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HomeMy WebLinkAbout1998-09-08 - AGENDA REPORTS - PROP 9 UTILITY RATE (2)CONSENT CALENDAR CITY OF SANTA CLARITA AGENDA REPORT City Manager Approal . 9-5:7� Item to be presented by: Jarrod R. DeGonta DATE: September 8, 1998 SUBJECT: STATE INITIATIVE - PROPOSITION 9, THE UTILITY RATE REDUCTION AND REFORM ACT DEPARTMENT: City Manager RECOMMENDATION Oppose Proposition 9. BACKGROUND The City Council is requested by the League of California Cities and Southern California Edison to oppose Proposition 9, which will appear on the November 3, 1998 ballot. Sponsored by the organization known as The Utility Reform Network (TURN) and Harvey Rosenfield, Proposition 9 attempts to reform the utility services and markets in the state. Specifically, Proposition 9 will alter the formula for the competitive electricity market established by AB 1890, which passed the Legislature in 1996. Part of the AB 1890 formula is the issuing of 6 billion dollars in bonds to the electrical service providers to refinance existing power plants and contracts, thus enabling electric utilities to pay off their investment in power plants. The goal was to pass those savings along to the consumers in the form of rate reductions and the creation of competition amongst the utility markets. Proposition 9, if passed, will repeal the authority of the State to make payments on those bonds. If this occurs, the State will have to issue moneys from the General Fund to cover the debt left by the repeal of the bonds. Proponents of the proposition state that if passage occurs, consumers will save approximately 20% off their current electrical bills. They also state that the current electrical competitive market will not be harmed with passage, although no details are expressed. Arguments also include that taxpayers should not finance the investments made by the electric companies in the form nuclear power. Proponents include consumer advocate groups including those led by Ralph Nader and Consumers Union. Opponents of the proposition argue that the repeal of the state funded bonds will effectively dismantle the competitive electrical market. They also point out that if the bonds are repealed, the state still has an obligation to pay utility companies under the I Oh APPROVED Agenda Iteint-cw., formula of AB 1890. Money will come out of the state General Fund for this debt. The repeal of the bonds will also jeopardize the state's bond rating. The utility companies also argue that without the state funded bonds, they will be forced to raise their rates to cover their potential loses. The organization against Proposition 9 is the Californians for Affordable and Reliable Electric Services (CARES). This group represents a vast spectrum of organizations, which include the California TaxPayers Association, California School Boards Association, Southern California Edison, and the League of California Cities. FISCAL IMPACT If this initiative passes, money will be taken out of the general fund to cover the 6 billion - dollar debt left by the repeal of the already issued bonds. There will be less funding for programs that benefit local municipalities, including benefits to the City of Santa Clarita. Also, the minimum funding guarantee for schools in grades K-14 as established under Proposition 98 will be lowered, thus reducing education funding. It is important to note that if there is a 6 billion -dollar hole in the General Fund, the State may be forced to raise taxes. At this time, it is not possible. to assess the specific financial impact of Santa Clarita. ATTACHMENTS Proposition 9 League of California Cities Press Release SAMS\MPM\prop9ag.doc 0B/26i96 10:29 SECRETARY OF STATE 4 605 259 6125 Text of Proposed Laws—Continued Constitutions of the United States and California. Any provisions of this act held to he invalid shall he severed foam the remaining provisions of this act, which shall be given full effect. SEC. 17. Except where expressly provided otherwise, this act shall become operative for all school terms that commence NO.240 P006i009 of least 60 days after the effective date of this act. SEC. 18. The provisions of this actmayhe amended by a statute that becomes effective upon approval by the electorate or by a statute to further the act's purpose that is passed by a four-fifths vote of each house of the Legislature and signed by the Governor. Proposition 9: Text of Proposed Law This initiative measure Is submitted to the people in accordance with the provisions of Article II, Section 8 of the California Constitution. This initiative measure amends and adds sections to the Public Utilities Code; therefore, existing provisions proposed to he deleted are printed in sit:ikeenaEype and now provisions proposed to be added are printed in italic type to indicate that they are new. PROPOSED LAW THE UTILITY RATE REDUCTION AND REFORM ACT SECTION 1. Findings and Declarations. The People of California find and declare as follows; The cost and dependability of Califarnia's electric utility service aro threatened by a new law that was intended to reduce regulation of electric utility companies in this state. Any change in the way electricity is sold