Bill Text: CA SB695 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Energy: rates.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 337, Statutes of 2009. [SB695 Detail]

Download: California-2009-SB695-Amended.html

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BILL NUMBER: SB 695	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 13, 2009

INTRODUCED BY   Senator  Wright   Kehoe 

                        FEBRUARY 27, 2009

   An act to amend Sections 327,  330, 365,  382,
and 739.1 of, and to add Sections  739.9  
365.1, 739.9,  and 745 to, the Public Utilities Code, and to
amend Section 80110 of the Water Code, relating to energy, and
declaring the urgency thereof, to take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 695, as amended,  Wright   Kehoe  .
Electricity: rates.
   (1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations, as defined. Existing law authorizes the commission to
fix the rates and charges for every public utility, and requires that
those rates and charges be just and reasonable.
   This bill would prohibit the commission from requiring or
permitting an electrical corporation to employ  dynamic
  mandatory or default time-variant  pricing for
residential customers  prior to January 1, 2016  , but would
authorize the commission to authorize an electrical corporation to
offer residential customers the option of receiving service pursuant
to  dynamic   time-variant  pricing 
and to participate in othe   r demand response programs
 . The bill would  , beginning January 1, 2016,
authorize the commission to authorize an electrical corporation to
employ default dynamic   require the commission to only
approve an electrical corporation's use of time-variant  pricing
for residential customers  , if the customer has the option
of receiving service pursuant to a rate schedule that is not based
upon dynamic pricing and  if  those  residential
customers  that exercise   have  the option
to not receive service pursuant to  the dynamic 
 time-variant  pricing  and  incur no additional
costs as a result of the exercise of that option.
   (2) Existing law requires the commission to establish a program of
assistance to low-income electric and gas customers, referred to as
the California Alternate Rates for Energy or CARE program, and
prohibits the cost to be borne solely by any single class of
customer.
   This bill would require the commission to establish the CARE
program to provide assistance to low-income electric and gas
customers with annual household incomes at or below 200% of the
federal poverty guideline levels, and require that the cost of the
program, with respect to electrical corporations, be recovered on an
equal cent-per-kilowatthour basis from all classes of customers that
were subject to the surcharge that funded the CARE program on January
1, 2008.
   (3) Existing law relative to electrical restructuring requires
that the electrical corporations and gas corporations that
participate in the CARE program administer low-income energy
efficiency and rate assistance programs described in specified
statutes, and undertake certain actions in administering specified
energy efficiency and weatherization programs.
   This bill would require that electrical corporations, in
administering the specified energy efficiency and weatherization
programs, to target energy efficiency and solar programs to
upper-tier and multifamily customers in a manner that will result in
long-term permanent reductions in electricity usage and develop
programs that specifically target new construction by, and new and
retrofit appliances for, nonprofit affordable housing providers. The
bill would require the commission to require electrical corporations
to deploy enhanced low-income energy efficiency (LIEE) programs, as
defined, designed to reach as many eligible customers as practicable
by December 31, 2014, particularly targeting those customers
occupying apartment houses or similar multiunit residential
structures, and would require the commission and electrical
corporations and gas corporations to expend all reasonable efforts to
coordinate ratepayer-funded programs with other energy conservation
and efficiency programs and to obtain additional federal funding to
support actions undertaken pursuant to this requirement.
   (4) Existing law relative to electrical restructuring requires the
commission to authorize and facilitate direct transactions between
electricity suppliers and retail end-use customers.
   Existing law requires the commission to designate a baseline
quantity of electricity and gas necessary for a significant portion
of the reasonable energy needs of the average residential customer,
and requires that electrical and gas corporations file rates and
charges, to be approved by the commission, providing baseline rates
and requires the commission, in establishing baseline rates, to avoid
excessive rate increases for residential customers.
   Existing law enacted during the energy crisis of 2000-01,
authorized the Department of Water Resources, until January 1, 2003,
to enter into contracts for the purchase of electricity, and to sell
electricity to retail end-use customers and, with specified
exceptions, local publicly owned electric utilities, at not more than
the department's acquisition costs and to recover those costs
through the issuance of bonds to be repaid by ratepayers. That law
provides that the department is entitled to recover certain expenses
resulting from its purchases and sales of electricity and authorizes
the commission to enter into an agreement with the department
relative to cost recovery. That law prohibits the commission from
increasing the electricity charges in effect on February 1, 2001, for
residential customers for existing baseline quantities or usage by
those customers of up to 130% of then existing baseline quantities,
until the department has recovered the costs of electricity it
procured for electrical corporation retail end use customers. That
law also suspends the right of retail end-use customers, other than
community choice aggregators and a qualifying direct transaction
customer, to acquire service through a direct transaction until the
Department of Water Resources no longer supplies electricity under
that law.
