I will send out a real legislative report next week.  In the meantime, I
thought you might appreciate a quick run-down of what actually happened in
the final hours of this year's wild legislative session.

The good news is that the public benefit charge bill passed easily with a
10-year term and no statutory harm was done.  The bad news is that utilities
captured the deregulation debate and successfully painted generators as
villains and the wholesale market as "broken."

Major legislative actions on energy matters follow.  If you have any
questions or would like a copy of final legislation, please call.

AB 995 (Wright) and SB 1194 (Sher), which extend public benefit charges for
energy conservation, renewable energy development, and RD&D, passed the
State Legislature by large margins.  Recent indications are that the
Governor will sign the bills, although interested companies should join IEP
in sending letters urging him to do so.
Power plant siting was front and center the last week of the session.  As
recently as Wednesday of this week, the bill was so bad for new power plant
development that IEP opposed the expedited siting provisions.  They were
rewritten by Republican staff and CEC attorneys to provide a 6-month process
for a mitigated negative declaration of environmental impacts that might
help those few entities that can start the process in full compliance with
local rules.  This provision is available for both combined cycle facilities
and peaking facilities.  The bill also includes a provision for four-month
approval of amendments to pending applications providing for the
installation of temporary peaking generation  on sites that will be
developed into combined cycle facilities within three years.  The CEC
expects this to apply so a single pending application.  Finally, the bill
includes language directing the CPUC and the EOB to be helpful on ISO issues
that affect the willingness self-generators to remain interconnected with
the grid.
Utility efforts to craft legislation assuring them of collection of large
negative balances in their Transition Revenue Accounts failed when they
could not reach agreement with representatives of large customer groups.  In
its place, the Legislature passed a non-binding resolution directing the
CPUC to investigate the issue and including highly offensive language on
$100 price caps and retroactive recalculation of market clearing prices.
Legislation establishing a retroactive cap on SDG&E rates and providing no
assurance of cost recovery to Sempra passed the Legislature.  Companion
legislation that most observers expect the Governor to veto provides $150
million of General Fund money to SDG&E.
A draft of so-called "sunshine" legislation surfaced late in the process.
The draft empowered the Electricity Oversight Board to collect anything it
might be interested in from the ISO, PX, utilities, generators, and
marketers and to treat the information confidentially.  The draft faced
unified opposition and did not make its way into any legislation.
AB 1002 (Wright) establishing public benefit charges on the natural gas
system passed the Legislature.  It continues to include language exempting
electricity generation from the charges.

Karen Edson
kedson@ns.net
916/552-7070