should benefit Lill electric utility customers, including residentiul and small business customers, and should result in u fair and competitive marketplace, Instead of creating A fully competitive market for electricity, the now law unfairly favors existing electric utility monopolies by forcing customers to pay rates more than 40 percent higher then the market price in order to bail out utilities for their past bad investments. As a result of this $28 billion bailout for electric utility companies. the average California household will pay more than $250 more per year for electricity than it would in a fully competitive market. Residential and small business customers should nut be required to hear the costs of bunds used by utility companies to pay far past bad investments. It is againstppublic policy for residential and small business customers to ba required to pay for the imprudent and uneconomic decisions of electric utility companies to invest in nuclear power planta that the public did not want and that threaten the health and safety of this state. Under the new law, deregulation of electric utility companies may result in marketing nbusus that harm residential and small business customers. Such abuses may include the selling of information about these customers to other companies for profit. Tharefnre, the People of California declare that it is necessary to protect residential and 'small business customary from unfair and unjustified taxes and surcharges that will force them to subsidize electric utility companies, It is also necessary to ensure that residential and small business customers directly henetit from deregulation of electric utility companies, SEC. 2, Purpose. The purpose of this chapter is to: 1. Reduce rosidentiat and small commercial electricity rates by 20 percent to Assure that these customers receive a direct benefit from the transition to the competitive marketplace for electricity. 2. Prohibit taxes, surcharges, bond payments. or any other assessment from being added to electricity hills to pay off utility companies' past bad investments in nuclear power plants and other generation -related costs. 3. Prohibit bonds from being used to force residential and small business customers to pay for past bad investments by electric utility companies. 4. Provide for fair and public review of California Public Utilities Commission decisions related to electricity price and services. 5, Protect the privacy of utility customera and provide the information consumers need to obtain low cost and high quality electric service. SEC. 3. Section 36A,1 is added to the Public Utilities Code, Lo read: 368, 1. (a) No later than January 1. 1999, electricity rates for residential and small commercial customers shall be reduced so that these customers receive rate reductions of at least 20 percent on their total electricity bill as compared to the rate schedules in e./felt for these customers on ✓une 10, 1996. (h) The rate reductions described in subdivision (a) shall be achieved through cutting payments to electric corporations for their nuclear and other uneconomic generation costs as described in Sections 267.1 and 367.2. (c) No utility tax, bond payment, surcharge, or other assessment in any form may be levied against any electric utility customer to pay for the rate reductions described in subdivisions (a) and (b). - SEC. 4_ Section 387.1 is Added to the Public Utilities Code, to read: 367,1. (a) Effective immediately, costs for nuclear generation plants and related assets and obligations shall not he paid for by electric utility customers, except to the extent that these costs are recovered by the sale of electricity at competitive market prices its reflected in independent Power Exchange revenues or in contracts with the Independent System Operator, (h) No uttliey .tax, bond payment, surcharge, or other Assessment in any form may be levied against artyelectric utility customer for the recovery of nuclear costs described in subdivision (a). ((,.) This section does not apply to reasonable nuclear decommissioning costs as referenced in Section 379. SRC, 5. Section 367.2 is added to the Public Utilities Coda, to read: 367,:.. (a) Effective immediately, costs for non-nuclear generation plants and related assets and obligations may not be recovered from electric utility customers under the cost recovery mechanism provided for by Sections 367 to 376, inclusive, except to the extent that those costs are recovered by the sale.of electricity at competitive market rates from independent Power Exchange revenues or from contracts with the Independent System Operator, unless the electric utility first demonstrates to the satisfaction of the commission at a public hearing that fnilure to recover those rants would deprive it of the opportunity to earn a fair rate of return. (b) This section does not apply to costs associated with renewable non-nuclear electricity generation facilities described in paragraph (3) of subdivision (c) of Section 381, or to costs associated with power purchases from qualifying facilities pursuant to the federal Public Utility RegulatoryPolicies Act of 1978 and related commission decisions. - SEC. 6. Section 840,1 is