall be suspended as of August 25, 2001, and the
commission may not authorize any new or replacement direct
transactions for retail end-use customers until January 1, 2003, and
then only pursuant to this section.
(b) Commencing January 1, 2003, any retail end-use customer
purchasing power from an electrical corporation may elect to purchase
power from an electric service provider upon payment of the fee
described in subdivision (c) and, unless the exception described in
subdivision (d) applies, the fee described in subdivision (d).
(c) Any retail end-use customer electing to purchase power from an
electric service provider pursuant to subdivision (b) shall pay an
exit fee equal to the excess, if any, of the customer's proportionate
share of total actual procurement costs, including financing costs
and proportionate share of administrative costs associated with this
section, incurred by the Department of Water Resources during the
period during which the customer purchased power from the Department
of Water Resources pursuant to Division 27 (commencing with Section
80000) of the Water Code, over the revenues collected by the
Department of Water Resources from the customer during that period,
as determined by the Department of Water Resources.
(d) (1) In addition to paying the fee described in subdivision
(c), a retail end-use customer electing to purchase power from an
electric service provider pursuant to subdivision (b) shall also pay
an additional exit fee equal to the customer's proportionate share of
the Department of Water Resource's estimated net unavoidable cost of
power procurement for the period commencing immediately after the
commencement of purchases from an alternate provider through the
expiration of all then existing contracts for power entered into by
the Department of Water Resources, as the proportionate share and
unavoidable cost are determined by the Department of Water Resources,
unless the exception in paragraph (2) applies.
(2) A retail end-use customer electing to purchase power from an
electric service provider may not be required to pay the fee
described in this subdivision to the extent that, as of the customer'
s commencement of purchase from an alternate provider, the total
load, measured in aggregate annual megawatt hours, taking
account of load profile, peak, and seasonal power requirements,
available for direct transactions within the service territory of
the electrical corporation, as determined by the commission, is less
than the difference between the total load within the service
territory of the electrical corporation and the sum of the electrical
corporation's retained generation as of August 24, 2001, and the
minimum delivery obligations under then existing power purchase
contracts of that electrical corporation as of August 24, 2001, and
power purchase contracts, not including renewals effectuated at the
discretion of the Department of Water Resources, procured by the
Department of Water Resources to serve customers within that
electrical corporation's service territory as of August 24, 2001.
(e) (1) The department shall submit information on its long term
power purchase contracts to the commission in a time frame that
allows the commission to meet its obligations under this subdivision.
Within 90 days after the effective date, and every 6 months
thereafter, the commission shall determine and publish the load
available for direct transactions, which is not subject to
subdivision (d).
(2) Within 30 days after the date of publishing the load available
for direct transactions, the commission shall establish an open
enrollment period. Any customer electing to take service through
direct transactions shall submit a notice to switch to the electrical
corporation within 90 days after the date that the available load
was published.
(f) Nothing in this section relieves customers
of the nonbypassable charges for qualified costs provided for in
Section 369.
(g) The commission shall adopt regulations regarding the ability
of direct transaction customers to become electrical corporation
customers. The regulations may include a requirement that direct
transaction customers give reasonable notice to the electrical
corporation before the electrical corporation is required to provide
service to those customers.
(h) (1) A retail end-use customer that was a party to a direct
transaction contract with a term commencing on or before May 1, 2000,
and extending through August 24, 2001, or later, may not be subject
to any charge associated with any power purchase or financing costs
incurred by the Department of Water Resources or its successor.
(2) A retail end-use customer that took continuous service under a
direct transaction contract for the period commencing on or before
May 1, 2000, and extending through January 17, 2001, or later, may
not be subject to any charge associated with qualified costs pursuant
to subdivision (f) of Section 399.20. Such a charge may not be
assessed against facilities operated by the University of California
or California State University.
(3) A retail end-use customer that was a party to a contract for a
direct transaction with a term commencing on or after January 17,
2001, through August 24, 2001, shall not be subject to any charge
associated with power purchase costs incurred by the Department of
Water Resources or its successor, for energy deliveries following the
date on which the load begins to receive service under the direct
transaction, provided that the commission finds that the execution of
a direct transaction during the period specified in this paragraph
shall not result in additional stranded costs.
(3) A retail end-use customer that was a party to a contract for a
direct transaction with a term commencing on or after January 17,
2001, through August 24, 2001, shall be required to pay the fee
described in subdivision (c). The customer may not be required to
pay the fee described in subdivision (d) following the date on which
the customer's load begins to receive service under the direct
transaction if the commission finds that the execution of a direct
transaction during the period specified in this paragraph will not
result in additional stranded costs.
(i) Notwithstanding subdivision (a), or any other provision of
law, a residential end-use customer may at any time elect to purchase
electricity from an electric service provider if the electrical
energy is at least 80 percent from renewable energy sources as
determined by the State Energy Conservation and Development
Commission. A residential end-use customer that elects to purchase
electrical power pursuant to this subdivision shall pay the fee
required under subdivision (c).
(j) This section is not applicable to a facility, located on
the site of, or immediately adjacent to, an electric generating plant
that is not owned by an electrical corporation, and that meets all
of the following criteria:
(1) Shares common operating facilities with the electric
generating plant.
(2) Has never been served by an electrical corporation.
(3) Does not require the use of transmission or distribution
facilities owned by an electrical corporation.
(k) The provisions of the act adding this section, including this
section, are not applicable to obtaining power under Section 701.8,
except for power obtained under paragraph (3) of subdivision (f) of
Section 701.8.
(l) "Effective date," for purposes of this section, means
the effective date of the act adding this section in the 2001-02
Second Extraordinary Session.
SEC. 8.5. Section 365.3 is added to the Public Utilities Code, to
read:
365.3. (a) For purposes of this section, "customer generation"
means a generating facility that meets both of the criteria set forth
in paragraphs (1) and (2), or the criterion set forth in paragraph
(3):
(1) The facility supplies the retail electricity user with
electric energy using private transmission lines or utility
transmission lines paid for and dedicated to the retail electricity
user.
(2) The retail electricity user or its affiliate, pursuant to
paragraph (1) of subdivision (a) of Section 372, holds an ownership
interest in the generating facility or related property of the lesser
of 50 percent or an interest commensurate with the user's
proportionate consumption of the output of the facility.
(3) The customer load is served by generation consistent with
subdivision (b) of Section 218.
(b) Customer load that has been served by customer generation
commencing on or before May 1, 2000, through August 24, 2001, is not
subject to any charge associated with qualified costs as defined in
subdivision (f) of Section 399.20 or any power purchase or financing
costs incurred by the Department of Water Resources or its successor
, if the customer load has not purchased power from the
electrical corporation for more than 336 hours during the period
specified in this subdivision due to a customer generation outage. If
the customer load purchased power from the electrical corporation
for more than 336 hours during the period specified in this
subdivision, the customer shall pay a proportionate share of
qualified costs pursuant to Section 399.20 for power purchases from
May 1, 2000, to January 17, 2001, and a proportionate share of the
costs incurred by the Department of Water Resources for power
purchases from January 17, 2001, to August 24, 2001 . Customer
load that is served by customer generation for which an application
for authority to construct has been submitted to the lead agency
under the California Environmental Quality Act (Division 13
(commencing with Section 21000) of the Public Resources Code), not
later than August 24, 2001, shall not be is
not subject to any charge associated with power purchase costs
incurred by the Department of Water Resources or its successor for
energy deliveries following the date on which the load begins to
receive service from the customer generation.
(c) Customer load that is served by customer generation installed
on or after August 24, 2001, except as otherwise specified in
subdivision (b), is not subject to any charge associated with power
purchase costs incurred by the Department of Water Resources or its
successor for energy deliveries following the date on which the load
begins to receive service from the customer generation, provided that
the application of this provision shall be limited to the load
amounts specified in subdivision (d). Eligibility under this
subdivision shall be determined by procedures established by the
State Energy Resources Development and Conservation Commission, based
upon a first-come, first-served methodology, the load and resources
in each electrical corporation's service territory, the fuel
efficiency of the generation, and other pertinent criteria , as
determined by the State Energy Resources Development and Conservation
Commission .
(d) The application of subdivision (c) shall be limited commencing
January 1, 2002, to 250 megawatts of load statewide, and the limit
shall increase by 250 megawatts statewide on each January 1
thereafter. If the commission determines that the total statewide
load will exceed the sum of the electrical corporations' retained
generation, as of August 24, 2001, and the minimum delivery
obligations under power purchase contracts of the electrical
corporations as of August 24, 2001, and the power purchase contracts,
not including renewals effectuated at the discretion of the
Department of Water Resources, procured by the Department of Water
Resources to serve customers within the electrical corporations'
service territories as of August 24, 2001, the commission shall
increase the then current limit for customer generation pursuant to
this subdivision by not less than 30 percent of the excess amount.
The amount of any increase in customer generation resulting from the
excess amount may not be used for direct access transactions or for
calculating total load for direct transactions, under Section 365.2.
(e) This section is not applicable to a facility, located on the
site of or immediately adjacent to an electric generating plant that
is not owned by an electrical corporation, and that meets all of the
following criteria:
(1) Shares common operating facilities with the electric
generating plant.
(2) Has never been served by an electrical corporation.
(3) Does not require the use of transmission or distribution
facilities owned by an electrical corporation.
SEC. 9. Section 367 of the Public Utilities Code is amended to
read:
367. The commission shall identify and determine those costs and
categories of costs for generation-related assets and obligations,
consisting of generation facilities, generation-related regulatory
assets, nuclear settlements, and power purchase contracts, including,
but not limited to, restructurings, renegotiations, or terminations
thereof approved by the commission, that were being collected in
commission-approved rates on December 20, 1995, and that may become
uneconomic as a result of a competitive generation market, in that
these costs may not be recoverable in market prices in a competitive
market, and appropriate costs incurred after December 20, 1995, for
capital additions to generating facilities existing as of December
20, 1995, that the commission determines are reasonable and should be
recovered, provided that these additions are necessary to maintain
the facilities through December 31, 2001. These uneconomic costs
shall include transition costs as defined in subdivision (f) of
Section 840, and shall be recovered from all customers or in the case
of fixed transition amounts, from the customers specified in
subdivision (a) of Section 841, on a nonbypassable basis and shall:
(a) Be amortized over a reasonable time period, including
collection on an accelerated basis, consistent with not increasing
rates for any rate schedule, contract, or tariff option above the
levels in effect on June 10, 1996; provided that, the recovery shall
not extend beyond December 31, 2001, except as follows:
(1) Costs associated with employee-related transition costs as set
forth in subdivision (b) of Section 375 shall continue until fully
collected; provided, however, that the cost collection shall not
extend beyond December 31, 2006.
