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

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

---

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

---

BILL NUMBER: SB 695	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 24, 2009
	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, 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:  
Energy:  rates.
   (1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations  and gas 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  , as defined,  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  
charges, as specified,  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
  that are no greater than  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   cents-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  
cents-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   at  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  , including programs that promote
weatherization of existing dwelling units and replacement of
inefficient appliances  . The bill would require the commission,
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  delete the existing suspension of direct
transactions in the Water Code that was adopted during the energy
crisis of 2000-01, and would instead  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   maximum
allowable total kilowatthours annual limit  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  change the reporting date to April 1 of each
year and  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  , including the state's goals
for reducing emissions of greenhouse gases  . 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.
   (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.
   (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.
   (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  (CARE)
 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   at  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  , including programs that
promote weatherization of existing dwelling units and replacement of
inefficient appliances  .
   (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 electrical and gas
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 is authorized to provide electric
service within the service territory of an electrical corporation
pursuant to this chapter, and includes an aggregator, broker, or
marketer  , as defined in Section 331,  and an
electric service provider.  "Other provider" does not include a
community choice aggregator and the limitations in this section do
not apply to the sale of electricity by "other providers" to a
community choice aggregator for resale to community choice
aggregation electricity consumers pursuant to Section 366.2. 

   (b)The commission may allow individual retail nonresidential
end-use customers to acquire electric service from other providers,
subject to the limitation that the total annual kilowatthours
supplied by all other providers to distribution customers of an
electrical corporation shall not exceed the maximum total annual
level of kilowatthours supplied by all other providers, within that
electrical corporation's distribution service territory, for any year
between April 1, 1998, and December 31, 2009. 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  
   (b) The commission shall allow individual retail nonresidential
end-use customers to acquire electric service from other providers in
each electrical corporation's distribution service territory, up to
a maximum allowable total kilowatthours annual limit. The maximum
allowable annual limit shall be established by the commission for
each electrical corporation at the maximum total kilowatthours
supplied by all other providers to distribution customers of that
electrical corporation during a sequential 12-month period between
April 1, 1998, and the effective date of this section. Within six
months of the effective date of this section, or by July 1, 2010,
whichever is sooner, the commission shall adopt and implement 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 in each electrical corporation's distribution
service territory from the number of kilowatthours provided by other
providers as of the effective date of this section, to the maximum
allowable annual limit for that electrical corporation's distribution
service territory. The commission shall review and, if appropriate,
modify its currently effective rules governing direct transactions,
but that review shall not delay the start of the phase-in schedule.
 
   (c) Once the commission has authorized additional direct
transactions pursuant to subdivision (b), it shall do both of the
following:
    (1)     Ensure that 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  adopted  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  
applies  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 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 order, on a
fully nonbypassable basis, to 
    (2)     (A)     Ensure
that, in the event that the commission authorizes, in the situation
of a contract with a third party, or orders, in the situation of
utility-owned generation, an electrical corporation to obtain
generation resources that the commis   sion determines are
needed to meet system or local area reliability needs for the benefit
of all customers in the electrical corporation's distribution
service territory, the net capacity costs of those generation
resources   are allocated on a fully nonbypassable basis
consistent with departing load provisions as determined by the
commission, 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 pursuant to subparagraph (A)
 ,  shall be allocated to all customers who pay
their 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   for applying this
allocation  , but may be allowed 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.
   (C) It is the intent of the Legislature, in enacting this
paragraph,  to provide additional guidance to the commission with
respect to the implementation of subdivision (g) of Section 380, as
well as  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) (1) If the commission approves a centralized resource adequacy
mechanism pursuant to subdivisions (h) and (i) of Section 380, upon
the implementation of the centralized resource adequacy mechanism the
requirements of paragraph (2) of subdivision (c) shall be suspended.
If the commission later orders that electrical corporations cease
procuring capacity through a centralized resource adequacy mechanism,
the requirements of paragraph (2) of subdivision (c) shall again
apply.  
   (2) If the use of a centralized resource adequacy mechanism is
authorized by the commission and has been implemented as set forth in
paragraph (1), the net capacity costs of generation resources that
the commission determines are required to meet urgent system or
urgent local grid reliability needs, and that the commission
authorizes to be procured outside of the Section 380 or Section 454.5
processes, shall be recovered according to the provisions of
paragraph (2) of subdivision (c).  
   (3) Nothing in this subdivision supplants the resource adequacy
requirements of Section 380 or the resource procurement procedures
established in Section 454.5.  
   (d) 
    (e)  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) 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.
   (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 
    These programs shall be designed to  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   that are no greater than 
200 percent of the federal poverty guideline levels, the cost of
which shall not be borne solely by any single class of customer. 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)   (d)  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.
   (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.
   (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.
   (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.
   (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.
   (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.
  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   place any
restriction upon, or otherwise limit, the authority of the commission
to reduce any residential rate  .
  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  , at any time,  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) 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   charges  as a result of the exercise
of that option.  Prohibited charges include, but are not limited
to, administrative fees for switching away from time-variant pricing,
hedging premiums that exceed any actual costs of hedging, and
discounts or other incentives paid to customers solely to  
increase participation in time-variant pricing. This prohibition on
additional charges is not intended to ensure that a customer will
necessarily experience a lower total bill as a result of switching
rate schedules. 
  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
  April  1 of each year, and shall identify,
clearly and concisely, all of the following:
   (A) Each program mandated by statute and its annual cost to
ratepayers.
   (B) Each program mandated by the commission and its annual cost to
ratepayers.
   (C) Energy purchase contract costs and bond-related costs incurred
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
   (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 
emissions of  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
  April  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. 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. 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. 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.
     ____ CORRECTIONS  Text--Page 8.
                             ____