HomeMy WebLinkAboutAgenda Packet - May 5, 2003 -CC , ,
n ,,,,, ii, ,„
..“,:„, ,,_ ,,,t,,„,„..,..,,,,..,...,_ 7:air' 7' ..,,, ...,„,,,,,, , ' ' '7' „Z .'"
9z
E .e y-y
AZUSA.
a<.,IIT A wsrrc
CONSENT CALENDAR
TO: HONORABLE MAYOR AND MEMBERS OF AZUSA CITY COUNCIL
FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES
VIA: RICK COLE, CITY MANAGER fb\
DATE: MAY 5, 2003
SUBJECT: LETTER OF SUPPORT FOR SB 888
RECOMMENDATION
It is recommended that the Azusa City Council pass a motion to support SB 888 with
clarifying amendments and authorize the Mayor to sign the letter of support.
BACKGROUND
State Senator Joseph Dunn recently introduced a bill, SB 888, which is intended to return
California to a regulated, cost based, electric utility industry. It would repeal most of AB 1890
of 1996 which restructured the electric industry in California.
The highlights of the Bill are:
• Declares the legislative intent to restore the Investor Owned Utilities (IOU)
obligation to serve, stop power plant divestiture, reinstated comprehensive
planning, provide reasonable rates, and assure universal service.
• Requires CPUC to set transmission maintenance standards.
• Repeal direct access provision of AB 1890.
• Provides that current direct access customers return to IOU service after their
contracts expire.
• Requires cost based regulation of IOUs.
• Restores the obligation to build generation to meet loads of IOUs.
This Bill deals almost entirely with Investor Owned Utilities in California. However, by moving
the California electric utility industry towards regulated, obligation to serve, and cost based
.44a/// 5/570 9
Page 2: Letter of Support for SB 888
market, it will restore market stability, supply reliability and cost predictability. Indirectly,
public owned utilities can benefit from those market attributes. Therefore, California
Municipal Utilities Association and Southern California Public Power Association have
expressed support to this Bill.
A sample Letter of Support is attached for your reference.
Prepared by: J. Hsu
Attachment
•
t
l
t ifoc '' .
e
AZUSA
The Canyon City—Gateway to the American Dream
Office of the Mayor
May 6, 2003.
Honorable Joseph Dunn
California State Senate
Room 2080
Sacramento, CA 95814
SUBJECT: SUPPORT FOR SB 888 AS PROPOSED TO BE AMENDED
Dear Senator Dunn:
The City of Azusa supports SB 888 with clarifying amendments as proposed by the
California Municipal Utilities Association (CMUA), and urges you to work with CMUA
on the proposed amendments.
Azusa commends your effort with SB 888 to correct what has been widely recognized
as a policy disaster in California—Energy Deregulation. The economic proportions of
deregulation have added billions of dollars in costs to the California economy, and the
ramifications will be with us for years to come.
In 1999, the last year in which we had a stable electricity market, the California
Independent System Operator (ISO) spent $7 billion on electricity. In 2000, the same
area spent $27 billion. This cost was projected to rise to $70 billion before the Federal
Energy Regulatory Commission instituted price caps. Price caps became necessary
because of market failure, and market failure was guaranteed given the unique nature
of electricity, infrastructure costs to generate electricity, and corporate greed.
Deregulation was supposed to result in lower rates. However, deregulation increased
costs to residents, businesses, and government, and degraded the reliability of
electricity distribution in California resulting in extensive statewide rolling blackouts,
which even impacted municipal utilities who had met their obligation to serve
customers by having adequate electricity supply on hand. Deregulation also weakened
investor owned utilities' creditworthiness and further jeopardized system reliability for
all.
213 E. Foothill Blvd.,Azusa, California,91702, (626)812-5228
3
Page 2: Honorable Joseph Dunn
SB 888 takes a big step to remedy the disaster of Deregulation. It restores investor
owned utilities' obligation to serve, including their obligation to plan for the future. It
requires rates charged to consumers be just and reasonable for reliable and safe
electricity. It provides potential investors of future generation and transmission
projects a fair return on their investment. SB 888 provides for cost effective
transmission and distribution of electricity and gives the CPUC an appropriate
regulatory role in overseeing the public interest.
Further, we believe that SB 888 may provide us with an opportunity to reform the ISO
ro ensure adequate transmission for all Californians at cost-based rates. Correcting
failed market strucrures necessitates redesigning ISO functions to limit involvement in
markets and change its goal from serving markets to serving consumers. Here too,
CMUA Is sponsoring legislation that would require the ISO to benchmark its costs to
other similar organizations throughout the country and we urge you to work with
CMUA to incorporate appropriate language into your b'J.
Sincer
ristina Cruz-Madrid
Mayor
cc: Azusa City Council
Gloria Romero, California State Senator
Edward Chavez, California Assembly Member
Jerry Jordan, CMUA
Bill Carnahan, SCPPA