   This bill would delete the prohibition that the commission not
increase the electricity charges in effect on February 1, 2001, for
residential customers for existing baseline quantities or usage by
those customers of up to 130% of then existing baseline quantities.
The bill would authorize the commission  , until January 1,
2019,  to increase the rates charged residential customers
for electricity usage up to 130% of the baseline quantities by the
annual percentage change in the Consumer Price Index from the prior
year plus 1%, but not less than 3% and not more than 5% per year.
This authorization would be subject to the limitation that rates
charged residential customers for electricity usage up to the
baseline quantities, including any customer charge revenues, not
exceed 90% of the system average rate, as defined. The bill would
authorize the commission to increase the rates for participants in
the CARE program, subject to certain limitations. The bill would
require the commission to authorize direct transactions subject to a
phase-in schedule of not less than 3 years and not more than 5 years,
and subject to total and yearly direct transaction limits
established, as specified, for each electrical corporation. The bill
would continue the suspension of direct transactions except as
expressly authorized, until the Legislature, by statute, repeals the
suspension or otherwise authorizes direct transactions.
   (5) Under existing law, a violation of the Public Utilities Act or
any order, decision, rule, direction, demand, or requirement of the
commission is a crime.
   Because certain of the provisions of this bill would be a part of
the act and because a violation of an order or decision of the
commission implementing its requirements would be a crime, the bill
would impose a state-mandated local program by creating a new crime.
   (6) 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.
   (7) This bill would declare that it is to take effect immediately
as an urgency statute.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 327 of the Public Utilities Code is amended to
read:
   327.  (a) The electrical corporations and gas corporations that
participate in the California Alternate Rates for Energy program, as
established pursuant to Section 739.1, shall administer low-income
energy efficiency and rate assistance programs described in Sections
382, 739.1, 739.2, and 2790, subject to commission oversight. In
administering the programs described in Section 2790, the electrical
corporations and gas corporations, to the extent practicable, shall
do all of the following:
   (1) Continue to leverage funds collected to fund the program
described in subdivision (a) with funds available from state and
federal sources.
   (2) Work with state and local agencies, community-based
organizations, and other entities to ensure efficient and effective
delivery of programs.
   (3) Encourage local employment and job skill development.
   (4) Maximize the participation of eligible participants.
   (5) Work to reduce consumers electric and gas consumption, and
bills.
   (6) For electrical corporations, target energy efficiency and
solar programs to upper-tier and multifamily customers in a manner
that will result in long-term permanent reductions in electricity
usage, and develop programs that specifically target new construction
by, and new and retrofit appliances for, nonprofit affordable
housing providers.
   (b) If the commission requires low-income energy efficiency
programs to be subject to competitive bidding, the electric and gas
corporation described in subdivision (a), as part of their bid
evaluation criteria, shall consider both cost-of-service criteria and
quality-of-service criteria. The bidding criteria, at a minimum,
shall recognize all of the following factors:
   (1) The bidder's experience in delivering programs and services,
including, but not limited to, weatherization, appliance repair and
maintenance, energy education, outreach and enrollment services, and
bill payment assistance programs to targeted communities.
   (2) The bidder's knowledge of the targeted communities.
   (3) The bidder's ability to reach targeted communities.
   (4) The bidder's ability to utilize and employ people from the
local area.
   (5) The bidder's general contractor's license and evidence of good
standing with the Contractors' State License Board.
   (6) The bidder's performance quality as verified by the funding
source.
   (7) The bidder's financial stability.
   (8) The bidder's ability to provide local job training.
   (9) Other attributes that benefit local communities.
   (c) Notwithstanding subdivision (b), the commission may modify the
bid criteria based upon public input from a variety of sources,
including representatives from low-income communities and the program
administrators identified in subdivision (b), in order to ensure the
effective and efficient delivery of high quality low-income energy
efficiency programs. 
  SEC. 2.    Section 330 of the Public Utilities
Code is amended to read:
   330.  In order to provide guidance in carrying out this chapter,
the Legislature finds and declares all of the following:
   (a) It is the intent of the Legislature that a cumulative rate
reduction of at least 20 percent be achieved not later than April 1,
2002, for residential and small commercial customers, from the rates
in effect on June 10, 1996. In determining that the April 1, 2002,
rate reduction has been met, the commission shall exclude the costs
of the competitively procured electricity and the costs associated
with the rate reduction bonds, as defined in Section 840.
   (b) The people, businesses, and institutions of California spend
nearly twenty-three billion dollars ($23,000,000,000) annually on
electricity, so that reductions in the price of electricity would
significantly benefit the economy of the state and its residents.
   (c) The Public Utilities Commission has opened rulemaking and
investigation proceedings with regard to restructuring California's
electrical industry and reforming utility regulation.