(2) Power purchase contract obligations shall continue for the
duration of the contract. Costs associated with any buy-out,
buy-down, or renegotiation of the contracts shall continue to be
collected for the duration of any agreement governing the buy-out,
buy-down, or renegotiated contract; provided, however, no power
purchase contract shall be extended as a result of the buy-out,
buy-down, or renegotiation.
(3) Costs associated with contracts approved by the commission to
settle issues associated with the Biennial Resource Plan Update may
be collected through March 31, 2002; provided that only 80 percent of
the balance of the costs remaining after December 31, 2001, shall be
eligible for recovery.
(4) Nuclear incremental cost incentive plans for the San Onofre
nuclear generating station shall continue for the full term as
authorized by the commission in Decision 96-01-011 and Decision
96-04-059; provided that the recovery shall not extend beyond
December 31, 2003.
(5) Costs associated with the exemptions provided in subdivision
(a) of Section 374 may be collected through March 31, 2002, provided
that only fifty million dollars ($50,000,000) of the balance of the
costs remaining after December 31, 2001, shall be eligible for
recovery.
(6) Fixed transition amounts, as defined in subdivision (d) of
Section 840, may be recovered from the customers specified in
subdivision (a) of Section 841 until all rate reduction bonds
associated with the fixed transition amounts have been paid in full
by the financing entity.
(b) Be limited in the case of utility-owned fossil generation to
the uneconomic portion of the net book value of the fossil capital
investment existing as of January 1, 1998, and appropriate costs
incurred after December 20, 1995, for capital additions to generating
facilities existing as of December 20, 1995, that the commission
determines are reasonable and should be recovered, provided that the
additions are necessary to maintain the facilities through December
31, 2001. All "going forward costs" of fossil plant operation,
including operation and maintenance, administrative and general, fuel
and fuel transportation costs, on or before December 31, 2000, shall
be recovered solely from independent Power Exchange revenues or from
contracts with the Independent System Operator, provided that for
the purposes of this chapter, the following costs may be recoverable
pursuant to this section:
(1) Commission-approved operating costs for particular
utility-owned fossil powerplants or units, at particular times when
reactive power/voltage support is not yet procurable at market-based
rates in locations where it is deemed needed for the reactive
power/voltage support by the Independent System Operator, provided
that the units are otherwise authorized to recover market-based rates
and provided further that for an electrical corporation that is also
a gas corporation and that serves at least four million customers as
of December 20, 1995, the commission shall allow the electrical
corporation to retain any earnings from operations of the reactive
power/voltage support plants or units and shall
may not require the utility to apply any portions to
offset recovery of transition costs. Cost recovery under the cost
recovery mechanism shall end on December 31, 2001.
(2) An electrical corporation that, as of December 20, 1995,
served at least four million customers, and that was also a gas
corporation that served less than four thousand customers, may
recover, pursuant to this section, 100 percent of the uneconomic
portion of the fixed costs paid under fuel and fuel transportation
contracts that were executed prior to December 20, 1995, and were
subsequently determined to be reasonable by the commission, or 100
percent of the buy-down or buy-out costs associated with the
contracts to the extent the costs are determined to be reasonable by
the commission.
(c) Be adjusted throughout the period through March 31, 2002, to
track accrual and recovery of costs provided for in this subdivision.
Recovery of costs prior to December 31, 2001, shall include a
return as provided for in commission Decision 95-12-063,
as modified by Decision 96-01-009, together with associated taxes.
(d) (1) Be allocated among the various classes of customers, rate
schedules, and tariff options to ensure that costs are recovered from
these classes, rate schedules, contract rates, and tariff options,
including self-generation deferral, interruptible, and standby rate
options in substantially the same proportion as similar costs are
recovered as of June 10, 1996, through the regulated retail rates of
the relevant electric utility, provided that there shall be a
firewall segregating the recovery of the costs of competition
transition charge exemptions such that the costs of competition
transition charge exemptions granted to members of the combined class
of residential and small commercial customers shall be recovered
only from these customers, and the costs of competition transition
charge exemptions granted to members of the combined class of
customers, other than residential and small commercial customers,
shall be recovered only from these customers.
(2) Individual customers shall may
not experience rate increases as a result of the allocation of
transition costs. However, customers who elect to purchase energy
from suppliers other than the Power Exchange through a direct
transaction, may incur increases in the total price they pay for
electricity to the extent the price for the energy exceeds the Power
Exchange price.
(3) The commission shall retain existing cost allocation
authority, provided the firewall and rate freeze principles are not
violated.
(e) On and after January 1, 2002, this section shall not
be is not applicable to an electrical
corporation that has entered into an agreement with the state under
subdivision (b) of Section 399.21, except that references in Sections
368, 369, 370, 371, 372, 373, and 374 to the costs described in this
section shall continue to refer to those costs.
SEC. 9.2. Section 367.2 is added to the Public Utilities Code, to
read:
367.2. (a) The commission shall establish a Ratepayer Benefit
Account with a separate subaccount for each electrical corporation
that has entered into an agreement pursuant to subdivision (b) of
Section 399.21. The following funds shall be credited to the
electrical corporation's subaccount:
(1) Fifty percent of the first billion dollars, and one hundred
percent of all additional dollars resulting from any litigation or
agreement relative to the charging, either directly or indirectly, of
excessive costs for power by electric power generators, suppliers,
and marketers and excessive costs for natural gas charged either
directly or indirectly by natural gas suppliers or marketers, prior
to January 18, 2001.
(2) Any refunds, reimbursements , or other financial
penalties ordered by the commission to be paid with respect to the
electrical corporation in commission proceeding I. 01-04-022.
(b) The commission shall from time to time in proportion to the
class percentage rate increases adopted in the commission's Decision
Number 01-05-064 for the ratepayers of an electrical corporation,
refund to each ratepayer in a class based on consumption of power,
moneys in the electrical corporation's Ratepayer Benefit Account
subaccount through an immediate bill credit or, in the alternative, a
reduction in rates in the same proportionate manner.
(c) All funds held by an electrical corporation that are required
by this section to be credited to the Ratepayer's Benefit Account
subaccount of the corporation are property of the ratepayers of that
electrical corporation and are held in trust on their behalf.
SEC. 9.4. Section 368 of the Public Utilities Code is amended to
read:
368. Each electrical corporation shall propose a cost recovery
plan to the commission for the recovery of the uneconomic costs of an
electrical corporation's generation-related assets and obligations
identified in Section 367. The commission shall authorize the
electrical corporation to recover the costs pursuant to the plan if
the plan meets the following criteria:
(a) The cost recovery plan shall set rates for each customer
class, rate schedule, contract, or tariff option, at levels equal to
the level as shown on electric rate schedules as of June 10, 1996,
provided that rates for residential and small commercial customers
shall be reduced so that these customers shall receive rate
reductions of no less than 10 percent for 1998 continuing through
2002. These rate levels for each customer class, rate schedule,
contract, or tariff option shall remain in effect until the earlier
of March 31, 2002, or the date on which the commission-authorized
costs for utility generation-related assets and obligations have been
fully recovered. Unless the electrical corporation has entered into
a binding and enforceable agreement pursuant to subdivision (b) of
Section 399.21, the electrical corporation shall be at risk for those
costs not recovered during that time period. Each utility shall
amortize its total uneconomic costs, to the extent possible, such
that for each year during the transition period its recorded rate of
return on the remaining uneconomic assets does not exceed its
authorized rate of return for those assets. For purposes of
determining the extent to which the costs have been recovered, any
over-collections recorded in Energy Costs Adjustment Clause and
Electric Revenue Adjustment Mechanism balancing accounts, as of
December 31, 1996, shall be credited to the recovery of the costs.
(b) The cost recovery plan shall provide for identification and
separation of individual rate components such as charges for energy,
transmission, distribution, public benefit programs, and recovery of
uneconomic costs. The separation of rate components required by this
subdivision shall be used to ensure that customers of the electrical
corporation who become eligible to purchase electricity from
suppliers other than the electrical corporation pay the same
unbundled component charges, other than energy, that a bundled
service customer pays. No cost shifting among customer classes, rate
schedules, contract, or tariff options shall result from the
separation required by this subdivision. Nothing in this provision
is intended to affect the rates, terms, and conditions or to limit
the use of any Federal Energy Regulatory Commission-approved contract
entered into by the electrical corporation prior to the effective
date of this provision.
(c) In consideration of the risk that the uneconomic costs
identified in Section 367 may not be recoverable within the period
identified in subdivision (a) of Section 367, an electrical
corporation that, as of December 20, 1995, served more than four
million customers, and was also a gas corporation that served less
than four thousand customers, shall have the flexibility to employ
risk management tools, such as forward hedges, to manage the market
price volatility associated with unexpected fluctuations in natural
gas prices, and the out-of-pocket costs of acquiring the risk
management tools shall be considered reasonable and collectible
within the transition freeze period. This subdivision applies only
to the transaction costs associated with the risk management tools
and shall not include any losses from changes in market prices.
(d) In order to ensure implementation of the cost recovery plan,
the limitation on the maximum amount of cost recovery for nuclear
facilities that may be collected in any year adopted by the
commission in Decision 96-01-011 and Decision 96-04-059 shall be
eliminated to allow the maximum opportunity to collect the nuclear
costs within the transition cap period.
(e) As to an electrical corporation that is also a gas corporation
serving more than four million California customers, for
so long as any cost recovery plan adopted in accordance with this
section satisfies subdivision (a), it shall also provide for annual
increases in base revenues, effective January 1, 1997, and January 1,
1998, equal to the inflation rate for the prior year plus two
percentage points, as measured by the consumer price index. The
increase shall do both of the following:
(1) Remain in effect pending the next general rate case review,
which shall be filed not later than December 31, 1997, for rates that
would become effective in January 1999. For purposes of any
commission-approved performance-based ratemaking mechanism or general
rate case review, the increases in base revenue authorized by this
subdivision shall create no may not be
construed to create a presumption that the level of base
revenue reflecting those increases constitute the appropriate
starting point for subsequent revenues.
(2) Be used by the utility for the purposes of enhancing its
transmission and distribution system safety and reliability,
including, but not limited to, vegetation management and emergency
response. To the extent the revenues are not expended for system
safety and reliability, they shall be credited against subsequent
safety and reliability base revenue requirements. Any excess revenues
carried over shall may not be used to
pay any monetary sanctions imposed by the commission.
(f) The cost recovery plan shall provide the electrical
corporation with the flexibility to manage the renegotiation,
buy-out, or buy-down of the electrical corporation's power purchase
obligations, consistent with review by the commission to assure that
the terms provide net benefits to ratepayers and are otherwise
reasonable in protecting the interests of both ratepayers and
shareholders.
