Bill Text: CA AB1350 | 2013-2014 | Regular Session | Amended

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

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Bill Title: Electricity: direct transactions.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2014-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1350 Detail]

Download: California-2013-AB1350-Amended.html

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BILL NUMBER: AB 1350	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 1, 2013

INTRODUCED BY   Assembly Member Roger Hernández

                        FEBRUARY 22, 2013

   An act to amend Section  370   365.1  of
the Public Utilities Code, relating to electricity.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1350, as amended, Roger Hernández. Electricity: direct
transactions.
   The Public Utilities Act requires the Public Utilities Commission,
pursuant to electrical restructuring, to authorize and facilitate
direct transactions between electricity suppliers and retail end-use
customers.  However, other provisions of the act suspend the
right of retail end-use customers, other than community choice
aggregators, as defined, to acquire service from certain electricity
suppliers, after a period of time to be determined by the PUC, until
the Department of Water Resources no longer supplies electricity
under that law. The act requires the PUC to require a consumer, as a
prerequisite for the consumer to engage in direct transactions, to
have the obligation to pay specified uneconomic costs of an
electrical corporation subject to specified conditions. The act
provides that to the extent the consumer does not use the electrical
corporation's facilities for direct transactions, the obligation to
pay is required to be confirmed in writing. A violation of the act is
a crime.     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 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 suspended the right of retail end-use customers,
other than community choice aggregators and a qualifying direct
transaction customer, as defined, to acquire service through a direct
transaction until the Department of Water Resources no longer
supplies electricity under that law. Existing law continues the
suspension of direct   transactions except as expressly
authorized, until the Legisl   ature, by statute, repeals
the suspension or otherwise authorizes direct transactions. Existing
law requires the commission to authorize direct transactions for
nonresidential end-use customers subject to a reopening schedule that
will phase in over a period of not less than 3 years and not more
than 5 years, and is subject to an annual maximum allowable total
kilowatthour limit established, as specified, for each electrical
corporation. 
   This bill would require  , until January 1, 2016, the
electricity marketer engaged in the direct transaction with the
consumer to inform the consumer that the consumer's obligation to pay
those costs is to be confirmed in writing. Because a violation of
this requirement is a crime, this bill would impose a state-mandated
local program.   the commission to adopt and implement a
schedule that implements a second phase-in period for expanding
direct transactions, as specified, over a reasonable time commencing
not later than July 1, 2014. The bill would require the commission to
ensure that nonprofit and government customers, as defined, are
given priority to acquire electric service through direct
transactions and to ensure that not less than 25% of the allowable
kilowatthours in any phase-in period are reserved for nonprofit and
governmental customers. The bill would establish as a condition
precedent to the second phase-in of the expansion of direct
transactions   that the commission find that other providers
supplying electricity through a direct transaction are procuring
eligible renewable energy resources sufficient to meet their
procurement requirements pursuant to the California Renewables
Portfolio Standard Program.  
   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 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. 
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

   SECTION 1.    Section 365.1 of the   Public
Utilities Code   is amended 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)  (1)    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 
    (2)     During the first phase-in period
for expanding access to direct transactions, 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   October 11, 2009.
The  commission shall adopt and implement  a 
 the first direct transactions  reopening schedule 
that commences immediately   commencing April 11, 2010,
 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   October 11, 2009  , 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  first 
phase-in schedule. 
   (3) The commission shall adopt and implement a schedule that
implements a second phase-in period for expanding access to direct
transactions over a reasonable time, commencing not later than July
1, 2014. During the second phase-in period, the allowable amount of
kilowatthours supplied by other providers in each electrical
corporation's distribution service territory, in addition to the
amounts authorized pursuant to paragraph (2), shall be increased by
the following amounts: for Pacific Gas and Electric Company, 3,946
gigawatthours; for Southern California Edison Company, 3,946
gigawatthours; and for San Diego Gas and Electric Company, 462
gigawatt hours. The commission shall ensure that nonprofit and
government customers are given priority to acquire electric service
through direct transactions and shall ensure that not less than 25
percent of the allowable kilowatthours in any phase-in period are
reserved for nonprofit and governmental customers. Should nonprofit
and governmental customers not acquire service through direct
transactions up to 25 percent, the commission shall make direct
transactions available to other customers up to the limits
established by the commission for each period. As a condition
precedent to the authorization of additional direct transactions
pursuant to this paragraph, the commission shall find that other
providers are procuring eligible renewable energy resources
sufficient to meet their procurement requirements pursuant to the
renewables portfolio standard established pursuant to Article 16
(commencing with Section 399.11). The commission may review and, if
appropriate, modify its then effective rules governing direct
transactions, but that review shall not delay the start of the second
phase-in schedule. For purposes of this paragraph, the following
terms have the following meanings:  
   (A) "Governmental customers" means a city, county, whether general
law or chartered, a city and county, special district, school
district, political subdivision, or other local public agency, but
shall not mean a joint powers authority, the state or any agency or
department of the state other than an individual campus of the
University of California, the California State University, or a
community college.  
   (B) "Nonprofit customer" means any customer that is a nonprofit
organization described in Section 501(c)(3) of the Internal Revenue
Code (26 U.S.C. Sec. 501(c)(3)), that is exempt from taxation under
Section 501(a) of the Internal Revenue Code (26 U.S.C. Sec. 501(a)).

   (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) If the commission authorizes or orders an electrical
corporation to obtain generation resources pursuant to subparagraph
(A), the commission shall ensure that those resources meet a system
or local reliability need in a manner that benefits all customers of
the electrical corporation. The commission shall allocate the costs
of those generation resources to ratepayers in a manner that is fair
and equitable to all customers, whether they receive electric service
from the electrical corporation, a community choice aggregator, or
an electric service provider.
   (C) 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.

   (D) 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. 
  SECTION 1.    Section 370 of the Public Utilities
Code is amended to read:
   370.  The commission shall require, as a prerequisite for a
consumer in California to engage in direct transactions permitted in
Section 365, that beginning with the commencement of these direct
transactions, the consumer shall have an obligation to pay the costs
provided in Sections 367, 368, 375, and 376, and subject to the
conditions in Sections 371 to 374, inclusive, directly to the
electrical corporation providing electricity service in the area in
which the consumer is located. This obligation shall be set forth in
the applicable rate schedule, contract, or tariff option under which
the customer is receiving service from the electrical corporation. To
the extent the consumer does not use the electrical corporation's
facilities for direct transaction, the obligation to pay shall be
confirmed in writing, and the customer shall be advised by any
electricity marketer engaged in the transaction of the requirement
that the customer execute a confirmation. The requirement for
marketers to inform customers of the written requirement shall cease
on January 1, 2016. 
  SEC. 2.  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.