BILL NUMBER: SB 695 CHAPTERED
BILL TEXT
CHAPTER 337
FILED WITH SECRETARY OF STATE OCTOBER 11, 2009
APPROVED BY GOVERNOR OCTOBER 11, 2009
PASSED THE SENATE SEPTEMBER 8, 2009
PASSED THE ASSEMBLY SEPTEMBER 1, 2009
AMENDED IN ASSEMBLY AUGUST 17, 2009
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, 745, and 748 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, Kehoe. 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 do any of the following: (A)
employ mandatory or default time-variant pricing, as defined, with or
without bill protection, as defined, for residential customers prior
to January 1, 2013, (B) employ mandatory or default time-variant
pricing, without bill protection, for residential customers prior to
January 1, 2014, or (C) employ mandatory or default real-time
pricing, without bill protection, for residential customers prior to
January 1, 2020. The bill 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
default time-variant pricing for residential customers, beginning
January 1, 2014, if those residential customers have the option to
not receive service pursuant to time-variant pricing and incur no
additional charges, as specified, as a result of the exercise of that
option. The bill would exempt certain customers from being subject
to default time-variant pricing.
(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 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 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
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, 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 at the dwelling units and
develop programs that specifically target 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 reopening schedule that commences
immediately and will phase in over a period of not less than 3 years
and not more than 5 years, and subject to an annual maximum allowable
total kilowatthour 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.
The bill would require that by May 1, 2010, and by May 1 of each
year thereafter, the commission also report to the Governor and
Legislature with its recommendations for actions that can be
undertaken during the upcoming year to limit utility cost and rate
increases, consistent with the state's 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
costs and rate 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.
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 at the dwelling units, and develop programs that specifically
target 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, as defined in Section 218.3. "Other provider" does not
include a community choice aggregator, as defined in Section 331.1,
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 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 any 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
reopening schedule that commences immediately and will phase in the
allowable amount of increased kilowatthours over a period of not less
than three years, and not more than five years, raising 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 under any programs or rules adopted by the
commission to implement the resource adequacy provisions of Section
380, the renewables portfolio standard provisions of 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 applies notwithstanding any prior decision of the
commission to the contrary.
(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 commission 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 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 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.
(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.
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
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 (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 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, the following terms have
the following meanings:
(1) "Bill protection" means that customers on mandatory or default
time-variant pricing will be guaranteed that the total amount paid
for electric service shall not exceed the amount that would have been
due under the customer's previous rate schedule.
(2) "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 do any of the following:
(1) Employ mandatory or default time-variant pricing, with or
without bill protection, for any residential customer prior to
January 1, 2013.
(2) Employ mandatory or default time-variant pricing, without bill
protection, for residential customers prior to January 1, 2014.
(3) Employ mandatory or default real-time pricing, without bill
protection, for residential customers prior to January 1, 2020.
(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, 2014, the commission shall only
approve an electrical corporation's use of default time-variant
pricing in a manner consistent with the other provisions of this
part, if all of the following conditions have been met:
(1) Residential customers have the option to not receive service
pursuant to time-variant pricing and incur no additional 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 more than a proportional share of any discounts or
other incentives paid to customers 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 the exercise of the option to not
receive service pursuant to a time-variant rate schedule.
(2) Residential customers receiving a medical baseline allowance
pursuant to subdivision (c) of Section 739 and customers requesting
third-party notification pursuant to subdivision (c) of Section
779.1, shall not be subject to mandatory or default time-variant
pricing.
(3) A residential customer shall not be subject to a default
time-variant rate schedule without bill protection unless that
residential customer has been provided with not less than one year of
interval usage data from an advanced meter and associated customer
education and, following the passage of this period, is provided with
not less than one year of bill protection during which the total
amount paid by the residential customer for electric service shall
not exceed the amount that would have been payable by the residential
customer under that customer's previous rate schedule.
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) 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 April 1 of each year, and shall
identify, clearly and concisely, all of the following:
(1) Each program mandated by statute and its annual cost to
ratepayers.
(2) Each program mandated by the commission and its annual cost to
ratepayers.
(3) Energy purchase contract costs and bond-related costs incurred
pursuant to Division 27 (commencing with Section 80000) of the Water
Code.
(4) All other aggregated categories of costs currently recovered
in retail rates as determined by the commission.
(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 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 748 is added to the Public Utilities Code, to
read:
748. (a) The commission, by May 1, 2010, and by each May 1
thereafter, shall prepare and submit a written report, separate from
and in addition to the report required by Section 747, to the
Governor and Legislature that contains the commission's
recommendations for actions that can be undertaken during the
succeeding 12 months to limit utility cost and rate increases,
consistent with the state's energy and environmental goals, including
goals for reducing emissions of greenhouse gases.
(b) In preparing the report required by subdivision (a), the
commission shall require electrical corporations with 1,000,000 or
more retail customers in California, and gas corporations with
500,000 or more retail customers in California, to study and report
on measures the corporation recommends be undertaken to limit costs
and rate increases.
(c) The commission shall post the report required by subdivision
(a) in a conspicuous area of its Internet Web site.
SEC. 9. 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. 10. 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. 11. 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.