   (d) The commission has found, after an extensive public review
process, that the interests of ratepayers and the state as a whole
will be best served by moving from the regulatory framework existing
on January 1, 1997, in which retail electricity service is provided
principally by electrical corporations subject to an obligation to
provide ultimate consumers in exclusive service territories with
reliable electric service at regulated rates, to a framework under
which competition would be allowed in the supply of electricity and
customers would be allowed to have the right to choose their supplier
of electricity.
   (e) Competition in the electric generation market will encourage
innovation, efficiency, and better service from all market
participants, and will permit the reduction of costly regulatory
oversight.
   (f) 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.
   (g) 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 electrical grid.
   (h) 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.
   (i) Reliable electric service depends on conscientious inspection
and maintenance of transmission and distribution systems. To continue
and enhance the reliability of the delivery of electricity, the
Independent System Operator and the commission, respectively, should
set inspection, maintenance, repair, and replacement standards.
   (j) It is the intent of the Legislature that California enter into
a compact with western region states. That compact should require
the publicly and investor-owned utilities located in those states,
that sell energy to California retail customers, to adhere to
enforceable standards and protocols to protect the reliability of the
interconnected regional transmission and distribution systems.
   (k) In order to achieve meaningful wholesale and retail
competition in the electric generation market, it is essential to do
all of the following:
   (1) Separate monopoly utility transmission functions from
competitive generation functions, through development of independent,
third-party control of transmission access and pricing.
   (2) Permit customers to choose from among competing suppliers of
electricity.
   (3) Provide customers and suppliers with open, nondiscriminatory,
and comparable access to transmission and distribution services.
   () The commission has properly concluded that:
   (1) This competition will best be introduced by the creation of an
Independent System Operator and an independent Power Exchange.
   (2) Generation of electricity should be open to competition.
   (3) There is a need to ensure that no participant in these new
market institutions has the ability to exercise significant market
power so that operation of the new market institutions would be
distorted.
   (4) These new market institutions should commence simultaneously
with the phase in of customer choice, and the public will be best
served if these institutions and the nonbypassable transition cost
recovery mechanism referred to in subdivisions (s) to (w), inclusive,
are in place simultaneously and no later than January 1, 1998.
   (m) It is the intention of the Legislature that California's
publicly owned electric utilities and investor-owned electric
utilities should commit control of their transmission facilities to
the Independent System Operator. These utilities should jointly
advocate to the Federal Energy Regulatory Commission a pricing
methodology for the Independent System Operator that results in an
equitable return on capital investment in transmission facilities for
all Independent System Operator participants.
   (n) Opportunities to acquire electricity in the competitive market
should be restrained to the extent necessary to ensure electrical
system reliability and market functionality.
   (o) Under the existing regulatory framework, California's
electrical corporations were granted franchise rights to provide
electricity to consumers in their service territories.
   (p) Consistent with federal and state policies, California
electrical corporations invested in powerplants and entered into
contractual obligations in order to provide reliable electrical
service on a nondiscriminatory basis to all consumers within their
service territories who requested service.
   (q) The cost of these investments and contractual obligations are
currently being recovered in electricity rates charged by electrical
corporations to their consumers.
   (r) Transmission and distribution of electricity remain essential
services imbued with the public interest that are provided over
facilities owned and maintained by the state's electrical
corporations.
   (s) It is proper to allow electrical corporations an opportunity
to continue to recover, over a reasonable transition period, those
costs and categories of costs for generation-related assets and
obligations, including costs associated with any subsequent
renegotiation or buyout of existing generation-related contracts,
that the commission, prior to December 20, 1995, had authorized for
collection in rates and that may not be recoverable in market prices
in a competitive generation market, and appropriate additions
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
costs are necessary to maintain those facilities through December 31,
2001. In determining the costs to be recovered, it is appropriate to
net the negative value of above market assets against the positive
value of below market assets.
   (t) The transition to a competitive generation market should be
orderly, protect electric system reliability, provide the investors
in these electrical corporations with a fair opportunity to fully
recover the costs associated with commission approved
generation-related assets and obligations, and be completed as
expeditiously as possible.
   (u) The transition to expanded customer choice, competitive
markets, and performance based ratemaking as described in Decision
95-12-063, as modified by Decision 96-01-009, of the Public Utilities
Commission, can produce hardships for employees who have dedicated
their working lives to utility employment. It is preferable that any
necessary reductions in the utility workforce directly caused by
electrical restructuring, be accomplished through offers of voluntary
severance, retraining, early retirement, outplacement, and related
benefits. Whether workforce reductions are voluntary or involuntary,
reasonable costs associated with these sorts of benefits should be
included in the competition transition charge.
   (v) Charges associated with the transition should be collected
over a specific period of time on a nonbypassable basis and in a
manner that does not result in an increase in rates to customers of
electrical corporations. In order to insulate the policy of
nonbypassability against incursions, if exemptions from the
competition transition charge are granted, a firewall shall be
created that segregates recovery of the cost of exemptions as
follows:
   (1) The cost of the competition transition charge exemptions
granted to members of the combined class of residential and small
commercial customers shall be recovered only from those customers.
