This bill would authorize each electrical corporation that has not yet fully recovered its commission-authorized uneconomic costs to propose a cost recovery plan to the commission for the recovery of losses to the electrical corporation incurred because of wholesale price volatility of electric energy. The bill would require the commission to make a determination of which costs specified in the cost recovery plan submitted by the electrical corporation are reasonable and should be recovered. The bill would require the commission to authorize the electrical corporation to use a portion of the competition transition charge recovered from classes of customers on a nonbypassable basis under existing law for the recovery of commission-approved losses to the electrical corporation incurred because of wholesale price volatility of electric energy. Because, under existing law, a violation of the above provisions with regard to regulation by the commission would be a crime, this bill would impose a state-mandated local program by changing the definition of a 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. In order for a deregulated wholesale electrical market in California to function properly, market actors must be allowed to respond to market signals in a timely fashion. Utilities regulated by the Public Utilities Commission must be allowed to enter into significant long-term contracts for the purchase of energy, and given flexibility similar to that of municipal utilities. It is inconsistent with the Legislature's intent to deregulate the wholesale market for electricity in a fashion that will provide lower, stable prices for consumers, to allow the commission to forestall the use of forward or bilateral contracting for electrical purchases. The commission, through its failure to establish appropriate guidelines or benchmarks for forward contracts, has prevented the use of those contracts to keep wholesale costs low for investor-owned utilities.