Today's Law As Amended


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AB-2006 Electrical restructuring: Public Utility Commission procedures.(2003-2004)



As Amends the Law Today


SECTION 1.
 The Legislature finds and declares all of the following:
(a) An adequate and reliable supply of electricity is essential to the health, safety, and welfare of all California consumers.
(b) Safe, reliable, and affordable electric service is of utmost importance to the consumers of this state and its economy.
(c) Electrical corporations have an obligation to provide their customers with reliable electric service at just and reasonable rates.
(d) In order to provide safe, reliable, and affordable electric service to consumers, electrical corporations must provide needed resources, including cost-effective energy efficiency and other demand reduction measures, utility-owned and procured generation, new and repowered generation, cogeneration, renewable generation, transmission, distribution, and an adequately sized, well-trained workforce, in a manner that produces the best value for ratepayers at just and reasonable rates.
(e) In order to ensure that investments in resources are made in a manner that produces the best value for ratepayers, electrical corporations should prepare a long-term integrated resource plan for commission review and approval, that achieves a diversified portfolio of efficient, cost-effective, environmentally responsible supply and demand resources.
(f) In order to ensure that a long-term integrated resource plan will result in investments in physical generating capacity dedicated to serving all load requirements, that is available to meet peak demand and planning and operating reserves, at or deliverable to locations and at times as may be necessary to ensure local area reliability and system reliability, the commission shall adopt resource adequacy requirements that apply equally to all load serving entities.
(g) In order to ensure that the long-term integrated resource plan achieves a diversified portfolio of efficient, cost-effective, environmentally responsible, supply and demand resources, resource adequacy requirements shall be met first through cost-effective energy efficiency and other demand reduction measures.
(h) In order to attract sufficient capital to make investments in needed resources, there must be assurance that reasonable costs and investments, including a return of and on direct investments, and payments made to third parties under contract with an electrical corporation for non-utility-owned generation, are recoverable in rates.
(i) California consumers will not receive reliable and affordable electric service, nor will consumers avoid repetition of past problems with excessive wholesale electricity prices, rolling blackouts, and long-term supply contracts that threaten consumers with billions of dollars in above-market electricity costs, unless a durable framework is enacted to provide regulatory certainty and market stability in support of investment in needed efficient, cost-effective, environmentally responsible resources at just and reasonable rates.
(j) Protecting the interests of consumers by ensuring that investments made to provide safe, reliable electric service are prudent and cost effective, should be the highest priority of California regulatory policy and action.
(k) The Public Utilities Commission has an obligation to provide an open regulatory forum where all persons affected by public utility service and rates or otherwise affected by decisions made by the commission, can observe and participate in the decisionmaking process.

SEC. 1.5.

 Section 250 is added to the Public Utilities Code, to read:

250.
 Prior to adopting any settlement agreement, including any settlement of a judicial or administrative proceeding to which the commission is a party or all incumbent commissioners are parties, that is contested by any person or entity and that involves a ratepayer obligation of greater than ten million dollars ($10,000,000) per ratemaking district, in addition to any other requirement applicable to settlements, the commission shall not approve the settlement before it has held a hearing to review the settlement and any alternative proposed by any affected person or entity, in order to ensure that the proposed settlement agreement resolves the dispute at the lowest reasonable cost to ratepayers, while balancing other public interest objectives, including protection of public health and safety, promotion of a sound economy, conservation of resources, preservation of environmental quality, and promotion of adequate, just, and reasonable service.

SEC. 2.

 Section 301 of the Public Utilities Code is amended to read:

301.
 The membership of the Public Utilities Commission, and the qualifications and tenure of the members of the commission are as provided in Section 1 of Article XII of the Constitution of this state. As provided in Section 1 of Article XII of the Constitution of this state, the Public Utilities Commission consists of five members appointed by the Governor and approved by the Senate, a majority of the membership concurring, for staggered six-year terms. A vacancy is filled for the remainder of the term. The Legislature may remove a member for incompetence, neglect of duty, or corruption, two-thirds of the membership of each house concurring. 

SEC. 2.3.