   (2) The cost of the 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 those customers. The commission shall retain existing cost
allocation authority provided that the firewall and rate freeze
principles are not violated.
   (w) It is the intent of the Legislature to require and enable
electrical corporations to monetize a portion of the competition
transition charge for residential and small commercial consumers so
that these customers will receive rate reductions of no less than 10
percent for 1998 continuing through 2002. Electrical corporations
shall, by June 1, 1997, or earlier, secure the means to finance the
competition transition charge by applying concurrently for financing
orders from the Public Utilities Commission and for rate reduction
bonds from the California Infrastructure and Economic Development
Bank.
   (x) California's public utility electrical corporations provide
substantial benefits to all Californians, including employment and
support of the state's economy. Restructuring the electric services
industry pursuant to the act that added this chapter will continue
these benefits, and will also offer meaningful and immediate rate
reductions for residential and small commercial customers, and
facilitate competition in the supply of electricity. 

  SEC. 3.    Section 365 of the Public Utilities
Code is amended to read:
   365.  The actions of the commission pursuant to this chapter shall
be consistent with the findings and declarations contained in
Section 330. In addition, the commission shall do all of the
following:
   (a) Facilitate the efforts of the state's electrical corporations
to develop and obtain authorization from the Federal Energy
Regulatory Commission for the creation and operation of an
Independent System Operator and an independent Power Exchange, for
the determination of which transmission and distribution facilities
are subject to the exclusive jurisdiction of the commission, and for
approval, to the extent necessary, of the cost recovery mechanism
established as provided in Sections 367 to 376, inclusive. The
commission shall also participate fully in all proceedings before the
Federal Energy Regulatory Commission in connection with the
Independent System Operator and the independent Power Exchange, and
shall encourage the Federal Energy Regulatory Commission to adopt
protocols and procedures that strengthen the reliability of the
interconnected transmission grid, encourage all publicly owned
utilities in California to become full participants, and maximize
enforceability of such protocols and procedures by all market
participants.
   (b) (1) Authorize direct transactions between electricity
suppliers and end use customers, subject to the direct transaction
limits of this subdivision.
   (2) The commission shall develop and implement a direct access
phase-in schedule for each electrical corporation that incorporates a
total and yearly direct transaction limit of a specified amount of
electricity that may be procured through direct transactions.
   (3) The phase-in period shall be determined by the commission for
each electrical corporation and shall be for not less than three
years, and for not more than five years, duration. The purpose of the
phase-in period is to ensure electrical system reliability and
market functionality, while avoiding stranded costs being incurred by
electrical corporations in meeting their duty or obligation to
provide reliable electric service.
   (4) The total and yearly direct transaction limits shall be
determined by the commission as follows:
   (A) The commission shall, for each electrical corporation,
determine the maximum load serviced through direct transactions
within the service territory of the electrical corporation during the
period from April 1, 1998, to February 1, 2001, inclusive. The
maximum load shall be determined as a specified amount of electricity
and not a percentage of overall load within the electrical
corporation's service territory.
   (B) The commission shall, for each electrical corporation,
determine the load serviced through direct transactions within the
service territory of the electrical corporation as of January 1,
2009.
   (C) The total direct transaction limit shall be the difference
between the maximum load serviced through direct transactions within
the service territory of the electrical corporation during the period
from April 1, 1998, to February 1, 2001, inclusive, minus the load
serviced through direct transactions within the service territory of
the electrical corporation as of January 1, 2009.
   (D) The yearly direct transaction limit shall be the total direct
transaction limit divided by the number of years in the phase-in
period adopted for that electrical corporation by the commission.
   (5) The commission may authorize a direct transaction that results
in a quantity of electricity being purchased in excess of an
electrical corporation's yearly direct transaction limit during the
phase-in period when, at the time the direct transaction is entered
into, the load being served through direct transactions within the
service territory of that electrical corporation was below the yearly
direct transaction limit, and as a result of the direct transaction,
the limit is reached and exceeded by a nonsubstantial margin.
   (6) The commission may authorize a direct transaction that results
in a quantity of electricity being purchased in excess of the
electrical corporation's total direct transaction limit when, at the
time the direct transaction is entered into, the load being served
through direct transactions within the service territory of that
electrical corporation was below the total direct transaction limit,
and as a result of the direct transaction, the limit is reached and
exceeded by a nonsubstantial margin.
   (7) The commission shall establish, in advance, procedures for
obtaining the approval of a direct transaction pursuant to paragraphs
(5) and (6).
   (8)  Any phase-in of customer eligibility for direct transactions
ordered by the commission shall be equitable to all customer classes
and accomplished as soon as practicable, consistent with operational
and other technological considerations.