(g) An example of a plan authorized by this section is the
document entitled "Restructuring Rate Settlement" transmitted to the
commission by Pacific Gas and Electric Company on June 12, 1996.
SEC. 9.6. Section 369 of the Public Utilities Code is amended to
read:
369. (a) (1) The commission shall establish an effective
mechanism that ensures recovery of transition costs referred to in
Sections 367, 368, 375, and 376, and subject to the conditions in
Sections 371 to 374, inclusive, from all existing and future
consumers in the service territory in which the utility provided
electricity services as of December 20, 1995; provided, that the
costs shall not be recoverable from new customer load or incremental
load of an existing customer where the load is being met through a
direct transaction and the transaction does not otherwise require the
use of transmission or distribution facilities owned by the utility.
However, the obligation to pay the competition transition charges
cannot may not be avoided by the
formation of a local publicly owned electrical corporation on or
after December 20, 1995, or by annexation of any portion of an
electrical corporation's service area by an existing local publicly
owned electric utility.
(2) This subdivision does not apply to service taken under
tariffs, contracts, or rate schedules that are on file, accepted, or
approved by the Federal Energy Regulatory Commission, unless
otherwise authorized by the Federal Energy Regulatory Commission.
(b) (1) The commission also shall establish an effective mechanism
that ensures recovery from all existing and future consumers in the
service territory in which the utility provided electricity services
as of January 15, 2001 of qualified costs described in Section
399.20, subject to Section 399.25, provided that the costs may not be
recoverable from either of the following:
(A) (i) New
customer load being met through a direct transaction or (ii)
incremental load of an existing customer being met through a direct
transaction where the customer's load as of January 15, 2001 was
greater than or equal to 20 kilowatts, in each case where the direct
transaction does not otherwise require the use of transmission and
distribution facilities owned by the utility.
(B) New customer load, or incremental load of an existing
customer, being met by new or expanded gas fired or renewable
customer generation facilities that serve retail load.
(2) The commission shall develop regulations to verify that
customers asserting exemptions under subparagraphs (A) and (B) of
paragraph (1) legitimately qualify as new or incremental customer
loads.
(3) The obligation to pay the electrical corporation debt
repayment set-aside may not be avoided by the formation of a local
publicly owned electrical corporation on or after January 15, 2001,
or by annexation of any portion of an electrical corporation's
service area by an existing local publicly owned electric utility, as
defined in subdivision (d) of Section 9604.
SEC. 9.8. Section 377 of the Public Utilities Code is amended to
read:
377. (a) The commission shall continue to regulate the facilities
for the generation of electricity owned by any public utility prior
to January 1, 1997, that are subject to commission regulation until
the owner of those facilities has applied to the commission to
dispose of those facilities and has been authorized by the commission
under Section 851 to undertake that disposal. Notwithstanding any
other provision of law, no facility for the generation of electricity
owned by a public utility may be disposed of prior to January 1,
2006. The commission shall ensure that public utility generation
assets, qualifying facility contracts, and other bilateral contracts
remain dedicated for the benefit of the public utility's bundled
service customers, provided that nothing in this section shall be
construed to compel any electrical corporation to renew or
renegotiate an expiring contract; and further provided, that nothing
in this section may be construed to prevent the commission from
approving an application to amend, buyout, or terminate a qualifying
facility or other bilateral contract made pursuant to a voluntarily
entered and mutually agreed upon contract amendment, buyout, or
termination, if the commission determines that the amendment, buyout,
or termination is in the public interest. For purposes of this
section, utility owned generation, qualifying facility contracts and
other bilateral contracts shall be referred to as "utility retained
generation." This section does not apply to the transfer or sale of
generation plants that are located outside California and are owned
exclusively by companies not based in California. The definition of
"utility retained generation" as provided in this section is without
regard prejudice to whether shareholder
bilateral contracts that are the subject of an agreement between the
Department of Water Resources and San Diego Gas and Electric Company
in a certain Memorandum of Understanding are or are not "utility
retained generation."
(b) Notwithstanding any other provision of law, the commission
shall establish rates that enable a public utility electrical
corporation to recover on a timely basis, consistent with the
electrical corporation achieving and maintaining an
investment grade credit rating a rating for
outstanding senior unsecured debt of the electrical corporation of at
least one rating above the lowest investment grade rating by one or
more nationally recognized rating agencies , all reasonable
costs of producing power and ancillary services from utility retained
generation dedicated to the service of bundled service customers.
Those rates shall ensure that the public utility electrical
corporation is able to recover reasonable operating and capital
costs, including a reasonable return of and on the public utility
electrical corporation's investment in owned generation assets.
(1) Operating costs shall include all customary categories of
operating costs, including, but not limited to, fuel and fuel
transportation costs both fixed and variable, operations and
maintenance expenses, remediation costs, costs of emissions credits,
direct and indirect administrative and general costs, taxes,
scheduling and dispatch costs, congestion costs, ancillary service
costs, and other transmission-related costs charged to generators.
Prior to January 1, 2004, operating costs for the San Onofre Nuclear
Generating Station Units 2 and 3 shall be recovered pursuant to
nuclear incremental cost incentive plans as authorized by the
commission in commission Decision Nos. 96-01-011 and 96-94-059.
(2) The Southern California Edison Company's investment in
generation assets initially shall be set at the amounts recorded on
its books of account as of December 31, 2000, including reasonable
sites-specific general plant and capital additions made after
December 31, 1995, together with their associated regulatory
receivable or payable for taxes. For Southern California Edison
Company, existing investments for Units 2 and 3 at the San Onofre
Nuclear Generating Station and the Palo Verde Nuclear Generating
Station shall be recovered over a period ending December 31, 2015,
and incremental capital investments placed in service after December
31, 2000, will be recovered from the time they are placed in service,
provided that the electrical corporation shall recover an allowance
for funds used during construction for capital projects extending for
more than one year. Notwithstanding the foregoing, prior to January
1, 2004, incremental capital investments for the San Onofre Nuclear
Generating Station Units 2 and 3 shall be recovered pursuant to
nuclear incremental cost incentive plans as authorized by the
commission in commission Decision Nos. 96-01-011 and 96-94-059.
The cost of major capital additions and improvements to the
public utility's electrical corporation's
generation assets shall be reviewed and approved by the commission,
in the manner set forth in Sections 1005 and 1005.5, in advance of
the public utility electrical corporation
being allowed or required to invest in such major capital
additions or improvements.
(3) Decommissioning costs shall be recovered consistent with
commission decisions.
(c) Notwithstanding any other provision of law, the commission
shall do both of the following:
(1) Establish rates that ensure the electrical corporation's
entitlement to recover its reasonable procurement costs on a timely
basis.
(2) Establish procedures designed to ensure that any
undercollection or overcollection of procurement costs shall be
reconciled in a timely manner and any undercollection will be
financed on reasonable terms consistent with the credit
rating of the electrical corporation as investment grade
a rating for outstanding senior unsecured debt of the electrical
corporation of at least one rating above the lowest investment grade
rating by one or more nationally recognized rating agencies .
Those procedures shall include, but are not limited to, the
development of a framework and criteria for procurement practices,
the submission of an annual procurement plan, and the prompt approval
or disapproval of contracts consistent with Section 399.10. The
commission may not exercise retrospective reasonableness review of
power procurement contracts entered into consistent with an approved
procurement plan in accordance with Section 399.10.
(d) The rates described in subdivisions (b) and (c) shall be
separate from rates established for the Department of Water Resources
pursuant to Division 27 (commencing with Section 80000) of the Water
Code and shall be established based on forecasts of costs submitted
by the electrical corporation. Differences between revenues and
authorized costs shall be tracked in balancing accounts, and the
commission shall review the balancing accounts not less than
semiannually. Prior to the commission establishing authorized costs,
actual costs shall be tracked in the balancing accounts. If the net
balances in the electrical corporation's balancing accounts are
overcollected or undercollected by an amount that exceeds 10 percent
of the electrical corporations's actual recorded generation revenues
for the prior calendar year, excluding revenues collected for the
Department of Water Resources, the commission shall adjust rates
either (1) to refund any net overcollection to customers, in
proportion to the class percentage rate increases adopted in the
commission Decision 01-05-064 to each ratepayer in a class based on
consumption of power, through a bill credit, either on a one-time
basis, or amortized over a reasonable period, or (2) to permit the
electrical corporation to recover the undercollection in an
expeditious manner consistent with enabling the electrical
corporation to regain and retain, for the senior outstanding
unsecured debt of the electrical corporation, a rating by one or more
nationally recognized rating agencies of at least one rating above
the lowest investment grade rating. When one or more nationally
recognized rating agencies have rated the senior outstanding
unsecured debt of the electrical corporation with a rating of at
least one rating above the lowest investment grade rating, and that
electrical corporation has maintained that rating for at least five
consecutive years, then the commission may change the amount that
triggers a refund or rate adjustment pursuant to this subdivision, if
the amount set by the commission is consistent with maintenance of
an investment grade credit rating at least one rating above the
lowest investment grade.
SEC. 10. Section 379 of the Public Utilities Code is amended to
read:
379. Nuclear decommissioning costs shall be recovered as a
nonbypassable charge until the time as the costs
are fully recovered. The commission may accelerate the recovery of
decommissioning costs consistent with the public interest.
SEC. 10.5. Article 15.5 (commencing with Section 399.10) is added
to Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code,
to read:
Article 15.5 Electrical Corporation Procurement Plans
399.10. (a) No later than On or before
January 1, 2002, the commission shall determine the allocation
of electricity, including quantity, characteristics and duration of
electricity delivery, to be provided by the Department of Water
Resources under its power purchase contracts to the customers of each
electrical corporation. Each electrical corporation shall file a
procurement plan with the commission 45 days after the commission
specifies the allocation of electricity, including quantity,
characteristics and duration of electricity delivery, to be provided
by the Department of Water Resources under its power purchase
contracts to the customers of the electrical corporation. The
proposed procurement plan shall specify the date the electrical
corporation intends to resume procurement of electricity for its
retail customers, consistent with its obligation to serve, which
shall be referred to for purposes of this section as the "proposed
commencement date." The commission shall review and adopt a
procurement plan as specified in subdivisions (b), (c), and (d) no
later than 90 days prior to the proposed commencement date.
An electrical corporation that does not possess an investment grade
credit rating by one or more nationally recognized rating agencies
may file a procurement plan with the commission, but, except to the
extent set forth in a binding and enforceable agreement pursuant to
subdivision (b) of Section 399.21, it may not be required to commence
procurement on behalf of its customers until its credit rating is
restored to investment grade by one or more nationally recognized
rating agencies.