added to the Public Utilities Code, to read: 840.1. Notwithstanding current Sections 840 to 847, inclusive: (a) No electric corporation, affiliate of an electric corporolinn, 06/26/96 10:32 SECRETARY OF STATE 4 605 259 6125 or any other financing entity may assess or collect any utility tax, bond payment, surcharge, or any other assessment authorized by a Public Utilities Commission financing order issuedpursuant to Sections 840 to 847, inclusive, for the purpose of paying principal, interest, or other costs of any bonds authorized by those sections. (b) The Public Utilities Commission may not issue any financing order pursuant to Sections 840 to 847, inclusive, after the effective date of this section. (cJ Any electric carpuration, affiliate of an electric corporation, or other rnancing entity that is subject to a financing order issued under Section 84I that is determined by a court of competent jurisdiction to be enforceable notwithstanding subdivision (a) of this section, shall offset any utility tax, bund payment, surcharge, or other assessment described in subdivision (a) collected from any customer with an equal credit to be applied concurrently with the collection of the utility tax, bond payment, surcharge, or other assessment. SEC. 7. Section 841.1 is added to the Public Utilities Code, to read: 841.1. Any underwriter or bond purchaser who purchases rate reduction bonds after November 24, 1991, issued pursuant to current Sections 840 to 847, inclusive, shall be deemed to have notice of the provisions of Sections 367.1, 367,2, :368.1, and 840.1. SEC. 8. Section 1701.5 is added to the Public Utilities Code, to read: 1701.5. (a) Any action or proceeding of the Public Utilities Commission pursuant to Sections 367,1, 367.2, 368.1. and 840.1 shall require a public hearing where evidence is taken by, and discretion is vested in, the Public Utilities Commission. (bi Any change to the amount of above -market costs for non-nuclear generation plants and related assets and obligations being recovered from utility customers shall be made only after the electrical corporation hoe provided notice to the public pursuant to Section 454. (c) Any action or proceeding to attack, review, act aside, void, or annul a determination, finding. or decision of the Public Utilities Commission relating to electric restructuring under Chapter 2.3 (commencing with Section 330) and financing of transition costs as described in Article 5.5 (commencing with Section 840) of Chapter 4 shall be in accordance with Section 1094.5 of the Code of Civil Procedure. In any such action, the writ of mandate shall Iie from the court of appeals to the Public Utilities. Commission. The court mny not exercise its independent judgment, but shall determine only whether the determination, finding, or decision of the Public Utilities Commission is supported by substantial evidence in light of the whole record. SEC. S. Section 394.15. is added to the Public Utilities Cade, to read: :194.15. The confidentiality of residential and small commercial customer information $11411 be fully protected as Provided by Inw. No entity providing electricity services, including an electric corporation, may provide information about a residential or small commercial customer to any third party without the express written consent of the customer, SEC. 10. Section 393 is added to the Public Utilities Cade, to read: 393. The Public Utilities Commission shall requireeach electric utility or electric service provider to provide information or materials with each utility hill issued to residential and small commercial customers as the commission determines are necessary to assist consumers ;in obtaining low-cost, high-qu41ity electric service options, including electric service options that reduce environmental impacts such its those that rely an renewable energy sources, and to protect the consumers' interest in all matters concerning safe and dependable delivery of electric service. SLC. 11. Section 330,1 is added to the Public Utilities Code, to read: NO.240 P007/009 Text of Proposed Laws—Colltittued 330.1. (a) "Utility tax." "bons! payments," 'surcharge," "assessment,"nr "involuntary payment"mean any charge that serves to permit an electric corporation to recover the value of uneconomic assets from ratepayers, and includes, but is not limited to, a 'fixed transition amount.`as defined by subdivision (d) of Section A40, and the "competition trnrtrition Charge' that is the nonbypassable charge referred to In Sections 387 to 376, inclusive. (b) For purposes of this section and Sections 367,1, 367.2, 368.1, 393, and 840.1, the terms "electric utility," electric, utility company,"and "electric corporation"have the same meaning as the term "electrical corporation"as defined in Section 238. SEC. 12, Section 367 of the Public Utilities Code is amended to read: 367. The commission shall identify and determine those costs and categories of costa for generation -related assets and obligations, consisting of generation facilities, generation -related regulatory assets, nuclear settlements, and power purchase contracts, including, but not limited to, restructurings, renegotiations or terminations thereof approved