   (c) Customers shall be eligible for direct access irrespective of
any direct access phase-in implemented pursuant to this section if at
least one-half of that customer's electrical load is supplied by
energy from an eligible renewable energy resource, as defined in
Section 399.12, provided however that nothing in this section shall
provide for direct access for electric consumers served by municipal
utilities unless so authorized by the governing board of that
municipal utility.
   (d) The commission shall not authorize direct transactions other
than as expressly authorized by this section. 
   SEC. 2.    Section 365.1 is added to the  
Public Utilities Code   , to read:  
   365.1.  (a) Except as expressly authorized by this section, and
subject to the limitations in subdivisions (b) and (c), the right of
retail end-use customers pursuant to this chapter to acquire service
from other providers is suspended until the Legislature, by statute,
lifts the suspension or otherwise authorizes direct transactions. For
purposes of this section, "other provider" means any person,
corporation, or other entity that was authorized to provide electric
service within the service territory of an electrical corporation
pursuant to this chapter, and includes electric service providers, an
aggregator, broker, or marketer, as defined in Section 331, and an
electric service provider, as defined in Section 218.3.
   (b) Notwithstanding subdivision (a), the commission may allow
individual retail nonresidential end-use customers to acquire
electric service from electric service providers, subject to the
limitation that the total annual kilowatthours supplied by all
electric service providers to distribution customers of an electrical
corporation shall not exceed the maximum total annual level of
kilowatthours supplied by all electric service providers, within that
electrical corporation's distribution service territory, for any
year between April 1, 1998, and December 31, 2009. By January 31,
2010, the commission shall calculate and adopt a phase-in schedule of
not less than three years, and not more than five years, to raise
the allowable limit of kilowatthours supplied by other providers from
the number of kilowatthours provided by other providers as of the
operative date of this section, to the maximum total annual level for
each electrical corporation's distribution service territory.
   (c) The commission shall not authorize additional direct
transactions pursuant to subdivision (b) unless both of the following
conditions are met:
   (1) (A) Other providers are subject to the same requirements that
are applicable to the state's three largest electrical corporations
pursuant to the resource adequacy requirements established by the
commission pursuant to Section 380, the renewables portfolio standard
requirements established by the commission pursuant to Article 16
(commencing with Section 399.11), and the requirements for the
electricity sector adopted by the State Air Resources Board pursuant
to the California Global Warming Solutions Act (Division 25.5
(commencing with Section 38500) of the Health and Safety Code). This
requirement is made notwithstanding any prior decision of the
commission.
   (B) It is the intent of the Legislature in enacting this paragraph
that as a condition for allowing direct transactions, the resource
adequacy requirements, the renewable portfolio standard requirements,
and the requirements for reducing emissions of greenhouse gases be
applied in a competitively neutral manner.
   (2) (A) The commission utilizes a mechanism that allocates the net
costs of new generation resources acquired by an electrical
corporation to meet system or local area reliability needs, on a
fully nonbypassable basis, either through a contract with a third
party, pursuant to commission authorization, or through direct
ownership of the generation resource by the electrical corporation,
pursuant to commission direction, to all of the following:
   (i) Bundled service customers of the electrical corporation.
   (ii) Customers that purchase electricity through a direct
transaction with other providers.
   (iii) Customers of community choice aggregators.
   (B) The resource adequacy benefits of new generation resources
acquired by an electrical corporation to meet system or local area
reliability needs shall be allocated to all customers who pay their
net costs. It is the intent of the Legislature that the mechanism
generally be consistent with that adopted by the commission in
Decision 06-07-029, as modified by Decision 07-11-05, but that no
energy auction shall be required as a condition of employing the
mechanism, and the allocation of the net costs of contracts with
third parties shall be allowed for the terms of those contracts.
   (d) The commission may report to the Legislature on the efficacy
of authorizing individual retail end-use residential customers to
enter into direct transactions, including appropriate consumer
protections. 
   SEC. 4.   SEC. 3.   Section 382 of the
Public Utilities Code is amended to read:
   382.  (a) Programs provided to low-income electricity customers,
including, but not limited to, targeted energy-efficiency services
and the California Alternate Rates for Energy program shall be funded
at not less than 1996 authorized levels based on an assessment of
customer need.
   (b) In order to meet legitimate needs of electric and gas
customers who are unable to pay their electric and gas bills and who
satisfy eligibility criteria for assistance, recognizing that
electricity is a basic necessity, and
            that all residents of the state should be able to afford
essential electricity and gas supplies, the commission shall ensure
that low-income ratepayers are not jeopardized or overburdened by
monthly energy expenditures. Energy expenditure may be reduced
through the establishment of different rates for low-income
ratepayers, different levels of rate assistance, and energy
efficiency programs.
   (c) Nothing in this section shall be construed to prohibit
electric and gas providers from offering any special rate or program
for low-income ratepayers that is not specifically required in this
section.