(b) An electrical corporation's proposed procurement plan shall
include, but is not limited to, the following:
(1) An assessment of the price risk associated with the electrical
corporation's portfolio, including any utility-retained generation,
existing power purchase and exchange contracts and proposed
contracts, or purchases under which an electrical corporation will
procure electricity and electricity-related products, and the
remaining open position to be served via spot market transactions.
(2) A definition of each electricity product, electricity-related
product, and procurement related financial product, including support
and justification for the product type and amount to be procured
under the plan.
(3) The duration of the plan.
(4) The duration, timing, and range of quantities of each product
to be procured.
(5) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services,
including the format and criteria of the procurement process.
(6) An incentive mechanism, if there is one proposed, including
the type of transactions to be covered by the mechanism, its
respective procurement benchmarks, and other parameters needed to
determine the sharing of risks and benefits.
(7) The upfront standards and criteria by which the acceptability
and eligibility for rate recovery of a proposed procurement
transaction will be known by the electrical corporation prior to
execution of the transaction. The upfront standards and criteria
shall include an expedited approval process for the commission's
review of proposed contracts and subsequent approval or rejection of
the contracts. The electrical corporation shall propose alternative
procurement choices in the event a contract is rejected.
(8) Procedures for updating the procurement plan.
(9) A showing that the procurement plan will create or maintain a
diversified procurement portfolio consisting of both short-term and
long-term electricity and electricity-related products.
(10) The electrical corporation's risk management policy,
strategy, and practices including specific measures of price
stability.
(11) A plan to achieve appropriate increases in diversity of
ownership and diversity of fuel supply of nonutility electrical
generation.
(12) A mechanism for recovery of reasonable administrative costs
related to procurement in the generation component of rates.
(c) The commission shall review and accept, modify, or reject each
electrical corporation's procurement plan. The commission's review
shall consider each electrical corporation's individual procurement
situation, and shall give strong consideration to that situation in
determining which one or more of the following features shall apply
to that electrical corporation. A procurement plan approved by the
commission shall contain one or more of the following features,
provided that the commission shall may
not approve a feature or mechanism for an electrical corporation if
it finds that the feature or mechanism would impair the restoration
of an electrical corporation's creditworthiness:
(1) A competitive procurement process under which the electrical
corporation may request bids for procurement-related services. The
commission shall specify the format of the procurement process, as
well as criteria to ensure that the auction process is open and
adequately subscribed. Any purchases made in compliance with the
commission-authorized process shall be recovered in the generation
component of rates.
(2) An incentive mechanism that establishes a procurement
benchmark or benchmarks and authorizes the electrical corporation to
procure from the market, subject to comparing the electrical
corporation's performance to the commission-authorized benchmark or
benchmarks. This incentive mechanism shall be clear, achievable, and
contain quantifiable objectives and standards. The incentive
mechanism shall contain balanced risk and reward incentives and shall
limit the risk and reward of an electrical corporation.
(3) Upfront achievable standards and criteria by which the
acceptability and eligibility for rate recovery of a proposed
procurement transaction shall be known by the electrical corporation
prior to the execution of the bilateral contract for the transaction.
The commission shall provide for expedited review and either
approve or reject the individual contracts submitted by the
electrical corporation pursuant to its procurement plan. To the
extent the commission rejects a proposed contract pursuant to this
criteria, the commission shall designate alternative procurement
choices contained in the procurement plan that will be recoverable
for ratemaking purposes.
(d) A procurement plan approved by the commission shall accomplish
each of the following objectives:
(1) Enable the electrical corporation to fulfill its obligation to
serve its customers at just and reasonable rates.
(2) Eliminate the need for after-the-fact reasonableness reviews
of an electrical corporation's actions in compliance with an approved
procurement plan, including resulting electricity procurement
contracts, practices, and related expenses. However, the commission
may establish a regulatory process to verify and assure that each
contract was administered in accordance with the terms of the
contract, and that contract disputes that may arise are reasonably
resolved.
(3) Ensure timely recovery of prospective procurement costs
incurred pursuant to an approved procurement plan. The commission
shall establish rates based on forecasts of procurement costs adopted
by the commission, actual procurement costs incurred, or some
combination thereof, as determined by the commission.
(4) Moderate the price risk associated with serving the electrical
corporation's retail customers, including the price risk embedded in
its long-term supply contracts, by authorizing an electrical
corporation to enter into financial and other electricity-related
product contracts.
(5) Provide for just and reasonable rates, with an appropriate
balancing of price stability and price level in the electrical
corporation's procurement plan.
(e) The commission shall provide for periodic reviews and
prospective modification of an electrical corporation's procurement
plan in response to changing market conditions.
(f) The commission is authorized to engage an independent
consultant or advisory service to evaluate risk management and
strategy. The reasonable costs of a consultant or advisory service
is a reimbursable expense and eligible for funding pursuant to
Section 631.
(g) The commission shall adopt appropriate procedures to ensure
the confidentiality of any market sensitive information submitted in
an electrical corporation's proposed procurement plan or resulting
from or related to its approved procurement plan, including, but not
limited to, proposed or executed power purchase contracts, data
request responses, or consultant reports, provided that the Office of
Ratepayer Advocates and other consumer groups that are nonmarket
participants shall be provided access to the information under
confidentiality procedures authorized by the commission.
(h) Nothing in this article alters, modifies, or amends the
commission's oversight of affiliate transactions under its rules and
decisions or the commission's existing authority to investigate and
penalize an electrical corporation's alleged fraudulent activities,
or to disallow costs incurred as a result of gross incompetence,
fraud, abuse, or similar grounds.
(i) An electrical corporation that serves less than 500,000
electric retail customers within the state may file with the
commission a request for exemption from the provisions of this
article, which the commission shall grant upon a showing of good
cause.
(j) Prior to its approval pursuant to Section 851 of any
divestiture of generation assets owned by an electrical corporation
on September 1, 2001, the commission shall determine the impact of
the proposed divestiture on the electrical corporation's procurement
rates and may only approve the divestiture if the commission
determines that the divestiture is in the public interest and
will result in net ratepayer benefits.
399.11. Nothing in this article is intended to suggest that
procurement of electricity from third parties is the preferred method
of fulfilling an electrical corporation's obligation to serve its
customers at just and reasonable rates.
SEC. 11. Article 16 (commencing with Section 399.20) is added to
Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, to
read:
Article 16. Electricity Market Stabilization
399.20. For the purposes of this article, the following terms
shall have the following meanings:
(a) (1) "Electrical corporation debt repayment set-aside" means a
nonbypassable rate and other charges, including, but not limited to,
distribution, connection, disconnection, and termination rates and
charges, that are authorized by the commission in a financing order
to allow the electrical corporation to recover all or any portion of
both (A) qualified costs, and (B) the costs of providing, recovering,
financing, or refinancing the qualified costs through a plan
approved by the commission in the financing order, including, but not
limited to, the costs of issuing, servicing, and retiring
electricity market stabilization bonds. For the purposes of this
article, an electrical corporation debt repayment set-aside shall be
imposed on a nonbypassable basis at a uniform rate per kilowatthour
of electricity consumed pursuant to Section 399.25.
(2) If requested by the electrical corporation in its application
for a financing order, an electrical corporation debt repayment
set-aside may include nonbypassable rates and other charges to
recover federal and state taxes whose recovery period is modified by
the transactions approved in the financing order.
(b) "Electricity market stabilization bonds" means bonds, notes,
certificates of participation or beneficial interest, or other
evidences of indebtedness or ownership, issued pursuant to an
executed indenture or other agreement of a financing entity, the
proceeds of which are used, directly or indirectly, to provide,
recover, finance, or refinance qualified costs, and that are directly
or indirectly secured by, or payable from, stabilization property.
(c) "Financing entity" means an electrical corporation or any
entity designated by the electrical corporation to issue electricity
market stabilization bonds or acquire stabilization property, or
both, pursuant to this article.
(d) "Financing order" means an order of the commission adopted in
accordance with this article approving an electrical corporation debt
repayment set-aside. A financing order shall include, without
limitation, a procedure for the expeditious approval by the
commission of periodic adjustments to the electrical corporation debt
repayment set-aside included therein to ensure timely recovery of
the qualified costs and the costs of issuing, servicing, refinancing,
and retiring the electricity market stabilization bonds approved by
the financing order.
(e) "Net undercollected costs" means the difference between the
cost of the energy and ancillary services provided by the electrical
corporation and the energy and ancillary services related revenues
received by the electrical corporation from retail customers for the
period from May 1, 2000, to January 18, 2001, inclusive.
(f) "Qualified costs" means, with respect to an electrical
corporation, all of the following:
(1) The net undercollected costs in the amount determined pursuant
to Section 399.22.
(2) Interest associated with the net undercollected costs prior to
the issuance of bonds as determined pursuant to Section 399.22.
(g) Notwithstanding any other provision of law an electrical
corporation may not recover from the proceeds of electric market
stabilization bonds more than two billion five hundred million
dollars ($2,500,000,000) of net undercollected costs, plus interest
determined under paragraph (2) of subdivision (f), in an amount of
not more than four hundred million dollars ($400,000,000).
(h) (1) "Stabilization property" means the property right created
pursuant to this article including, without limitation, the right,
title, and interest of an electrical corporation or its transferee:
(A) In and to the tariff established pursuant to a financing
order, as adjusted from time to time in accordance with the financing
order, and to all revenues, collections, claims, payments, moneys,
or proceeds of or arising from the tariff.
(B) To be paid the amount that is determined in a financing order
to be the amount that the electrical corporation or its transferee is
lawfully entitled to receive pursuant to the provisions of this
article, and the proceeds thereof.
(C) In and to all revenues, collections, claims, payments, moneys
, or proceeds of or arising from the tariffs or
constituting an electrical corporation debt repayment set-aside that
are the subject of a financing order.
(D) To the nonbypassable rates and other charges referred to in
subdivision (a) imposed pursuant to a financing order.
(E) In and to all rights to obtain adjustments to the tariff
pursuant to the terms of the financing order.
(2) "Stabilization property" shall constitute a current property
right notwithstanding the fact that the value of the property right
will depend on consumers using electricity or, in those instances
where consumers are customers of a particular electrical corporation,
the electrical corporation performing certain services.
399.21. (a) Electricity market stabilization bonds pursuant to
this article may only be issued by an electrical corporation serving
more than 4,000,000 customers which is also a gas corporation serving
fewer than 5,000 customers. To issue electricity market
stabilization bonds the electrical corporation shall submit to the
commission an application to issue electricity market stabilization
bonds in an amount necessary to recover qualified costs. No
electricity market stabilization bonds may be issued without
commission approval.
