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<title>August 2004: California Retail Choice Legislation Developing</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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</center><p align="left"><b><u><br>
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<p ALIGN="left"><u><b>August 2004<br>
</b></u><font size="6"><b>California Retail Choice Legislation
Developing<br>
</b></font><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>5/01/08</font><font size="2">)</font></p>
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<p align="justify"><br>
<b>Reliable Electric Service Act of 2004<br>
</b>The California legislature is continuing its analysis of
a bill addressing electric industry restructuring which would reintroduce
retail choice to the state of California. California Assembly Speaker Fabian
Nunez introduced the bill, referred to as the Reliable Electric Service Act
of 2004 (the “Act”) in February 2004. In May, the California Assembly
pproved an amended version of the Act, referring it to the Senate Committee
on Energy, Utilities and Communications (EU&C). EU&C amended the bill and
referred it to the Senate Committee on Rules. The Act was amended again on
July 29, 2004 and rereferred to the Rules Committee. The Rules Committee
sent the Act to the Senate Committee on Appropriations for review.</p>
<p align="justify"><b>Retail Electric Choice</b><br>
The Act authorizes the California Public Utilities Commission (“CPUC”) to
adopt rules allowing eligible high usage customers to choose electricity
suppliers. The Act requires utilities to file a long-term integrated
resource plan which must be approved by the CPUC. The Act also requires the
CPUC to submit a plan to streamline the transmission siting process and to
establish, in consultation with the California Independent System Operator,
resource adequacy requirements for ensuring the availability of generating
capacity to meet load demands and reserve operating requirements. The Act
repeals the state’s earlier attempts at restructuring which were implemented
in the mid to late 1990’s, prior to the California energy crisis of the
early 2000s.<br>
<br>
<b>Cost Recovery</b><br>
In addition to authorizing a measure of retail choice, the Act expressly
requires the CPUC to approve “just and reasonable rates sufficient to ensure
that the electrical corporation fully recovers [its] … initial capital
investment found reasonable by the commission … [and the] full cost of
contracting for generation resources with another entity … in a manner
determined to provide the best value to ratepayers.” California Assembly
Bill 2006, as amended, July 29, 2004. Such cost recovery extends to costs
related to system reliability and local area reliability. Under the Act as
revised, these costs “shall be equitably borne by and recoverable from all
customers on a pro rata, fully compensatory basis, that cannot be bypassed.”
<br>
<br>
<b>Effective Date</b><br>
Under the latest amendments, the CPUC is directed to authorize retail choice
on or before December 31, 2005.</p>
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<blockquote>
<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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