   (d) The commission shall allocate funds necessary to meet the
low-income objectives in this section.
   (e) Beginning in 2002, an assessment of the needs of low-income
electricity and gas ratepayers shall be conducted periodically by the
commission with the assistance of the Low-Income Oversight Board.
The assessment shall evaluate low-income program implementation and
the effectiveness of weatherization services and energy efficiency
measures in low-income households. The assessment shall consider
whether existing programs adequately address low-income electricity
and gas customers' energy expenditures, hardship, language needs, and
economic burdens.
   (f) The commission shall require electrical corporations to deploy
enhanced low-income energy efficiency programs designed to reach as
many eligible customers as practicable by December 31, 2014,
particularly targeting those customers occupying apartments or
similar multiunit residential structures. The commission and
electrical corporations and gas corporations shall make all
reasonable efforts to coordinate ratepayer-funded programs with other
energy conservation and efficiency programs and to obtain additional
federal funding to support actions undertaken pursuant to this
subdivision. For purposes of this subdivision, "enhanced programs"
are programs that provide long-term reductions in energy consumption
at the dwelling unit based on an audit or assessment of the dwelling
unit, and may include improved insulation, energy efficient
appliances, measures that utilize solar energy, and other 
cost-effective  improvements to the physical structure.
   SEC. 5.   SEC. 4.   Section 739.1 of the
Public Utilities Code is amended to read:
   739.1.  (a) The commission shall establish a program of assistance
to low-income electric and gas customers with annual household
incomes at or below 200 percent of the federal poverty guideline
levels, the cost of which, for an electrical corporation, shall be
recovered on an equal cent-per-kilowatthour basis from all classes of
customers that were subject to the surcharge that funded the program
on January 1, 2008. The program shall be referred to as the
California Alternate Rates for Energy or CARE program. The commission
shall ensure that the level of discount for low-income electric and
gas customers correctly reflects the level of need.
   (b) The commission shall work with the public utility electrical
and gas corporations to establish penetration goals. The commission
shall authorize recovery of all administrative costs associated with
the implementation of the CARE program that the commission determines
to be reasonable, through a balancing account mechanism.
Administrative costs shall include, but are not limited to, outreach,
marketing, regulatory compliance, certification and verification,
billing, measurement and evaluation, and capital improvements and
upgrades to communications and processing equipment.
   (c) The commission shall examine methods to improve CARE
enrollment and participation. This examination shall include, but
need not be limited to, comparing information from CARE and the
Universal Lifeline Telephone Service (ULTS) to determine the most
effective means of utilizing that information to increase CARE
enrollment, automatic enrollment of ULTS customers who are eligible
for the CARE program, customer privacy issues, and alternative
mechanisms for outreach to potential enrollees. The commission shall
ensure that a customer consents prior to enrollment. The commission
shall consult with interested parties, including ULTS providers, to
develop the best methods of informing ULTS customers about other
available low-income programs, as well as the best mechanism for
telephone providers to recover reasonable costs incurred pursuant to
this section.
   (d) (1) The commission shall improve the CARE application process
by cooperating with other entities and representatives of California
government, including the California Health and Human Services Agency
and the Secretary of California Health and Human Services, to ensure
that all gas and electric customers eligible for public assistance
programs in California that reside within the service territory of an
electrical corporation or gas corporation, are enrolled in the CARE
program. To the extent practicable, the commission shall develop a
CARE application process using the existing ULTS application process
as a model. The commission shall work with public utility electrical
and gas corporations and the Low-Income Oversight Board established
in Section 382.1 to meet the low-income objectives in this section.
   (2) The commission shall ensure that an electrical corporation or
gas corporation with a commission-approved program to provide
discounts based upon economic need in addition to the CARE program,
including a Family Electric Rate Assistance program, utilize a single
application form, to enable an applicant to alternatively apply for
any assistance program for which the applicant may be eligible. It is
the intent of the Legislature to allow applicants under one program,
that may not be eligible under that program, but that may be
eligible under an alternative assistance program based upon economic
need, to complete a single application for any commission-approved
assistance program offered by the public utility.
   (e) The commission's program of assistance to low-income electric
and gas customers shall, as soon as practicable, include nonprofit
group living facilities specified by the commission, if the
commission finds that the residents in these facilities substantially
meet the commission's low-income eligibility requirements and there
is a feasible process for certifying that the assistance shall be
used for the direct benefit, such as improved quality of care or
improved food service, of the low-income residents in the facilities.
The commission shall authorize utilities to offer discounts to
eligible facilities licensed or permitted by appropriate state or
local agencies, and to facilities, including women's shelters,
hospices, and homeless shelters, that may not have a license or
permit but provide other proof satisfactory to the utility that they
are eligible to participate in the program.