(b) The commission shall approve the application upon verification
of the qualified costs pursuant to Section 399.22, and a
certification by the Director of Finance that the electrical
corporation, and its holding company to the extent of the holding
company's obligations set forth in paragraphs (3) and (5), have
entered into a binding and enforceable agreement with
the state in which, at a minimum, the
electrical corporation and its holding company agree to all of the
following:
(1) Sell to retail end-use customers all electricity generated by
assets owned by the electrical corporation and at cost-based rates as
determined by the commission.
(2) Apply the proceeds of the electricity market stabilization
bonds, after payment of issuance costs, in accordance with the intent
of subdivision (c) paragraph (11) .
(3) Provide the Department of Water Resources or its designee with
the entire output from the Sunrise generating facility for a term of
not less than 10 years at cost-of-service based rates pursuant to a
contract previously executed between an affiliate of the holding
company and the Department of Water Resources or its designee.
(4) Convey electrical corporation owned land to a trust
pursuant to Article 17 (commencing with Section 399.30). Section 851
and Section 21080 of the Public Resources Code are not applicable to
the conveyance required under this paragraph.
(5) Dismiss, with prejudice, any and all legal claims the
electrical corporation and its holding company may have or relinquish
any legal claim the electrical corporation and its holding company
could have had against the State of California or any agency,
department or subdivision thereof, the federal Government, or the
commission for a taking or a violation of the filed rate doctrine
arising from or related to the facts asserted in the litigation; and
any claims challenging actions taken by the commission prior to the
date of the dismissal or release, or actions that the commission
failed to take prior to the dismissal or release, to implement
Assembly Bill 1 of the 2001-02 First Extraordinary Session (Ch. 4,
Stats. 2001-02 1st Ex. Sess.) and Assembly Bill 6 of the 2001-02
First Extraordinary Session (Ch. 2, Stats. 2001-02 1st Ex. Sess.).
(5)
(6) Resume procurement of the full net short needs and
electricity requirements for retail customers within the electrical
corporation's service area as soon as the company is rated at least
investment grade by one or more nationally recognized rating agencies
or January 1, 2003, whichever occurs sooner.
(6)
(7) Relinquish all claims against the state for
commandeering the electrical corporation's block forward market
contracts purchased through the California Power
Exchange.
(7)
(8) Agree to administer the power procurement contracts that
the Department of Water Resources may request the electrical
corporation to administer.
(8)
(9) (A) Provide the state with an irrevocable option for a
period of not less than five years to purchase the transmission
facilities owned by the electrical corporation.
(B) The option shall include all of the following:
(i) The purchase price shall be fair market value, not to
exceed two times net book value.
(ii) The state shall purchase any entitlements to use the
transmission facilities from any local publicly owned electric
utility that owns those entitlements and that is a participating
transmission owner in the Transmission Control Agreement among the
Independent System Operator and transmission owners.
(iii) Prior to acquiring any transmission facilities, the state
shall contract with the electrical corporation for the electrical
corporation to perform all operation and maintenance of the
transmission facilities. The contract shall be for a term of 20
years. The contract shall provide that the electrical corporation
recover its costs of providing operation and management services
along with a reasonable profit. The contract shall survive the sale,
transfer, exchange, or assignment of all or any portion of the
transmission facilities. The contract shall, consistent with the
provisions of this section, be designed to satisfy the requirements
of the United States Internal Revenue Service Revenue Procedure
97-13, Section 5.03(3).
(iv) Prior to end of the 20-year period of the operation and
maintenance contract and for each 20-year period thereafter, the
Department of Water Resources shall enter into a new contract to
provide operation and maintenance services. When selecting the
entity to provide those services, the Department of Water Resources
shall base its selection on all of the following factors:
(I) Operational efficiencies available from using the same entity
that provides operation and maintenance services for an
interconnected distributing utility.
(II) Prior experience providing operation and maintenance services
for transmission facilities in the topographic and climatological
conditions found in the state.
(III) Availability of a workforce with the existing skill and
experience to maintain a high degree of transmission system
reliability.
(C) For purposes of subparagraph (B), "operation and maintenance"
of transmission facilities means operation, maintenance, repair,
replacement, reconstruction, improvement, enlargement, expansion, or
extension of the transmission facilities.
(D) The state may exercise the option provided under this
paragraph only upon approval of that action by a subsequently enacted
statute.
(9)
(10) Confirm that the electrical corporation shall make
payments of all amounts owed by the electrical corporation for energy
and capacity delivered by any qualifying facility prior to March 27,
2001, together with accrued and unpaid interest thereon in
accordance with agreements regarding energy pricing and payment
issues entered into by and between the electrical corporation and the
qualifying facilities.
(10)
(11) Agree that any revenues derived from the issuance of
electricity market stabilization bonds for the amount authorized
pursuant to this section shall be used solely to pay
procurement-related debt and may not be expended for unpaid debt or
charges imposed on the electrical corporation by the Power Exchange,
the Independent System Operator, or by any suppliers of wholesale
electricity purchased on or before January 18, 2001, provided that
this provision shall not restrict payments to any qualifying facility
or bilateral contract counterparty. For purposes of this paragraph
"procurement-related debt" shall include, without limitation, the
electrical corporation's obligations and liabilities for the payment
of Power Exchange customer credits. For purposes of this paragraph
"Power Exchange customer credits" means all outstanding customer
credits, as defined in commission Decision 97-08-056 of August 1,
1997, and as modified by commission Decision 99-06-058 of June 10,
1999.
(11)
(12) Agree that for any year during which the electrical
corporation's authorized return on equity may not be reduced pursuant
to Section 454.11, the electrical corporation may not be permitted
to pay a distribution to shareholders of cash, liquid assets, or
property without consideration of substantially equal value, whether
by way of dividends or otherwise, unless all of the following
conditions are met:
(A) The electrical corporation is permitted to make this payment
in compliance with applicable law.
(B) The outstanding senior unsecured debt of the electrical
corporation is rated with a rating at least one rating above the
lowest investment grade rating by one or more nationally recognized
rating agencies.
(C) One or more nationally recognized rating agencies have
confirmed, after reviewing the dividends proposed to be paid for the
fiscal year in question, that the outstanding senior unsecured debt
of the electrical corporation will continue to be rated at least one
rating above the lowest investment grade rating after the payment of
the dividends.
(c) The agreement entered into pursuant to subdivision (b) may not
limit the electrical corporation's ability to do either of the
following:
(1) Pay dividends to holders of its preferred stock that is issued
and outstanding as of August 1, 2001.
(2) Make payments that implement its stand-alone tax treatment,
consistent with subdivision (d).
(d) It is the intent of the Legislature in authorizing the
issuance of a financing order pursuant to this article to continue
the current stand-alone tax treatment of the electrical corporation.
Accordingly, the electrical corporation shall agree, in a binding
and enforceable agreement pursuant to subdivision (b), to have the
electrical corporation apply the approximately four hundred million
dollars ($400,000,000) in payments due to the electrical corporation
from such stand-alone tax treatment for the 2000 taxable year,
consisting of the tax refund of the estimated quarterly tax payments
made by the electrical corporation for the 2000 taxable year and an
additional amount equal to the federal loss carryback the electrical
corporation would have had if it were not part of the holding company'
s consolidated group of taxpayers, to the reduction or elimination of
the past debt of the electrical corporation in order to restore the
creditworthiness of the electrical corporation by the earliest
feasible date.
(e) The binding and enforceable agreement in subdivision (b) shall
be enforceable against the electrical corporation by the commission
in proceedings.
(f) If the restriction on the electrical corporation's ability to
pay dividends pursuant to paragraph (12) of subdivision (b) results
in the equity component of the electrical corporation's capital
structure temporarily to exceed that authorized by the commission,
the commission shall authorize the electrical corporation to recover
a reasonable return on that portion of the retained equity that the
commission finds is in excess of that needed to achieve the intended
purposes of paragraph (12) of subdivision (b).
399.22. This section shall apply to all electrical corporations
subject to Section 399.21.
(a) The commission and the State Auditor shall verify for an
electrical corporation the amount of the qualified costs and other
amounts permitted to be recovered through an electrical corporation
debt repayment set-aside not later than 60 days from the date of
submission of the amount to be verified. To the extent that the
verification and any adjustments are not completed by that date, the
qualified costs shall be the amount submitted by the electrical
corporation. The commission review may only be for the purpose of
verifying recorded amounts and making any adjustments resulting from
that verification. Notwithstanding any other provision of law,
qualified costs and other amounts permitted to be recovered through
an electrical corporation debt repayment set-aside shall be
recoverable in accordance with this article.
(b) (1) Notwithstanding any other provision of law, the commission
shall establish, not later than 60 days from the date of the filing
of an application of an electrical corporation, an electrical
corporation debt repayment set-aside designed to enable the
electrical corporation to recover the qualified costs described in
the application over an amortization period to be determined
consistent with this article.
(2) The electrical corporation debt repayment set-aside shall be
established by the adoption of a financing order as set forth in this
section. The commission shall establish an electrical corporation
debt repayment set-aside sufficient to enable the electrical
corporation to recover the full amount of its qualified costs set
forth in the financing order.
(3) Customers, as specified in Section 399.25, shall continue to
pay the electrical corporation debt repayment set-aside in accordance
with the financing order until the electrical corporation has
recovered the qualified costs set forth in the financing order and,
if electricity market stabilization bonds have been issued in
connection therewith, until those bonds are paid in full by the
financing entity. Notwithstanding any other provision of law, rates,
and charges included within the electrical corporation debt
repayment set-aside shall constitute disconnectible charges, the
nonpayment of which by a customer, in whole or in part, entitles the
electrical corporation to disconnect electric service under
procedures set forth in commission tariffs.
(c) The commission shall issue a financing order in accordance
with this article to facilitate the provision, recovery, financing,
or refinancing of qualified costs. A financing order shall be
adopted only upon the application of an electrical corporation and
shall become effective in accordance with its terms only after the
electrical corporation files with the commission the electrical
corporation's written notice of intent to comply with all terms and
conditions of the financing order. Notwithstanding Section 1756,
Section 1759, or any other provision of law, no court, except the
California Supreme Court, has jurisdiction to review, reverse,
correct, or annul any financing order, or to suspend or delay the
execution or operations thereof, or to enjoin, restrain, or interfere
with the commission in the performance of its official duties in
respect thereof, as provided by law and the rules of the court.