by the commission, that were being ° collected in commission -approved rates on December 20, 1995, and that may become uneconomic us a result of a competitive generation market, in that these costs may not be recoverable in market prices in a competitive market, and appropriate costa incurred after December 20, 1995, for capital additions to generating facilities existing as of December 20, 1996, that the commission determines are reasonable and should be recovered, provided that these additions ore necessary to maintain the facilities through December 31, 20tH, These uneconomic costs shall include transition coats as defined in subdivision (f) of Section 840, and shall be recovered from all customers -or in the case of fixed transition• amounts, ftiom the customers specified in subdivision (a) of Section 841, on u nonbypaseabla basis and shall: (a) & umerttted ever st reeaeaable bane perie� aS eolleetirm tea air aceeferated lmeie; eenaiaieret wink net irtereeeing rates ler arty rate schedule, earth etch, v- er `2=14a- ar2 optica abtwe the it.efe i:z effeeb oat .Itstte {& �i±9f; ptfded that tits vacovery f aka}} set extend beyenrtdd 13eeember fit i'09i exespB as +44 Geste usseeieted with ompie, ce ielated tranaitiaa wets vb set forth irr sethdMainn 0* of Ceeetien X* aka}/ CM611tte u iii faRy eeHeebed; provided; lie tte.el, timet the cost collection shaft neo albead beyond December ill; 9696. - fi)i Pa Pet pateltese eonh at ahiistttieas ehail continue for the daratien of the cantrae+ Foets arra ciated with tatty btty ant; ]my-riown,, nr renegotiation of the centraeta shall Continue to he, eolleeted for the deration of say *rivers*" goverairtg the beey it, ber,lawtr er tensge5ietad e7*;ae Met-, previdad- itewbv ae power paneitese eentraM shall be alder} tee a reedit of the +Y'mt bey dewtt et rsnegotietionr 4) fnaty associated wick eoasraets the eeramiesiea to-setNa leaetes aaseeiated �� ied Researee /daft updats uvay be collected tlttnash 1(areir 04; 99Q9 provided that t1*i7 f19 pereartt of t}te beisaco rtk kite eeebs re7aaift=r after i creember &is 999 ehsii be eligible for reeetet7t W Nuclear ineremeata! east. incentive pleat for the 6" F)ttefre aaeiesr geaervtiay statiee aha/! esttbiaea far the" terrtr res a etkeefeed by lite eemmiseiert in Decision 96 -9} -oil sad Geeisiatt flfrAi 43n9; Provided that t}te reco+ery *h" rrei exiartri beyemd 13eeember bt NOR. ffii Geeta associated with the sxempiioas prnvided tet sabdivisiea feta of ,Seetiett 044 may he, eoiieeted threa8k i> Tarek ai 9989; provided thvb only My :ailliea sailors 4$be 994}998/ of the beianee of the eeste Ismail int skier Beeembcr 0i- 9991; shvA be eiigibl far I ceem)e fQ Fixed h an -ibien atateents, at defatted in scbdi isien fdi of fieeiient 1140; rosy be tecevered from the eeeietrters epeeitied is enbdfvieiatt fat el Seebiett ti41• ttttEii $!! rate rtsdeesiett basso 06/26/96 10:33 SECRETARY OF STATE 4 605 259 6125 Text of Proposed Laws—Continued associated with tee fixed ti ontitien smounbs have been paid in feH by the £trlanrinf entity f6) Be based on a calculation mechanism that nets the negative value of all above market utility -owned generation -related assets against the positive value of all below market utility -owned generation -related assets. For those aasets Subject to valuation, the valuations used for the calculation of the uneconomic portion of the net book value shall be determined not later than December 31, 2001, and shall be based on appraisal, sale, or other divestiture. The commission's determination of the costa eligible for recovery and of the valuation of those assets at the time the assets are exposed to market risk or retired, in a proceeding under Section 455.5, 851, or otherwise, shall he final, and notwithstanding Section 1708 or any other provision of law, may not he rescinded, altered or amended. (e) (6) Be limited in the case of urilityowned fossil generation to the uneconomic portion of the net book value of the fossil capital investment existing.aa of January 1, 1998, and appropriate costa incurred after December 20, 1995, for capital additions to generating facilities existing as of December 20, 1996, that the commission determines are reasonable and should be recovered, provided that the additions are necessary to maintain the facilities through December 31, 2001: All "going forward casts'of fossil plant operation, including operation and maintenance, administrative and general, fuel and fuel transportation costa, shall he recovered solely from independent Power Exchange revenues or from contracts with the Independent System Operator,' provided that for the purposes of this chapter, the following coats may be recoverable pursuant ca this section: (1) Commission approved operating coats for particular utility -owned fossil powerplants or units, at particular times when reactive power/voltago support is not yet procurable at market-based rates in locations where it is deemed needed for the reactive powor/voltage support by the Independent System Operator, provided that the units are otherwise authorized to recover market-based rates and provided further that for an electrical corporation that is nlsa n gas corporation and that sorveS at least four million customers as of December 20, 1005, the commission shall allow the electrical corporation to retain any earnings from uparations of the reactive powerlvoltage support plants or units and shall not require the utility to apply nny pottiona to offset recovery of transition coats. Cost recovery under the cost recovery mechanism shrill end on December 31. 