 Section 303 of the Public Utilities Code is amended to read:

303.
 (a) A public utilities commissioner may not hold an official relation to, to  nor have a financial interest in, in  a person or corporation subject to regulation by the commission. If any commissioner acquires a financial interest in a corporation or person subject to regulation by the commission other than voluntarily, his or her office shall become vacant unless within a reasonable time he or she divests himself or herself of the interest.
(b) No executive of a public utility may serve as commissioner within two years after leaving the employment of the utility.
(c) (b)  The commission shall maintain adopt  an updated Conflict of Interest Code and Statement of Incompatible Activities  Activities, by February 28, 2005,  in a manner consistent with applicable law.

SEC. 2.5.

 Section 303.5 is added to the Public Utilities Code, to read:

303.5.
 (a) No person shall be a member of the commission who, during the two years prior to appointment to the commission, received any substantial portion of his or her income directly or indirectly from any person or corporation subject to regulation by the commission. No member of the commission shall be employed by any person or corporation subject to regulation by the commission during the term he or she is a member of the commission, or within two years after he or she ceases to be a member of the commission.
(b) The members of the commission shall not hold any other elected or appointed public office or position.
(c) The members of the commission and all employees of the commission shall comply with all applicable provisions of Section 19990 of the Government Code.
(d) No person who is a member or employee of the commission shall participate personally and substantially as a member or employee of the commission, in any matter in which, to his or her knowledge, he or she, his or her spouse, minor child, or partner, or any organization in which he or she is serving, or has served as officer, director, trustee, partner, or employee while serving as a member or employee of the commission or within two years prior to her or his appointment as a member of the commission, has a direct or indirect financial interest.
(e) No person who is a partner, employer, or employee of a member or employee of the commission shall act as an attorney, agent, or employee for any person other than the state in connection with any matter in which the commission is a party or has a direct and substantial interest.

SEC. 2.7.

 Section 330 of the Public Utilities Code is repealed.