(d) Notwithstanding Section 455.5, Section 1708, or any other
provision of law, except as otherwise provided in this subdivision,
the financing orders and the electrical corporation debt repayment
set-aside shall, upon the effectiveness of the financing orders, be
irrevocable and the commission may not have authority either by
rescinding, altering, or amending the financing order or otherwise,
to revalue or revise for ratemaking purposes the qualified costs, or
the costs of providing, recovering, financing, or refinancing the
qualified costs, determine that the electrical corporation debt
repayment set-aside is unjust or unreasonable, or in any way reduce
or impair the value of stabilization property either directly or
indirectly by taking the electrical corporation debt repayment
set-aside into account when setting other rates for the electrical
corporation; nor shall the amount of revenues arising with respect
thereto be subject to reduction, impairment, postponement, or
termination. Except as otherwise provided in this paragraph, the
state does hereby pledge and agree with the electrical corporation,
the owners of stabilization property, and holders of electricity
market stabilization bonds that the state shall neither limit nor
alter the electrical corporation debt repayment set-aside,
stabilization property, financing orders, and all rights thereunder
until the electrical corporation has recovered all qualified costs,
and if electricity market stabilization bonds have been issued in
connection therewith, obligations under those bonds, together with
the interest thereon, are fully met and discharged, provided that
nothing contained in this section shall preclude the limitation or
alteration of these matters if adequate provision is made by law for
the protection of the owners and holders. That pledge shall be
deemed to be part of a financing order upon adoption thereof by the
commission. Notwithstanding any other provision of this section, the
commission shall approve the adjustments to the electrical
corporation debt repayment set-aside as it determines to be necessary
to ensure timely recovery of all qualified costs that are the
subject of the pertinent financing order, and the cost of capital
associated with the provision, recovery, financing, or refinancing
thereof, including the cost of issuing, servicing, and retiring any
electricity market stabilization bonds issued to finance qualified
costs contemplated by the financing order.
(e) The commission shall establish procedures for the expeditious
processing of applications for financing orders, including the
approval or disapproval thereof not later than 60 days from the date
of the electrical corporation's submittal of an application. The
commission shall provide in any financing order for a procedure for
the expeditious approval by the commission of periodic adjustments to
the electric corporation debt repayment set-aside that is the
subject of the pertinent financing order, as required by subdivision
(d). The procedure shall require the commission to determine whether
the adjustments are required on each anniversary of the issuance of
the financing order, and at the additional intervals as may be
provided for in the financing order, and for the adjustments, if
required, to be approved within 90 days of each anniversary of the
issuance of the financing order, or of each additional interval
provided for in the financing order.
(f) The electrical corporation debt repayment set-aside shall
constitute stabilization property when, and to the extent that, a
financing order authorizing the electrical corporation debt repayment
set-aside has become effective in accordance with this article, and
the stabilization property shall thereafter continuously exist as
property for all purposes with all of the rights and privileges of
this article for the period and to the extent provided in the
financing order, but in any event until (1) the electrical
corporation has recovered the qualified costs and (2) the electricity
market stabilization bonds are paid in full, including all
principal, interest, premium, costs, and arrearages thereon.
(g) Sections 843, 844, and 845 shall apply with respect to this
article, as if those provisions were set forth in this article,
subject to the following:
(1) References in Sections 843, 844, and 845 to a "financing
entity" shall mean a financing entity as defined in this article.
(2) References in Sections 843, 844, and 845 to a "financing order"
shall mean a financing order as defined in this article.
(3) References in Sections 843, 844, and 845 to "fixed transition
amounts" shall mean an electric corporation debt repayment set-aside
as defined in this article.
(4) References in Sections 843, 844, and 845 to "rate reduction
bonds" shall mean electricity market stabilization bonds as defined
in this article.
(5) References in Sections 843, 844, and 845 to "transition costs"
shall mean qualified costs as defined in this article.
(6) References in Sections 843, 844, and 845 to "transition
property" shall mean stabilization property as defined in this
article.
399.23. With respect to an electrical corporation debt repayment
set-aside relating to financing orders providing for recovery of
qualified costs, the obligation of the electrical corporation to
collect and remit the electrical corporation debt repayment set-aside
consistent with a financing order shall continue irrespective of
whether that electrical corporation is providing electric power or
other services to the retail customers obligated to pay the
electrical corporation repayment set-aside.
399.24. The authority of the commission to issue financing orders
providing for recovery of qualified costs shall expire on December
15, 2006. The expiration of the authority shall have no effect upon
financing orders adopted by the commission pursuant to this article
or any stabilization property arising therefrom, or upon the charges
authorized to be levied thereunder, or the rights, interests, and
obligations of the electrical corporation or a financing entity or
holders of electricity market stabilization bonds pursuant to the
financing order, or the authority of the commission to monitor,
supervise, or take further action with respect to the order in
accordance with the terms of this article and of the order.
399.25. The electrical corporation debt repayment set-aside
established by order of the commission pursuant to this article shall
be paid exclusively by customers in the electrical corporation's
service territory with a maximum peak demand on the electrical
corporation's system exceeding 20 kilowatts, based on the usage of
the prior year. For customer load served by customer generation on
or before January 17, 2001, the customer's maximum peak demand for
purposes of this section shall not be based on demand under the
electrical corporation's tariff governing standby service or any
successor tariff.
399.26. The commission may not establish an electrical
corporation debt repayment set-aside for the purpose of providing for
the recovery of qualified costs or issue a financing order with
regard to an electrical corporation, unless both of the following
conditions have been met:
(a) The electrical corporation has entered into a binding and
enforceable agreement under subdivision (b) of Section 399.21, and
the Director of Finance has advised the commission that the
electrical corporation has entered into the definitive agreements
which by the terms of that binding and enforceable agreement are
required to be entered into as of the time of the taking of that
action.
(b) The electrical corporation has consented to an order of the
commission providing for cost-of-service based rates to apply to
generation assets owned by the electrical corporation to the extent
provided in the applicable agreement and for the period provided in
the agreement and obligating the electrical corporation not to apply
to the commission for approval to sell those generation assets for
the period provided in the agreement.
399.27. (a) Except as provided in a binding and enforceable
agreement under subdivision (b) of Section 399.21, financing entities
may issue electricity market stabilization bonds upon approval by
the commission in the pertinent financing orders. The terms and
conditions of those bonds shall be approved by the Director of
Finance in accordance with the agreement. That approval shall be
conclusive and binding and is not subject to review or contest except
in accordance with the agreement. In connection with that approval,
the Director of Finance may engage those independent consultants as
he or she determines to be appropriate. In order to permit the
Director of Finance to contract for those purposes, the contract or
agreement with any independent consultant may include provision for
the indemnification of parties thereto, however; that contract or
agreement may not include provisions for the indemnification,
including indemnification for any costs of defense, of any party for
acts or omissions involving gross negligence, recklessness, or
willful misconduct by that party or by the party's employees, agents,
or contractors. The bonds shall be nonrecourse to the credit or any
assets of the electrical corporation, other than the stabilization
property as specified in the pertinent financing order.
(b) Electrical corporations may sell and assign all or portions of
their interest in stabilization property to an affiliate.
Electrical corporations or their affiliates may sell or assign their
interests to one or more financing entities that make that property
the basis for issuance of the bonds to the extent approved in the
pertinent financing orders. Electrical corporations, their
affiliates, or financing entities may pledge or grant a security
interest in stabilization property as collateral, directly or
indirectly, for the bonds to the extent approved in the pertinent
financing orders providing for a security interest in the
stabilization property. In addition stabilization property may be
sold or assigned by (1) the financing entity or a trustee for the
holders of the bonds in connection with the exercise of remedies upon
a default, or (2) any person acquiring the stabilization property
after a sale or assignment pursuant to this subdivision.
(c) To the extent that any interest in stabilization property is
so sold or assigned, or is so pledged as collateral or a security
interest granted therein, the commission shall authorize the
electrical corporation to contract with the financing entity that it
will continue to operate its system to provide service to its
customers, will collect amounts in respect of the corporation debt
repayment set-aside for the benefit and account of the financing
entity, and will account for and remit these amounts to or for the
account of the financing entity. Contracting with the financing
entity in accordance with that authorization shall not impair or
negate the characterization of the sale, assignment, or pledge, or
grant of security interests as an absolute transfer, a true sale, or
security interest, as applicable. With respect to corporation debt
repayment set-aside relating to financing orders providing for
recovery of qualified costs, the obligation of the electrical
corporation to collect and remit the corporation debt repayment
set-aside consistent with a financing order shall continue
irrespective of whether that electrical corporation is providing
electric power or other services to the retail customers obligated to
pay those corporation debt repayment set-aside.
(d) Notwithstanding Section 1708 or any other provision of law,
any requirement under this article or a financing order that the
commission take action with respect to the subject matter of a
financing order shall be binding upon the commission, as it may be
constituted from time to time, and any successor agency exercising
functions similar to the commission and the commission shall have no
authority to rescind, alter, or amend that requirement in a financing
order. The approval by the commission in a financing order of the
issuance by an electrical corporation or a financing entity of the
bonds shall include the approvals, if any, as may be required by
Article 5 (commencing with Section 816) of Chapter 4, and Section
701.5. Nothing in Section 701.5 shall be construed to prohibit the
issuance of the bonds upon the terms and conditions as may be
approved by the commission in a financing order. Section 851 shall
not be applicable to the transfer or pledge of, or grant of a
security interest in, stabilization property, the issuance of the
bonds, or related transactions approved in a financing order.
399.28. Any sale, assignment, or other disposition of the utility
assets, including the grant of easements and conveyances in fee of
certain lands for conservation purposes, of an electrical corporation
to the Department of Water Resources or any other authorized state
agency or authority pursuant to a binding and enforceable agreement,
as defined in Section 399.21, and any implementing agreements
described in that agreement, are not subject to the commission's
approval.
SEC. 12. Article 17 (commencing with Section 399.30) is added
to Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code,
to read:
Article 17. Conservation Lands
399.30. (a) An electrical corporation authorized to recover
qualified costs pursuant to Article 16 (commencing with Section
399.20) shall transfer to a trust specified in subdivision (b) its
complete interest, except for an easement reserving the rights for
existing utility facilities, as of the effective date of this
section, in the lands identified in this subdivision. Lands to be
transferred, if not identified by legal description or the assessor's
parcel number, shall contain sufficient information regarding the
nature, general location, scope, and extent of the real property,
fixtures, improvements, or facilities that would place third parties
on inquiry notice of the right, title, or interest claimed by the
state or its subdivisions or creations, by reason of the deed,
assignment, or other instrument of conveyance. The lands identified
in this subdivision shall be conveyed and held by the trust for a
determination pursuant to this section, except that conservation
easements shall be transferred on lands that are subject to licensure
by the Federal Energy Regulatory Commission and that are producing
electricity as of the effective date of the act adding this section,
and all other interests in watershed, inland, forest, desert, and
coastal land or lands of potential conservation value owned by the
electrical corporation on the effective date of the act adding this
section shall be conveyed as they are held by the electrical
corporation:
(1) Fresno and Madera Counties: Jackass Meadows containing
approximately 280 acres, Big Creek 3 and Big Creek 4 together
consisting of approximately 282 acres, 14,425 acres of Shaver Lake,
but not to include the area known as the 2,500 acre Edison Specific
Plan as approved in the county general plan, and Dinkey Creek,
consisting of approximately 5,360 acres.