   (f) It is the intent of the Legislature that the commission ensure
CARE program participants are afforded the lowest possible electric
and gas rates and, to the extent possible, are exempt from additional
surcharges attributable to the energy crisis of 2000-01.
   (g) (1) As used in this subdivision, the following terms have the
following meanings:
   (A) "Baseline quantity" has the same meaning as defined in Section
739.
   (B) "California Solar Initiative" means the program providing
ratepayer funded incentives for eligible solar energy systems adopted
by the commission in Decision 05-12-044 and Decision 06-01-024, as
modified by Article 1 (commencing with Section 2851) of Chapter 9 of
Part 2 and Chapter 8.8 (commencing with Section 25780) of Division 15
of the Public Resources Code.
   (C) "CalWORKs program" means the program established pursuant to
the California Work Opportunity and Responsibility to Kids Act
(Chapter 2 (commencing with Section 11200) of Part 3 of Division 9
the Welfare and Institutions Code).
   (D) "Public goods charge" means the nonbypassable separate rate
component imposed pursuant to Article 7 (commencing with Section 381)
or Chapter 2.3 and the nonbypassable system benefits charge imposed
pursuant to the Reliable Electric Service Investments Act (Article 15
(commencing with Section 399) of Chapter 2.3).
   (2) The commission may, subject to the limitation in paragraph
(4), increase the rates in effect for CARE program participants for
electricity usage up to 130 percent of baseline quantities by the
annual percentage increase in benefits under the CalWORKs program as
authorized by the Legislature for the fiscal year in which the rate
increase would take effect, but not to exceed 3 percent per year.
 This paragraph shall become inoperative on January 1, 2019,
unless a later enacted statute deletes or extends that date.

   (3) Beginning January 1, 2019, the commission may, subject to the
limitation in paragraph (4), establish rates for CARE program
participants pursuant to  Sections 739, 739.1,  
this section and Sections 739  and 739.9, subject to 
the   both of the following: 
    (A)     The  requirements of
subdivision (b) of Section 382 that the commission ensure that
low-income ratepayers are not jeopardized or overburdened by monthly
energy expenditures. 
   (B) The requirement that the level of the discount for low-income
electricity and gas ratepayers correctly reflects the level of need
as determined by the needs assessment made pursuant to subdivision
(e) of Section 382. 
   (4) Tier 1, tier 2, and tier 3 CARE rates shall not exceed 80
percent of the corresponding  tier 1, tier 2, and tier 3 
rates charged residential customers not participating in the CARE
program, excluding any Department of Water Resources bond charge
imposed pursuant to Division 27 (commencing with Section 80000) of
the Water Code, the CARE surcharge portion of the public goods
charge, any charge imposed pursuant to the California Solar
Initiative, and any charge imposed to fund any other program that
exempts CARE participants from paying the charge.
   (5) Rates charged CARE program participants shall not have more
than three tiers. An electrical corporation that does not have a tier
3 CARE rate may introduce a tier 3 CARE rate that, in order to
moderate the impact on program participants whose usage exceeds 130
percent of baseline quantities, shall be phased in to 80 percent of
the corresponding rates charged residential customers not
participating in the CARE program, excluding any Department of Water
Resources bond charge imposed pursuant to Division 27 (commencing
with Section 80000) of the Water Code, the CARE surcharge portion of
the public goods charge, any charge imposed pursuant to the
California Solar Initiative, and any other charge imposed to fund a
program that exempts CARE participants from paying the charge.
 The   For an electrical corporation that does
not have a tier 3 CARE rate that introduces a tier 3 CARE rate, the
 initial rate shall be no more than 150 percent of the baseline
CARE rate. Any additional revenues collected by an electrical
corporation resulting from the adoption of a tier 3 CARE rate shall,
until the utility's next periodic general rate case review of cost
allocation and rate design, be  tracked and 
credited to reduce rates of residential ratepayers not participating
in the CARE program with usage above 130 percent of baseline
quantities.
   SEC. 6.   SEC. 5.   Section 739.9 is
added to the Public Utilities Code, to read:
   739.9.  (a) The commission may, subject to the limitation in
subdivision (b), increase the rates charged residential customers for
electricity usage up to 130 percent of the baseline quantities, as
defined in Section 739, by the annual percentage change in the
Consumer Price Index from the prior year plus 1 percent, but not less
than 3 percent and not more than 5 percent per year. For purposes of
this subdivision, the annual percentage change in the Consumer Price
Index shall be calculated using the same formula that was used to
determine the annual Social Security Cost of Living Adjustment on
January 1, 2008. This subdivision shall become inoperative on January
1, 2019, unless a later enacted statute deletes or extends that
date.