330.
 In order to provide guidance in carrying out this chapter, the Legislature finds and declares all of the following:
(a) It is the intent of the Legislature that a cumulative rate reduction of at least 20 percent be achieved not later than April 1, 2002, for residential and small commercial customers, from the rates in effect on June 10, 1996. In determining that the April 1, 2002, rate reduction has been met, the commission shall exclude the costs of the competitively procured electricity and the costs associated with the rate reduction bonds, as defined in Section 840.
(b) The people, businesses, and institutions of California spend nearly twenty-three billion dollars ($23,000,000,000) annually on electricity, so that reductions in the price of electricity would significantly benefit the economy of the state and its residents.
(c) The Public Utilities Commission has opened rulemaking and investigation proceedings with regard to restructuring California’s electric power industry and reforming utility regulation.
(d) The commission has found, after an extensive public review process, that the interests of ratepayers and the state as a whole will be best served by moving from the regulatory framework existing on January 1, 1997, in which retail electricity service is provided principally by electrical corporations subject to an obligation to provide ultimate consumers in exclusive service territories with reliable electric service at regulated rates, to a framework under which competition would be allowed in the supply of electric power and customers would be allowed to have the right to choose their supplier of electric power.
(e) Competition in the electric generation market will encourage innovation, efficiency, and better service from all market participants, and will permit the reduction of costly regulatory oversight.
(f) The delivery of electricity over transmission and distribution systems is currently regulated, and will continue to be regulated to ensure system safety, reliability, environmental protection, and fair access for all market participants.
(g) Reliable electric service is of utmost importance to the safety, health, and welfare of the state’s citizenry and economy. It is the intent of the Legislature that electric industry restructuring should enhance the reliability of the interconnected regional transmission systems, and provide strong coordination and enforceable protocols for all users of the power grid.
(h) It is important that sufficient supplies of electric generation will be available to maintain the reliable service to the citizens and businesses of the state.
(i) Reliable electric service depends on conscientious inspection and maintenance of transmission and distribution systems. To continue and enhance the reliability of the delivery of electricity, the Independent System Operator and the commission, respectively, should set inspection, maintenance, repair, and replacement standards.
(j) It is the intent of the Legislature that California enter into a compact with western region states. That compact should require the publicly and investor-owned utilities located in those states, that sell energy to California retail customers, to adhere to enforceable standards and protocols to protect the reliability of the interconnected regional transmission and distribution systems.
(k) In order to achieve meaningful wholesale and retail competition in the electric generation market, it is essential to do all of the following:
(1) Separate monopoly utility transmission functions from competitive generation functions, through development of independent, third-party control of transmission access and pricing.
(2) Permit all customers to choose from among competing suppliers of electric power.
(3) Provide customers and suppliers with open, nondiscriminatory, and comparable access to transmission and distribution services.
(l) The commission has properly concluded that:
(1) This competition will best be introduced by the creation of an Independent System Operator and an independent Power Exchange.
(2) Generation of electricity should be open to competition.
(3) There is a need to ensure that no participant in these new market institutions has the ability to exercise significant market power so that operation of the new market institutions would be distorted.
(4) These new market institutions should commence simultaneously with the phase in of customer choice, and the public will be best served if these institutions and the nonbypassable transition cost recovery mechanism referred to in subdivisions (s) to (w), inclusive, are in place simultaneously and no later than January 1, 1998.
(m) It is the intention of the Legislature that California’s publicly owned electric utilities and investor-owned electric utilities should commit control of their transmission facilities to the Independent System Operator. These utilities should jointly advocate to the Federal Energy Regulatory Commission a pricing methodology for the Independent System Operator that results in an equitable return on capital investment in transmission facilities for all Independent System Operator participants.
(n) Opportunities to acquire electric power in the competitive market must be available to California consumers as soon as practicable, but no later than January 1, 1998, so that all customers can share in the benefits of competition.
(o) Under the existing regulatory framework, California’s electrical corporations were granted franchise rights to provide electricity to consumers in their service territories.
(p) Consistent with federal and state policies, California electrical corporations invested in power plants and entered into contractual obligations in order to provide reliable electrical service on a nondiscriminatory basis to all consumers within their service territories who requested service.
(q) The cost of these investments and contractual obligations are currently being recovered in electricity rates charged by electrical corporations to their consumers.
(r) Transmission and distribution of electric power remain essential services imbued with the public interest that are provided over facilities owned and maintained by the state’s electrical corporations.
(s) It is proper to allow electrical corporations an opportunity to continue to recover, over a reasonable transition period, those costs and categories of costs for generation-related assets and obligations, including costs associated with any subsequent renegotiation or buyout of existing generation-related contracts, that the commission, prior to December 20, 1995, had authorized for collection in rates and that may not be recoverable in market prices in a competitive generation market, and appropriate additions incurred after December 20, 1995, for capital additions to generating facilities existing as of December 20, 1995, that the commission determines are reasonable and should be recovered, provided that the costs are necessary to maintain those facilities through December 31, 2001. In determining the costs to be recovered, it is appropriate to net the negative value of above market assets against the positive value of below market assets.
(t) The transition to a competitive generation market should be orderly, protect electric system reliability, provide the investors in these electrical corporations with a fair opportunity to fully recover the costs associated with commission approved generation-related assets and obligations, and be completed as expeditiously as possible.
(u) The transition to expanded customer choice, competitive markets, and performance based ratemaking as described in Decision 95-12-063, as modified by Decision 96-01-009, of the Public Utilities Commission, can produce hardships for employees who have dedicated their working lives to utility employment. It is preferable that any necessary reductions in the utility workforce directly caused by electrical restructuring, be accomplished through offers of voluntary severance, retraining, early retirement, outplacement, and related benefits. Whether workforce reductions are voluntary or involuntary, reasonable costs associated with these sorts of benefits should be included in the competition transition charge.
(v) Charges associated with the transition should be collected over a specific period of time on a nonbypassable basis and in a manner that does not result in an increase in rates to customers of electrical corporations. In order to insulate the policy of nonbypassability against incursions, if exemptions from the competition transition charge are granted, a firewall shall be created that segregates recovery of the cost of exemptions as follows:
(1) The cost of the competition transition charge exemptions granted to members of the combined class of residential and small commercial customers shall be recovered only from those customers.
(2) The cost of the competition transition charge exemptions granted to members of the combined class of customers other than residential and small commercial customers shall be recovered only from those customers. The commission shall retain existing cost allocation authority provided that the firewall and rate freeze principles are not violated.
(w) It is the intent of the Legislature to require and enable electrical corporations to monetize a portion of the competition transition charge for residential and small commercial consumers so that these customers will receive rate reductions of no less than 10 percent for 1998 continuing through 2002. Electrical corporations shall, by June 1, 1997, or earlier, secure the means to finance the competition transition charge by applying concurrently for financing orders from the Public Utilities Commission and for rate reduction bonds from the California Infrastructure and Economic Development Bank.
(x) California’s public utility electrical corporations provide substantial benefits to all Californians, including employment and support of the state’s economy. Restructuring the electric services industry pursuant to the act that added this chapter will continue these benefits, and will also offer meaningful and immediate rate reductions for residential and small commercial customers, and facilitate competition in the supply of electric power.