(2) Various properties in the eastern Sierra Nevada consisting of
approximately 825 acres and known generically as the Lee Vining HQ
property, Lundy Reservoir, Bishop Creek Canyon, Bishop Creek
Powerhouses 3, 5, and 6, Owens Lake, and Rush Creek Powerhouse.
(b) The state, acting through the Secretary of the Resources
Agency, shall establish a trust to hold the interests in land
conveyed by the electrical corporation. The state shall convey all
of its interest in approximately 160 acres lying between Shaver Lake'
s Dorabella Cove, on the east, the United States Forest Service's
Camp Dorabella on the east and south, other Southern California
Edison Company property on the south, Highway 168 on the west, and
Camp Edison on the north, for California State University Fresno's
proposed Sierra Center for Education and Research. For the remaining
land, the state shall seek the assistance of qualified nonprofit
organizations referenced in Section 815.3 of the Civil Code to
establish and operate the trust. The trust shall hold the interests
in land conveyed pursuant to subdivision (a) by the electrical
corporation.
(c) The trust, acting at the direction of the Secretary of the
Resources Agency, shall undertake a review process of the lands that
will consider the retention of fee title or conservation easement,
the use or uses of the lands, including the conservation, natural
resource, public recreation, existing and planned water use, and
public trust values of the lands, and including the possible
disposition of the lands or interests in land conveyed to the state.
The review process shall include formation of an advisory council,
chaired by the secretary or his or her designee, that consists
equally of representatives of state government, each local government
with jurisdiction over the transferred lands, end user water
authority interests, local commercial interests, and local
conservation interests. The United States Bureau of Reclamation
shall be invited to participate as a member of the advisory council.
State government representatives shall be appointed from among the
Resources Agency, the Wildlife Conservation Board, the State Lands
Commission, the Department of Parks and Recreation, the Department of
Fish and Game, and the Coastal Conservancy. Ex officio members may
be appointed at the discretion of the secretary. The review process
should include a series of public meetings in communities near the
lands identified in subdivision (a) and in areas potentially affected
by land use decisions.
(d) The management plan developed by the state for lands
transferred pursuant to this section shall be consistent with any
county or city general plans, zoning, or such other land use
management, regulatory, or permitting requirements and procedures.
(e) The purpose of the public review process is to ensure the
permanent conservation of these lands for their public interest
value, including fish, wildlife, and habitat; compatible human
recreation; protection of open space and aesthetic values;
preservation of historic and cultural resources; and protection of
existing and planned water use, including, water quality and
watershed functions. An additional objective is to increase
management efficiency by consolidating mixed public and electrical
corporation lands under public ownership.
(f) Notwithstanding subdivision (e), legal nonutility uses of the
property existing as of the time the easement or other real property
interest is conveyed shall be permitted to continue. If otherwise
consistent with existing law, utility uses, including the operation
and maintenance, repair, replacement, and installation of public
utility infrastructure, including, but not limited to, water and
sewer pipelines, and electric and telecommunication lines, existing
as of the time the easement or other real property interest is
conveyed, shall be permitted to continue. If otherwise consistent
with existing law, expansion of hydroelectric utility facilities
located on the property as of the time of conveyance to the state
shall be permitted, subject to the approval of the state and federal
agencies having jurisdiction over any expansion, and subject to
certification by the secretary that public trust values will obtain a
net benefit by that expansion.
(g) Notwithstanding subdivision (e), timber harvesting activities
for which permits have been obtained or for which renewed permits are
eligible to be obtained as of the effective date of the act that
added this section shall be permitted on the conveyed lands, subject
to modification based on management and disposition plans approved by
the state. Applications for new timber harvest plans subsequent to
that effective date shall be granted only upon certification by the
Department of Forestry and Fire Protection and approval by the
Department of Fish and Game and the appropriate regional water
control board that the activities are accompanied by a mitigation
plan that results in a net benefit to public trust resources.
(h) The operation and maintenance, repair, replacement, and
installation of public utility infrastructure, including, but not
limited to, water and sewer pipelines, and electric and
telecommunications lines for nonutility and other uses shall be
allowed, subject to the extent those activities are permitted by the
terms of the management and disposition plans approved by the state.
(i) Income derived from the conveyed lands from activities
exclusive of hydroelectric generation that were authorized by the
electrical corporation prior to the effective date of the act that
added this section shall remain assets of the electrical corporation
or its designees. Income derived from these lands subsequent to that
effective date exclusive of hydroelectric generation shall remain
the property of the state and shall be used to defray expenses
associated with these property transfers.
(j) The Secretary of the Resources Agency shall certify that lands
found to possess significant public values shall be managed in
perpetuity by the state to maintain or enhance those values. The
public review process may not recommend actions that are inconsistent
with these objectives. The state shall recommend actions that are
consistent with the current land management practices that have been
implemented by the electrical corporation. The state has the right
to, and may, impose conditions to protect open space, watershed,
existing and planned downstream water uses, and public trust
resources for all lands that are eventually transferred or otherwise
disposed of by the state following the public review process.
(k) The state may transfer its title or possessory interests that
ensure management in perpetuity for conservation of those public
trust values in those lands to the electrical corporation, a local
conservancy, state, federal, or local governmental agencies, special
districts, Indian tribes or tribal entities, or nonprofit
organizations qualified under Section 170(h) of the Internal Revenue
Code and Section 815.3 of the Civil Code, that are competent and
appropriate to own or manage the lands as required by this section,
along with sale of remaining possessory interest to a compatible
third party.
(l) New or modified economic uses of lands found to possess
significant public values may occur if compatible with the primary
purpose of protection or enhancement of existing and planned water
uses, and existing environmental and recreational uses.
(m) Lands not found to possess significant public values may be
used for land exchanges to protect other lands that possess
significant public values or may be disposed of to generate income to
acquire those other lands.
(n) On January 1, 2003, the advisory committee shall make
recommendations to the Legislature and the Secretary of the Resources
Agency about the final management or disposition recommendations
concerning the lands identified in subdivision (a). Pursuant to
directives of the secretary, and with the same public process
established in this section, periodic reviews of the management of
these lands or interests in these lands that are transferred to the
state by an electrical corporation, are authorized in order to assess
the stewardship of public trust resources.
(o) Existing public access on these lands shall be maintained
during the public review process unless a different arrangement is
agreed upon that is separately negotiated by and between the electric
corporation and the state.
(p) Notwithstanding any other provision of law, the electrical
corporation shall retain legal responsibility for all environmental
liabilities arising by operation of law based on its prior ownership
and interest in the lands conveyed to the state. The electrical
corporation shall indemnify and hold harmless the state or the trust
or the state's successors and assigns against liability arising out
of the electrical corporation's use or ownership prior to the
transfer, whether that liability is based on ownership in fee or
another lesser interest in the conveyed lands.
(q) The Secretary of the Resources Agency alone shall have the
authority to transfer, encumber, or dispose of lands or interests in
lands conveyed to the state by the electrical corporation, except
that the secretary may designate a state agency or department with
expertise in land ownership and conveyance transactions to be his or
her designee.
(r) With respect to any lands transferred to a trust pursuant to
this article, the state shall enter into a long-term operations and
maintenance contract with the electrical corporation for purposes of
managing those properties upon which leases, licenses, or other
developments have occurred or which have been permitted by the county
or the electrical corporation as of the effective date of the act
adding this section. The operations and maintenance contract shall
set forth the terms and conditions by which the lands shall be
managed pursuant to the conservation easements and management plans
developed by the state. Management responsibilities shall include,
but not be limited to, all of the following:
(1) Operating and maintaining campgrounds, concessions, and other
existing developments that the electrical corporation operated and
maintained as of the effective date of the transfer.
(2) Managing existing structures and developments on the lands,
consistent with the terms and conditions of the leases or other
agreements applicable to the lands, at the time of transfer to the
state.
(3) Finalizing a recordation process as described in subdivision
(t).
(s) With respect to any lands transferred to a trust pursuant to
this article, the operations and maintenance contract between the
state and the electrical corporation shall provide that the
electrical corporation shall make payments to the county in lieu of
property taxes as though the electrical corporation continued to own
all of the lands in fee simple. The State Board of Equalization
shall continue to assess the lands and determine the amount of the
payment owed to the county as though the electrical corporation
continued to own the lands in fee simple. The electrical corporation
shall be authorized to recover any payments made to the county from
the ratepayers. Nothing in this article may be interpreted to modify
or change the franchise fees, or the surcharges that replaced
franchise fees, imposed and collected by municipalities under
Division 3 (commencing with Section 6001).
(t) In coordination with the electrical corporation and the local
county recorder, the state shall offer to all lease holders or other
holders of land use rights, an opportunity to file with the state any
leases, authorization, approvals, licenses, or other documented
rights to use specific lands not yet used as of the effective date of
the transfer of the electrical corporation's lands to the state or a
trust pursuant to this article. Those rights shall be continued by
the state for the term of the rights as set forth in any
documentation. The state shall continue the timeframe for the
filings for a period of one year after notification by the state.
399.31. Notwithstanding operational changes necessary to comply
with orders of state or federal regulatory agencies, any operational
changes of the electrical corporation's hydroelectric facilities that
modify reservoir storage levels from historical patterns shall
comply with existing state water law regarding injury to downstream
legal users of water.
SEC. 13. Section 454.10 is added to the Public Utilities
Code, to read:
454.10. (a) In order to assure that the service provided by
electrical corporations is adequate, the commission may require each
electrical corporation that provides distribution service to make
direct investments in electric generation facilities whose output is
dedicated to serve the customers connected to its distribution grid.
(b) After a hearing, the commission shall approve rates sufficient
to enable the electrical corporation to recover its reasonable costs
of operation, its reasonable investment in the electric generation
facilities and a reasonable return on its investment, in accordance
with Section 451.
(c) An electrical corporation may meet the obligation described in
this section by entering into projects for electric generation
facilities jointly with the California Consumer Power and
Conservation Financing Authority.
(d) The commission may conduct proceedings, enter orders, and
undertake actions it considers necessary or appropriate to carry out
the provisions of this section.
(e) This section is declaratory of existing law.
SEC. 13.