   (b) The rates charged residential customers for electricity usage
up to the baseline quantities, including any customer charge
revenues, shall not exceed 90 percent of the system average rate
prior to January 1, 2019, and may not exceed 92.5 percent after that
date. For purposes of this subdivision, the system average rate shall
be determined by dividing the electrical corporation's total revenue
requirements for bundled service customers by the adopted forecast
of total bundled service sales.
   (c) This section does not require the commission to increase any
residential rate or restrict, or otherwise limit, the authority of
the commission to reduce any residential rate in effect immediately
preceding January 1, 2010.
   SEC. 7.   SEC. 6.   Section 745 is added
to the Public Utilities Code, to read:
   745.  (a)  For purposes of this section, "time-variant pricing"
includes time-of-use rates, critical peak pricing, and real-time
pricing, but does not include programs that provide customers
discounts from standard tariff rates as an incentive to reduce
consumption at certain times, including peak time rebates. 
    (b)    The commission shall not require or
permit an electrical corporation to employ mandatory  dynamic
  or default time-variant  pricing for residential
customers  prior to January 1, 2016  . 
   (b) 
    (c)  The commission may authorize an electrical
corporation to offer residential customers the option of receiving
service pursuant to  dynamic pricing  
time-variant pricing and to participate in other demand response
programs  . 
   (c) 
    (d)  The commission  may, beginning January 1,
2016, authorize an electrical corporation to employ default dynamic
pricing for residential customers, if the customer has the option of
receiving service pursuant to a rate schedule that is not based upon
dynamic pricing. The commission  shall only approve an
electrical corporation's  default use of dynamic 
 use of time-variant  pricing if residential customers
 that exercise   have  the option to not
receive service pursuant to  dynamic pricing incur no
additional costs   time-variant pricing and incur no
additional fees and surcharges  as a result of the exercise of
that option.
   SEC. 8.   SEC. 7.   Section 80110 of the
Water Code is amended to read:
   80110.  (a) The department shall retain title to all electricity
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.

   (b) The 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.
   (c) (1) For the 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. Prior to the execution of
any modification of any contract for the purchase of electricity by
the department pursuant to this division, on or after the effective
date of this section, the department or the commission, as
applicable, shall do the following:
   (A) The department shall notify the public of its intent to modify
a contract and the opportunity to comment on the proposed
modification.
   (B) At least 21 days after providing public notice, the department
shall make a determination as to whether the proposed modifications
are just and reasonable. The determination shall include responses to
any public comments.
   (C) No later than 70 days before the date of execution of the
contract modification, the department shall provide a written report
to the commission setting forth the justification for the
determination that the proposed modification is just and reasonable,
including documents, analysis, response to public comments, and other
information relating to the determination.
   (D) Within 60 days of the date of receipt of the department's
written report, the commission shall review the report and make
public its comments. If the commission in its comments recommends
against the proposed modification, the department shall not execute
the proposed contract modification.
   (2) This subdivision does not apply to the modification of a
contract modified to settle litigation to which the commission is a
party.
   (3) This subdivision does not apply to the modification of a
contract for the purchase of electricity that is generated from a
facility owned by a public agency if the contract requires the public
agency to sell electricity to the department at or below the public
agency's cost of that electricity.
   (4) This subdivision does not apply to the modification of a
contract to address issues relating to billing, scheduling, delivery
of electricity, and related contract matters arising out of the
implementation by the Independent System Operator of its market
redesign and technology upgrade program.
   (5) (A) For purposes of this subdivision, the department proposes
to "modify" a contract if there is any material change proposed in
the terms of the contract.
   (B) A change to a contract is not material if it is only
administrative in nature or the change in ratepayer value results in
ratepayer savings, not to exceed twenty-five million dollars
($25,000,000) per year. For the purpose of making a determination
that a change is only administrative in nature or results in
ratepayer savings of twenty-five million dollars ($25,000,000) or
less per year, the executive director of the commission shall concur
in writing with each of those determinations by the department.
   (d) 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 5.5 (commencing
with Section 840) of Chapter 4 of Part 1 of Division 1 of the Public
Utilities Code, as determined by the commission. 
   (e) Except as expressly authorized by, and subject to the
limitations in, Section 365, the right of retail end-use customers
pursuant to Article 6 (commencing with Section 360) of Chapter 2.3 of
Part 1 of Division 1 of the Public Utilities Code to acquire service
from other providers is suspended until the Legislature, by statute,
repeals the suspension or otherwise authorizes direct transactions.
 
   (f) 
    (e)  The department shall have the same rights with
respect to the payment by retail end-use customers for electricity
sold by the department as do providers of electricity to the
customers.
   SEC. 9.   SEC. 8.   No reimbursement is
required by this act pursuant to Section 6 of Article XIII B 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 XIII
B of the California Constitution.
   SEC. 10.   SEC. 9.   This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
   In order to avert a rate crisis involving unfair and unreasonable
rates being charged for electric and gas service by electrical and
gas corporations, it is necessary that this act take effect
immediately.