2001. (2) An electrical corporation that, as of December 20, 1995. served Lit leugt four million customers, and that was also a gas corporation that served loss than four thousand customers, may recover, pursuant to this section, 100 percent of the uneconomic portion of the fixed coats paid under fuel and fuel transportation contracts that were oxecuted prior to December 20, 1995, and were subsequently determined to he reasonable by the commission, or 100 percent of the buy -down or buy-out costs associatod with the contracts to the extent the coats are determined to be reasonable by the commission. (d) (c) Be adjusted throughout the period through March 31,. 2002, to track nccrnal and recovery of costs provided for in this subdivision. Rncavery of costa prior to Docember :11.2001, shall include it return as provided for in Decision 95-12.063, as modified by Decision 0"1-009, together with associated taxes. fel (d) (1) Be allocated among the vnrioua-classes of customers, rate schedules, and tariff options to ensure that costs aro recovered from.these classes, rate schedules, contract rates, Lind tariff options, including self -generation deferral, interruptible, and standby rate options in substantially the same proportion as similar costs ore recovered its of.luna 10, 1996, through the regulated retail rates of the relevant electric I 9 NO.240 P006/009 utility, provided that there shall be a lfrawall segregating the recovery of the costa of competition transition charge exemptions such that the costa of competition transition charge exemptions granted to members of the combined class of residential and small commercial customers shall be recovered only from these customers, and the coats of competition transition charge exemptions granted to members of the combined class of customers, other than rosidontial and small commercial customers, shall be recovered only from these customers. (2) Individual customers shall not experience rate increases as a result of the allocation of tranaition coats. However, customers who elect to purchase energy from suppliers other than the Power Exchange through a direct transaction, may incur increases in the total price they pay for electricity to the extent the price for the energy exceeds the Power Exchange price, (:1) The commission shall retain existing coat allocation authority, provided the firewall and rate freeze principles aro not violated. SRC. 13, Section 368 of the Public Utilities Code is amended to read: :168. Each electrical corporation shall propose it cost recovery plan to the commission for the recovery of the uneconomic coats of an electrical cnrporation'u generation•relnted assets and obligations identified in Section 367. The commission shall authorize the electrical corporation to recover the costa pursuant to the plan if the plan masts the following criteria: (a) The cost recovery plan shall Fier, rates for each customer claaa, rate schedule, contract, Lir tariffoption, at levels equal to the level as shown on electric rate schedulea as of June 10, 1996, provided that rates for residential and small commercial customers shall be reduced so that these customers shall receive rate reductions of no loss than 10 percent for 1998 continuing through 2002. These rate levels for each customer class, rate schedule, contract, or tariff option shall remain In effect until the earlier of March 31, 2002, Lir the date an which the commission-authorizod costs for utility generation -related assets and obligations have been fully recovered. The electrical corporation shall be at risk for those costs not recovered during that time period, Each utility shall. amortize its total uneconomic coats, to the extent possible, such that for each year during the transition period its recorded rate of return on the romaining uneconomic onsets does not exceed its authorized rate of return for those assets. For purposes of determining the extent to which the costs have been recovered, any over -collections recorded in Energy Coats Adjustment Clause and Electric Revenue Adjustment Mechanism balancing accounts, :is of December 31, 1996, shall fie credited to the recovery of the costa. (b) The coat recovery plan shall provide for identification and soparntion of individual rate components such as charges ler energy, trnnamiaaion. distribution, public benefit programa, and recovery of uneconomic costs. The separation of rate components required by this subdivision shall he used to ensure that customers of the electrical corporation who become eligible to purchase electricity from suppliers other than the electrical corporation pay the same unbundled component charges, other than energy, that a bundled service customer pays. No cost shifting among customer classes, rate schedules, contract, or tariff options shall result from the separation required