SEC. 14. Section 454.11 is added to the Public Utilities
Code, to read:
454.11. In the case of an electrical corporation serving more
than 4,000,000 customers, which is also a gas corporation serving
fewer than 5,000 customers, and that has entered into a binding and
enforceable agreement pursuant to subdivision (b) of Section 399.21,
the commission may not reduce, prior to January 1, 2006, the
authorized rate of return on equity of the electrical corporation
below the return authorized in the most recent decision or decisions
of the commission prior to the effective date of the act adding this
section to the Public Utilities Code, or modify the capital structure
upon which that rate of return is established. Electricity Market
Stabilization Bonds, as defined under Section 399.20, may not be
considered indebtedness for the purposes of determining an electrical
corporation's authorized capital structure. Neither the electrical
corporation's compliance with the requirements of any provision of
the act that added this section in the 2001-02 Second Extraordinary
Session nor the binding and enforceable agreement entered into by the
electrical corporation pursuant to subdivision (b) of Section
399.21, shall be found to constitute noncompliance with the
electrical corporation's authorized capital structure.
SEC. 14.
SEC. 15. Section 1731 of the Public Utilities Code is
amended to read:
1731. (a) The commission shall set an effective date when issuing
an order or decision. The commission may set the effective date of
an order or decision prior to the date of issuance of the order or
decision.
(b) After any order or decision has been made by the commission,
any party to the action or proceeding, or any stockholder or
bondholder or other party pecuniarily interested in the public
utility affected, may apply for a rehearing in respect to any matters
determined in the action or proceeding and specified in the
application for rehearing. The commission may grant and hold a
rehearing on those matters, if in its judgment sufficient reason is
made to appear. No cause of action arising out of any order or
decision of the commission shall accrue in any court to any
corporation or person unless the corporation or person has filed an
application to the commission for a rehearing within 10 days after
the date of issuance or within 10 days after the date of issuance in
the case of an order issued pursuant to either Article 5 (commencing
with Section 816) or Article 6 (commencing with Section 851) of
Chapter 4 relating to security transactions and the transfer or
encumbrance of utility property, or a financing order issued in
connection with qualified costs pursuant to Article 16 (commencing
with Section 399.20) of Chapter 2.3. For purposes of this article,
"date of issuance" means the date when the commission mails the order
or decision to the parties to the action or proceeding.
(c) No cause of action arising out of any order or decision of the
commission construing, applying, or implementing the provisions of
Chapter 4 of the Statutes of the 2001-02 First Extraordinary Session
shall accrue in any court to any corporation or person unless the
corporation or person has filed an application to the commission for
a rehearing within in 10 days after the date of issuance of the order
or decision. The commission shall issue its decision and order an
rehearing within 20 days after the filing of that application.
SEC. 15.
SEC. 16. Section 9601 of the Public Utilities Code is
amended to read:
9601. (a) Except with respect to supply options of the nature
specified in Section 218, with the exception of paragraph (3) of
subdivision (b) of that section, as it existed on December 20, 1995,
no person, corporation, electrical corporation, or local publicly
owned electric utility or other governmental entity other than a
retail customer's existing electric service provider as of December
20, 1995, shall provide partial or full electric service to a retail
customer of a local publicly owned electric utility unless the
customer first confirms in writing an obligation to pay, through
tariff or otherwise, to the utility currently providing electric
service, a nonbypassable generation-related severance fee or
transition charge established by the regulatory body for that
utility. The severance fee or transition charge shall be paid
directly to the local publicly owned utility providing electricity
service in the service area in which the consumer is located.
(b) Except as provided in subdivision (a) of Section 374, no local
publicly owned electric utility or other governmental entity shall
provide partial or full electric service to a retail customer of an
electrical corporation unless the customer of that electrical
corporation first confirms in writing an obligation to pay, through
tariff or otherwise, to the electrical corporation currently
providing electric service, a nonbypassable generation-related
transition charge established by the regulatory body for that
electrical corporation, and any electrical corporation debt repayment
set-aside established for that electrical corporation for recovery
of qualified costs pursuant to Article 16 (commencing with Section
399.20) of Chapter 2.3 of Part 1 of Division 1. The charge shall be
paid directly to the electrical corporation providing electricity in
the service area in which the consumer is located.
(c) No local publicly owned electric utility or electrical
corporation shall sell electric power to the retail customers of
another local publicly owned electric utility or electrical
corporation unless the first utility has agreed to let the second
utility make sales of electric power to the retail customers of the
first utility.
SEC. 16.
SEC. 17. Section 80002 of the Water Code is amended to read:
80002. Nothing in this division may be construed to reduce or
modify any electrical corporation's obligation to serve, except to
the extent set forth in a definitive agreement implementing the
procurement obligations of the department as contemplated by a
binding and enforceable agreement, as defined in subdivision (b) of
Section 399.21 of the Public Utilities Code. The department may
enter into those agreements with an electrical corporation and other
parties in furtherance of the foregoing, as it determines to be
appropriate. Nothing in this section may be construed to obligate
the department for any procurement cost obligations of any electrical
corporation that may have existed as of February 1, 2001.
SEC. 17.
SEC. 18. Section 80010 of the Water Code is amended to read:
80010. As used in this division, unless the context otherwise
requires, the following terms have the following meanings:
(a) "Bonds" means bonds, notes, or other evidences of indebtedness
issued solely for the purposes of paying the cost of electric power
and transmission, scheduling, and other related expenses incurred by
the department on and after the effective date of this division, or
to reimburse expenditures from the fund for those purposes; repaying
to the General Fund any advances made to the department from
appropriations made to the fund pursuant hereto or hereafter for
purposes of this division, any advances made to the department from
the Water Resources Electric Power Fund, and General Fund moneys
expended by the department pursuant to the Governor's Emergency
Proclamation dated January 17, 2001; establishing or maintaining
reserves in connection with the bonds; costs of issuance of bonds or
incidental to their payment or security; capitalized interest; or to
renew or refund any bonds.
(b) "Commission" means the Public Utilities Commission.
(c) "Department of Water Resources costs" means all costs incurred
by the Department of Water Resources, including, but not limited to,
debt service or other costs associated with bonds or notes issued to
finance those costs and ongoing costs incurred in the procurement of
power under contracts executed by the Department of Water Resources.
(d) "Department of Water Resources financing costs" means all
costs, including principal and interest, associated with the issuance
and repayment of all bonds and notes issued pursuant to this
division.
(e) "Electrical corporation" has the same meaning as that term is
defined in Section 218 of the Public Utilities Code.
(f) "Fund" means the Department of Water Resources Electric Power
Fund established by Section 80200.
(g) "Local publicly owned electric utility" includes the entities
defined in subdivision (d) of Section 9604 of the Public Utilities
Code and publicly owned utilities that provide electricity.
(h) "Power" means electric power and energy, including, but not
limited to, capacity and output, or any of them.
(i) "Public utility" has the same meaning as that term is defined
in Section 216 of the Public Utilities Code.
SEC. 18.
SEC. 19. Section 80110 of the Water Code is amended to read:
80110. (a) The department shall retain title to all power sold by
it to the retail end use customers. The department shall be entitled
to recover, as a revenue requirement, amounts and at the times
necessary to enable it to comply with Section 80134, and shall advise
the commission as the department determines to be appropriate. Such
revenue requirements may also include any advances made to the
department hereunder or hereafter for purposes of this division, or
from the Department of Water Resources Electric Power Fund, and
General Fund moneys expended by the department pursuant to the
Governor's Emergency Proclamation dated January 17, 2001. For
purposes of this division and except as otherwise provided in this
section, the Public Utility Commission's authority as set forth in
Section 451 of the Public Utilities Code shall apply, except any just
and reasonable review under Section 451 shall be conducted and
determined by the department. The commission may enter into an
agreement with the department with respect to charges under Section
451 for purposes of this division, and that agreement shall have the
force and effect of a financing order adopted in accordance with
Article 16 (commencing with Section 399.20) of Chapter 2.3 of Part 1
of Division 1 of the Public Utilities Code, as determined by the
commission. In no case shall the commission increase the electricity
charges in effect on the date that the act that adds this section
becomes effective for residential customers for existing baseline
quantities or usage by those customers of up to 130 percent of
existing baseline quantities, until such time as the department has
recovered the costs of power it has procured for the electrical
corporation's retail end use customers as provided in this division.
The department shall have the same rights with respect to the
payment by retail end use customers for power sold by the department
as do providers of power to such customers.
(b) Notwithstanding any provision of law, all rates, charges, and
fees established by the Public Utilities Commission to recover
Department of Water Resources costs pursuant to this section or
Section 365.2 of the Public Utilities Code shall be nonbypassable,
except to the extent permitted by Sections 365.2 and 365.3 of the
Public Utilities Code. The rates, charges, and fees shall be
disconnectible to the same extent as rates, charges, and fees payable
to an electrical corporation. Notwithstanding any other provision
of law, in allocating Department of Water Resources financing costs
to customer rates for department power purchased pursuant to this
division the commission shall allocate the Department of Water
Resources financing costs at a uniform rate per kilowatthour of
department-procured electricity consumed to all bundled service
customers of an electrical corporation, including all customers that
were receiving bundled service from the electrical corporation on or
after January 17, 2001. Nothing in this section shall be deemed to
affect the continuing validity of any rates, charges, or fees
established by the commission and applicable prior to the effective
date of the amendment to this section that added this subdivision.
SEC. 19.
SEC. 20. Notwithstanding any provision of law, the Director
of the Department of Water Resources, acting on behalf of the state,
may execute and deliver an agreement consistent with Section 399.21
of the Public Utilities Code with any electrical corporation.
SEC. 20.
SEC. 21. If any part of the provisions of this act, or the
application thereof to any person or circumstance, is held invalid,
the remainder of this act, including the application of such part or
provision to other persons or circumstances, shall not be affected
thereby, and this act shall otherwise continue in full force and
effect and shall otherwise be fully operative. To this end, the
provisions of this act, and each of them, are hereby declared to be
severable.
SEC. 21.
SEC. 22. It is the intent of the Legislature to accomplish
all of the following:
(a) Hold harmless local agencies that would receive revenues prior
to its acquisition by the state from local property taxation,
pursuant to Sections 100 and 100.01 of the Revenue and Taxation Code,
of a transmission facility that constitutes real property and that
is acquired by the state department or agency from an electrical
corporation.
(b) Decrease the revenue transfer pursuant to Section 97.3 of the
Revenue and Taxation Code in amounts equal to the property taxes
those local agencies would have received pursuant to Sections 100 and
Sections 100.01 of the Revenue and Taxation Code absent the transfer
of ownership to the state.
(c) Make reductions for the local agency, as defined by
subdivision (a) of Section 95 of the Revenue and Taxation Code, in
which the transmission facility is located in amounts not greater
than the property tax revenues that would have been received by the
local agency if the property had continued to be owned by the
electrical corporation.
SEC. 22.
SEC. 23. No reimbursement is required by this act pursuant
to Section 6 of Article XIIIB of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIIIB of the California Constitution.