SEC. 3.

 Chapter 2.4 (commencing with Section 400) is added to Part 1 of Division 1 of the Public Utilities Code, to read:

CHAPTER  2.4. Reliable Electric Service Act of 2004
400.
 This chapter shall be known, and may be cited, as the Reliable Electric Service Act of 2004.
400.1.
 (a) An electrical corporation has an obligation to, and shall, plan for and provide its customers with reliable electric service at just and reasonable rates, pursuant to Section 451, including those customers that take standby service from the electrical corporation on a commission-approved rate schedule.
(b) For purposes of this chapter, “electric service” includes providing adequate and efficient resources, including cost-effective energy efficiency and other demand reduction resources, utility-owned and procured generation resources, such as new and repowered generation resources, cogeneration, and renewable generation resources, transmission and distribution resources, metering, billing, and employing an adequately sized, well-trained utility workforce, including contracting for maintenance of generation facilities.
(c) Notwithstanding subdivisions (a) and (b), an electrical corporation has no obligation to plan for or procure electricity or meet resource adequacy requirements for any customer that has entered into a direct transaction.
400.5.
 (a) To ensure that adequate investments are made in resources necessary to provide customers with reliable electric service, the commission shall authorize an electrical corporation to provide efficient, cost-effective resources, including cost-effective energy efficiency and demand reduction resources, utility-owned and procured generation resources, which may include, among other resources, new and repowered generation resources, cogeneration, and renewable generation resources, consistent with the electrical corporation’s long-term integrated resource plan approved pursuant to Section 400.11 and its procurement plan adopted pursuant to Section 454.5.
(b) The commission shall, after public hearing, approve and thereafter maintain just and reasonable rates sufficient to ensure that the electrical corporation fully recovers both of the following:
(1) The electrical corporation’s initial capital investment in generation resources specified, found reasonable, and approved in the certificate of public convenience and necessity if the investment complies with the conditions specified by the commission in the certificate of public convenience and necessity at the time the investment is approved.
(2) The electrical corporation’s full cost of contracting for generation resources with another entity found reasonable pursuant to Sections 454.5 and Article 16 (commencing with Section 399.11) of Chapter 2.3, taking into account any collateral requirements and debt equivalence associated with the contract, in a manner determined by the commission to provide the best value to ratepayers.
(c) Nothing in this chapter alters the requirements of Section 451, 454.5, 455.5, 463, or 1005.5.
(d) It is the intent of the Legislature in enacting this section to reaffirm California’s traditional regulatory doctrine, under which an electrical corporation has the obligation to provide reliable electric service at just and reasonable rates, and the commission ensures that the electrical corporation is afforded the means to carry out this obligation, specifically including a reasonable opportunity to fully recover from all customers of the electrical corporation, in a manner determined by the commission pursuant to this code, a return of, and a reasonable return on, reasonable investments in utility-owned generation, transmission, and distribution resources that are necessary to meet the utility’s obligation, the utility’s reasonable costs to operate and maintain those resources, and the utility’s reasonable costs for nonutility generation resources procured in accordance with Section 454.5 and Article 16 (commencing with Section 399.11).
400.10.
 (a) To ensure that adequate investments necessary to meet the electrical corporation’s obligation to provide reliable electric service are made, every electrical corporation shall, commencing on January 1, 2006, and at least every three years thereafter, prepare and file with the commission a long-term integrated resource plan.
(b) The long-term integrated resource plan shall accomplish all of the following:
(1) Ensure that adequate resources are identified to serve the utility’s customers reliably.
(2) Provide for investments in, or procurement of, resources proposed pursuant to Section 454.5 and Article 16 (commencing with Section 399.11).
(3) Be consistent with Section 701.1 and Chapter 4 (commencing with Section 25300) of Division 15 of the Public Resources Code.
(4) Achieve a diversified portfolio of efficient, cost-effective, and environmentally responsible supply and demand resources to serve the utility’s customers.
(5) Provide for funding of all practicable and cost-effective energy efficiency and load management resources.
(6) Provide for investments in, or procurement of, necessary generation resources, and may include extensions, renewals, or renegotiations of contracts for existing generation resources, new or repowered generation, and cogeneration projects.
(7) Provide that an electrical corporation meets resource adequacy requirements established by the commission pursuant to Section 400.22, for the electric load served by the electrical corporation. For purposes of this chapter, “electric load served by the electrical corporation, including load served under a standby tariff,” does not include the electrical load of customers who have entered into a direct transaction.
