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  MAY 28, 2009
	AMENDED IN SENATE  APRIL 29, 2009
	AMENDED IN SENATE  APRIL 13, 2009

INTRODUCED BY   Senator Kehoe
   (Coauthor: Senator Wright)

                        FEBRUARY 27, 2009

   An act to amend Sections 327, 382,  and 739.1 
 739.1, and 747  of, and to add Sections 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, 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 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 time-variant pricing and to participate in other
demand response programs. The bill would require the commission to
only approve an electrical corporation's use of time-variant pricing
for residential customers  ,   beginning January 1,
2016,  if those residential customers have the option to not
receive service pursuant to 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. For a public utility that is both an electrical corporation
and a gas corporation, the bill would require that the cost of the
program be recovered on an equal cent-per-kilowatthour or per-therm
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  by occupant
of the dwelling units  and develop programs that specifically
target  rehabilitation and weatherization of existing dwelling
units and  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   , by
not later   than December 31, 2020, to ensure that all
eligible low-income electricity and gas customers are given the
opportunity to participate in low-income energy efficiency programs,
including  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 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) Existing law requires the commission to prepare and submit to
the Governor and the Legislature a written report on an annual basis
before February 1 of each year on the costs of programs and
activities conducted by an electrical corporation or gas corporation
that has more than a specified number of customers in California.
 
   This bill would also require the report to contain the commission'
s recommendations for actions that can be undertaken during the
upcoming year to limit utility cost increases, consistent with the
state's carbon reduction, energy, and environmental goals. The bill
would require the commission to annually require electrical and gas
corporations to study and report to the commission on measures that
they recommend be undertaken to limit cost increases.  
   (5) 
    (6)  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) 
    (7)  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) 
    (8)  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  by occupants of the dwelling units  , and develop
programs that specifically target  rehabilitation and weatherizat
  ion of existing dwelling units and  new construction
by, and new and retrofit appliances for, nonprofit affordable
housing providers. 
   (7) For electrical corporations and for public utilities that are
both electrical corporations and gas corporations, allocate the costs
of the CARE program on an equal cents per kilowatthour or equal
cents per therm basis to all classes of customers that were subject
to the surcharge that funded the program on January 1, 2008. 
   (b) If the commission requires low-income energy efficiency
programs to be subject to competitive bidding, the  electric
  electrical  and gas  corporation
  corporations  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 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   is
 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   The  commission may allow individual retail
nonresidential end-use customers to acquire electric service from
 electric service   other  providers,
subject to the limitation that the total annual kilowatthours
supplied by all electric service   other 
providers to distribution customers of an electrical corporation
shall not exceed the maximum total annual level of kilowatthours
supplied by all  electric service   other 
providers, within that electrical corporation's distribution service
territory, for any year between April 1, 1998, and December 31, 2009.
 By January 31, 2010,   Within six months of
the operative date of this section  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  of 2006 
(Division 25.5 (commencing with Section 38500) of the Health and
Safety Code). This requirement is made notwithstanding any prior
decision of the commission  to the contrary  .
   (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
 capacity  costs of new generation resources acquired by an
electrical corporation  to meet system or local area
reliability needs, on a fully nonbypassable basis,   for
the benefit of those customers identified in clauses   (i),
(ii), and (iii), to meet system or local area reliability needs
established by the commission pursuant to Section 380,  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,   order, on a fully nonbypassable basis,
 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   pursuant to subparagraph
(A),  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 an
  net capacity costs. Net capacity costs shall be
determined by subtracting the energy and ancillary services value of
the resource from the total costs paid by the electrical  
corporation pursuant to a contract with a third party or the annual
revenue requirement for the resource if the electrical corporation
directly owns the resource. An  energy auction shall not be
required as a condition of employing the mechanism, but may be
allowed  , to value the electrical output   as a
means to establish the energy and ancillary services value  of
the resource for purposes of determining the net costs of capacity to
be recovered from customers pursuant to this paragraph, and the
allocation of the net  capacity  costs of contracts with
third parties shall be allowed for the terms of those contracts.
 It 
    (C)     It  is the intent of the
Legislature, in enacting this subparagraph  
paragraph  , to ensure that the customers to whom the net costs
and benefits of capacity are allocated are not required to pay for
the cost of electricity they do not consume.
   (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. 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) 
    (d)  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 
    (e)     The   commission shall, by
not later than December 31, 2020, ensure that all eligible
low-income electricity and gas customers are given the opportunity to
participate in low-income energy efficiency programs, including
 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 improvements to the physical
structure. 
    (f) The commission shall allocate funds necessary to meet the
low-income objectives in this section. 
  SEC. 4.  Section 739.1 of the Public Utilities Code is amended to
read:
   739.1.  (a)  As used in this section, the following terms have
the following meanings:  
   (1) "Baseline quantity" has the same meaning as defined in Section
739.  
   (2) "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.  
   (3) "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 of
the Welfare and Institutions Code).  
   (4) "Public goods charge" means the nonbypassable separate rate
component imposed pursuant to Article 7 (commencing with Section 381)
of 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). 
    (b)     (1)    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 shall not
be borne solely by any single class of customer.  For an
electrical corporation or public utility that is both an electrical
corporation and a gas corporation, the costs, shall be recovered on
an equal cent-per-kilowatthour or per-therm 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. 