by this subdivision. Nothing in this provision is intended to affect the rates, tsrins, and conditions or to limit the use of any Federal Energy Regulatory Commisaion-approvod contract entered into by the electrical corporation prior to the nffoctive date of this provision. (c) In consideration of the risk that the uneconomic costa identified in Section 367 may not be recoverable within the period identified in subdivision (a1 of Section 367, an electrical corporation that, as of December 20, 1998, aerved more than 0E/26i9B 10:35 SECRETARY OF STATE i 605 259 6125 four million customers, and was also a gas corporation that served lass than four thousand customers, shall have the flexibility to employ risk management tools, ouch as forward hedges, to manage the market price volatility associated with unexppected fluctuations in natural gas prices, and the out-of-pocket costs of acquiring the risk managementtools shall be considered reasonable and collectible within the transition freeze period. This subdivision applies only to the transaction costs associated with the risk management tools and shall not include any losses from changes in market prices• (d) lir aider to ensure i:rrpiemetteotietr of she sees teeevery Platt. the e�eer� an 66 asaximan enetnrt of cote teeevery fa ♦l' amy�(60 eepReeeed in say Year adep�sed by the eettrtaiesian in Decision 96 01 oil sad l')eeifiart 96 94 969 eisaii be elirnineled to al}ew the tatimimem appal hen y to eeileeb tits naelear sorbs +►Rhin the h aneitien estp (e) As to an electrical corporation that is also a gas corporation serving more than tour million California customers, Be long as any coat recovery plan adopted in accordance with this sectfan satisfies subdivision (a), it shall also provide for annual increases in base revenues, affective January 1, I997, and ,January 1, 1998, equal to the inflation rate for the prior year plus two percentage pointe, as measured by the consumer price index. The increase shall do both of the following: (1) Remain in affect pending the next general roto case review, which shall he filed not later than December 31, 1997, for rates that would become efTectivo in January 1.999, For purposes of any commissinn-sppraved performance-based ratemaking mechanism or general rate case review, the increases in base revenue authorized by this subdivision ahall create no presumption that the level of base revenue reflecting those increases constitute the appropriate starting point for subsequent revenues. (2) Be used by the utility for the purposes of enhancing its transmission and distribution system safety and reliability,. including, but not limited to, vegetation management and emergency response. To the extent the revenues are not expanded for system safety and reliabilitv. they shall he credited against subaequent safety and reliability baso revenue requirements. Any excess revenues carried over shall not he used to pay any monetary sanctions imposed by the commission. N0.240 P009/009 Text of Proposed Laws—Contlnued f43 (e) The cost recovery plan shall provide the electrical corporation with the flexibility to manage the renegotiation, buy-out. or buydnwn of the electrical corporation's power purchase obligations, consistent with review by the commission to assure that the terms provide net benefits to ratepayers and are otherwise reasonable in protecting the interests of both ratepayers and shareholders. W An exempla of a plan arthertsed by orie section is elle deeeenenb emitled "Acohla %using Rete 9e461e:1eae" h•arts+nilled to the comm"Poion by Paerie fine anj Eitetric Fleettpetry on dyne SEC. 14. Initiative Integrity, (a) This act shall be broadly construed and applied in order to billy promote its underlying purposes, and to be consistent with the United States Constitution and the California Constitution. If any provision of this act conflicts directly or indirectly with any other provision of law, including but not limited to the cost recovery mechanism provided for by Sections 367 through 376 of the Public Utilities Code, or any other statute previously enacted by the Legislature, it is the intent of the voters that those other provisions shall be null and void to the extent that'thoy are inconsistent with this act, and are hereby repeated. (b) No provision of this act may be amended by the Legislature except (1) to further the purpose of that provision, by n statute passed in each house by rolleall vote entered in the journal, two thirds of the membership concurring, or (2) by a statute that becomes effective only when approved by the electorate. No amendment by the Legislature may be deemed to further the purposes of this act unless it furthers the purpose of the specific provision of this act that is being amended. In any judicial action with respect to any legislative amendment, the court shall exercise its independent judgment as to whether or not the amendment satisfies the requirements of this subdivision. (c) If any provision of this act or the application thereof to any porann or circumstances is held invalid, that invalidity shall not affect other provisions or applications of the act that can be given effect in the absence of the invalid provision or