HomeMy WebLinkAbout2001-09-25 - AGENDA REPORTS - AB 9X2 (2)CITY OF SANTA CLARITA
AGENDA REPORT
SUBSEQUENT NEED ITEM
DATE: September 25, 2001
City Manager Approv1:
Item to be presented by:
SUBJECT: SUPPORT OF ASSEMBLY BILL 9X2
DEPARTMENT: Field Services
RECOMMENDED ACTION
The City Council authorize staff to draft a letter to Governor Gray Davis to urge support
and signature of AB 9X2, and further direct staff to prepare a letter to the Public Utilities
Commission to urge reconsideration of suspension of direct access for community
aggregation.
BACKGROUND
Recently, the State of California has faced a power crisis, the full extent of which and
resolution to remains unknown. The California State Legislature has been working to
remedy the situation and provide for relief to both the electric utilities as well as
consumers. AB 9, of the second extraordinary session of the legislature (AB 9X2), has
recently passed the Assembly and the Senate, and is now before the governor. This
particular bill is of great importance to communities exploring options as they pertain to
energy.
In the electricity procurement market, aggregators of electricity purchases benefit from a
certainty of supply by purchasing in large quantities directly from the wholesale market.
An additional benefit of purchasing wholesale is the elimination of pass-through charges,
which may occur in retail prices for electricity. AB 9X2 eliminates the current narrow
definition of aggregator from the Public Utilities Code, and adds a number of different types
of aggregation to enable wholesale purchasing of electricity for end user customers. The
broadened definition allows for direct purchases for end customers and electricity suppliers,
and provides for the California Public Utilities Commission to facilitate these types of
transactions. Under AB 9X2, a community choice aggregator can purchase electricity for
residents and businesses unless users make a negative declaration stating specifically that
they do not wish to be involved in the program. Community Choice Aggregation or
Municipal Aggregation is defined for purposes of the legislation as, "Any city, county and
city, and county whose governing board elects to combine the loads of its residents,
businesses, or municipal utilities in a community -wide electricity buyers program, and any
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� Agenda Item:
SUPPORT OF ASSEMBLY BILL 9X2
September 25, 2001 — Page 2
group of cities or counties, or cities and counties, whose governing boards have elected to
combine their loads of their programs through a joint powers authority."
In essence, AB 92X offers an alternative procurement arrangement to traditional retail end
users of electricity. Community aggregation is viewed by many as a cost-effective option for
consumers. However, for Community Aggregation and thus AB 9X2 to be feasible, direct
access to wholesale energy service providers must be ensured. On September 13, 2001, the
California Public Utilities Commission suspended direct access. Furthermore, the decision
by the California Public Utilities Commission not only applies to Direct Access Service
Request (DASR) now, but retroactively to those requests made after July 1, 2001. It is
unclear as to how long this suspension will be in effect.
As a result of the energy crisis, cities throughout the state are interested in public power
options for their constituents, and in community aggregation. The Community Energy
Advisory Committee, appointed by the City Council, recognizes that the future of direct
access is uncertain, and that without reauthorizing legislation, direct access will be
formally ended. It is also recognized that without direct access, community aggregation as
envisioned in AB 9X2 is not feasible. However, when energy prices and supplies are
stabilized, direct access will again become an option for California residents, cities, and
businesses. Therefore, it is important to have in place the community aggregation option
proposed by AB 9X2. The Community Energy Advisory Committee voted unanimously to
recommend that the City Council draft a letter to Governor Gray Davis to urge him to sign
AB 9X2, and draft a second letter to the Public Utilities Commission to urge
reconsideration of suspension of direct access for community aggregation.
ALTERNATIVE ACTION
Other action as determined by Council.
FISCAL IMPACT
There are no anticipated costs for this item.
Energy Advisory Committee and related
Account No. 5100-8112.
ATTACHMENTS
None
/admin/ccitems/energyseq. doc
Funds for administration of the Community
meeting expenses are appropriated in