   (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.
 
   (3) Beginning January 1, 2019, the commission may, subject to the
limitation in paragraph (4), establish rates for CARE program
participants pursuant to this section and Sections 739 and 739.9,
subject to 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 conducted 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
to 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 to 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 to 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. 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 CARE baseline 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 credited to
reduce rates of residential ratepayers not participating in the CARE
program with usage above 130 percent of baseline quantities. 

   (b) 
    (c)  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) 
    (d)  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) 
    (e)  (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) 
    (f)  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) 
    (g)  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.
 
   (3) Beginning January 1, 2019, the commission may, subject to the
limitation in paragraph (4), establish rates for CARE program
participants pursuant to this section and Sections 739 and 739.9,
subject to 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. 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 credited to reduce rates of
residential ratepayers not participating in the CARE program with
usage above 130 percent of baseline quantities. 
  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. 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 
with  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 or default time-variant pricing for
residential customers prior to January 1, 2016.
   (c) The commission may authorize an electrical corporation to
offer residential customers the option of receiving service pursuant
to time-variant pricing and to participate in other demand response
programs.
   (d)  The   On and after January 1, 2016, the
 commission shall only approve an electrical corporation's use
of time-variant pricing if residential customers have the option to
not receive service pursuant to time-variant pricing and incur no
additional fees and surcharges as a result of the exercise of that
option.
   SEC. 7.    Section 747 of the   Public
Utilities Code   is amended to read: 
   747.  (a) It is the intent of the Legislature that the commission
reduce rates for electricity and natural gas to the lowest amount
possible.
   (b)  (1)    The commission shall prepare a
written report on the costs of programs and activities conducted by
each electrical corporation and gas corporation that is subject to
this section, including activities conducted to comply with their
duty to serve. The report shall be completed on an annual basis
before February 1 of each year, and shall identify, clearly and
concisely, all of the following: 
   (1) 
    (A)  Each program mandated by statute and its annual
cost to ratepayers. 
   (2) 
    (B)  Each program mandated by the commission and its
annual cost to ratepayers. 
   (3) 
    (C)  Energy purchase contract costs and bond-related
costs incurred pursuant to Division 27 (commencing with Section
80000) of the Water Code. 
   (4) 
    (D)  All other aggregated categories of costs currently
recovered in retail rates as determined by the commission. 
   (2) The report shall also contain the commission's recommendations
for actions that can be undertaken during the upcoming year to limit
utility cost increases, consistent with the state's energy and
environmental goals, including the state's goals for reducing
greenhouse gases.  
   (3) In preparing the report, the commission shall annually require
electrical and gas corporations to study and report to the
commission on measures that they recommend be undertaken to limit
cost increases. 
   (c) As used in this section, the reporting requirements apply to
electrical corporations with at least 1,000,000 retail customers in
California and gas corporations with at least 500,000 retail
customers in California.
   (d) The report required by subdivision (b) shall be submitted to
the Governor and the Legislature no later than February 1 of each
year.
   (e) The commission shall post the report required by subdivision
(b) in a conspicuous area of its Internet Web site.
   SEC. 7.   SEC. 8.   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) 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. 8.   SEC. 9.   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. 9.   SEC. 10.   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.