application. To this and, the provisions of this act are severable. (d) It is the will of the People that any legal challenges to the validity of any provision of this act be acted upon by the courts on an expedited basis. Proposition 10: Text of Proposed Law This initiative measure is submitted to the people in uccordance with the provisions of Article Il, Section 8 of the Culifornia Constitution. This initiative measure expressly nmende the California Constitution by adding sections thereto, and adds sections to the Health and Safety Code and the Ravonun and Taxation Code. Now previsions proposed to be added ore printed in italic type to indicate they are now. PROPOSED LAW CALIFORNIA CHILDREN AND FAMILIES FIRST INITIATIVE SECTION 1. Title. This measure shall be known and may be cited as the "California Children and Families First Act of 1998.1 SEC. 2. Findings and Deelkirations. The people find and declare as follows: (a) There is a compelling need in California to create and implement a comprehensive, collaborative, and integruted myatem of information and services to promote, support, anti 0-00 optimize early childhood development from the prenatal stage to five years of age. (b) There is a further compelling need in California to ensure that early childhood development programs and services are universally and continuously available for children until the beginning of kindergarten. Proper parenting, nurturing, and health care during these early yenra will provide the means for California's children to enter school in good health, ready and able to learn, and emotionally wall developed. (c) It has been determined that a child's first three years are the most critical in brain development, yet theme crucial years have inadvertently been neglected. Experiences that fill the child's first three years have a direct and substantial impact not only on brain development but on subsequent intellectual, social, emotional, and physical growth. (d) The seminal Starting Pointe report by the Carnegie Corporation of New York concludes that "how children function from the preschool years kill the way through adolescence, and oven adulthood, hinges in large part on their experiences before the age of three." (o) New research from many sources, including the Cnrnegie Corporation, the Baylor College of Medicine, and the Whita House Conference on Early Childhood Development, 08/21/98 10:05 FAX 98259 VALENCIA DIST. 0002 League of California Cities 1400 K Street, Suite 400 • Sacramento, California 95614 Phone: (916) 658-8200 Fax: (916) 658-8240 www.cacities.org FOR IMMEDIATE RELEASE CONTACT: Yvonne Hunter AUGUST 18,1998 916.658.8242 LEAGUE OF CALIFORNIA CITIES OPPOSED TO PROPOSITION 9 Sacramento, CA -- After careful deliberation, the League of California Cities Board of Directors voted unanimously to oppose Proposition 9, the electric utilities initiative slated for. the November ballot. The League is opposed to Prop. 9 because of the potentially harmful effects it would have on future funding to local governments, the negative impacts it would have on the municipal bond market and the uncertainty that would result in California's emerging competitive electricity market. "We are concerned about the potential for revenue loss to local governments should Prop. 9 pass. This, coupled with the negative impact the measure would have on the municipal bond market, gave our Board great concern," said Don Benninghoven, Executive Director of the League of California Cities. By impairing the collection of bonds already sold, Prop. 9 could adversely affect the ability of cities and municipalities to sell their own bonds due to an increase in perceived risk associated with the California initiative process. Already, Orrick; Herrington & Sutcliffe; the state's leading bond counsel, has identified potential credit and bond rating problems should Prop.,9 pass. "Thus initiative could seriously hamper the ability of our member cities to secure low-cost financing for local education bonds, local infrastructure bonds and other types of bonds;" Beiminghoven said. "At the very least, it would create an aura of uncertainty in the California municipal bond market." In addition, Bates noted that the League was active in the negotiations that led to electricity restructuring in California. "Numerous cities throughout California are evaluating their options in the new competitive electricity market," said Benninghoven. "Some have already signed contracts with new electric service providers or are negotiating to do so. The League is concerned that passage of Prop. 9 will cause uncertainty and produce a chilling effect on the newly emerging competitive electricity market. . Founded in 1898, the League of California Cities is a member organization that represents every one of California's 471 cities. The League strives to protect the local authority and autonomy of city government and help California's cities effectively serve their residents. In addition to advocating on cities' behalf at the State Capitol, the League provides its members professional development programs and information resources, conducts educational conferences and research, and publishes Western City magazine.