(8) Include demand and supply forecasts for 5- and 10-year periods. The demand forecasts shall reflect all energy efficiency and load management programs approved by the commission.
(c) The long-term integrated resource plan may provide for investments in distributed generation that would improve electrical system reliability, thereby deferring or eliminating investments in distribution facilities that would otherwise be needed to improve system reliability, by either direct investment by the electrical corporation or under contract with a retail customer or a third party, if the commission finds that the investment in distributed generation would accomplish both of the following:
(1) Result in overall cost savings for ratepayers due to deferral or elimination of electric distribution projects.
(2) Provide the required reliability and operational characteristics to support adequate service reliability to customers in the affected area.
(d) If the distributed generation is provided under contract with a retail customer or a third party to reduce distribution system loads, the retail customer or third party shall maintain physical assurance that the contracted load reduction will be available during all required time periods.
400.11.
 The commission shall, after public hearing, review and approve a long-term integrated resource plan for every electrical corporation, including those revisions to the plan that the commission determines are necessary to meet the requirements of Section 400.10 and achieve best value for utility customers.
400.15.
 In accordance with an electrical corporation’s long-term integrated resource plan approved pursuant to Section 400.11, and consistent with Sections 454.5 and 701.1 and Article 16 (commencing with Section 399.11), to meet resource adequacy requirements, each electrical corporation shall manage a diversified, efficient, cost-effective, environmentally responsible portfolio of non-utility-owned generation under contract with the utility, and utility-owned generation, combining the potential benefits of a competitive wholesale market, including operating efficiencies and lower prices, with the stability of cost-based generation resources, to achieve best value for ratepayers at just and reasonable rates.
400.18.
 (a) The commission shall, on or before July 1, 2005, prepare and submit to the Governor and the Legislature, a comprehensive plan to streamline the transmission siting process. The plan shall, at a minimum, include recommendations to eliminate regulatory overlap and duplication, and recommendations to reduce the time needed to process a request for transmission improvements. The commission shall consult with the State Energy Resources Conservation and Development Commission, the Independent System Operator, electrical corporations, and interested parties in the development and preparation of the plan.
(b) On or before December 31, 2005, the commission shall prepare and transmit a report to the Legislature summarizing the status of proceedings for each site for authorization of construction of all upgrades, improvements, or additions to the transmission system infrastructure determined by the electrical corporation to be necessary to ensure reliability and for which the electrical corporation has filed an application for a certificate of public convenience and necessity. The report shall include action that the commission has taken or proposes to take to facilitate the siting and authorization of those facilities and the schedule for completion in order to address the reliability needs identified by the electrical corporation. To the extent that the commission determines that the transmission upgrade, improvement, or addition is not needed, the commission shall identify the alternative it intends to pursue in order to ensure reliability. The commission shall annually update its report as part of its annual workplan.
400.22.
 (a) All electrical load serving entities, including nonutility electric service providers and community choice aggregators, shall be subject to the same requirements for resource adequacy, resource diversity, cost-effective energy efficiency, and the renewable portfolio standard, that are applicable to electrical corporations pursuant to this section, or otherwise as required by law, or by order or decision of the commission.
(b) The commission, in consultation with the Independent System Operator, shall establish resource adequacy requirements to ensure that adequate physical generating capacity dedicated to serving all load requirements is available to meet peak demand and planning and operating reserves, at or deliverable to locations and at times as may be necessary to ensure local area reliability and system reliability, at just and reasonable rates.
(c) The commission shall implement and enforce these resource adequacy requirements in a nondiscriminatory manner as to all load serving entities. The electrical corporation’s costs of meeting those resource adequacy requirements, including the costs associated with system reliability and local area reliability, that are found reasonable by the commission, shall be fully recoverable from those customers taking service from the electrical corporation, at the time the commitment to incur the cost is made or thereafter, on a fully nonbypassable basis pursuant to rates that are just and reasonable, as determined by the commission.
(d) Resource adequacy requirements established by the commission shall provide for, and ensure, all of the following:
(1) System-wide and local area grid reliability.
(2) Adequate physical generating capacity dedicated to serve all load requirements, including planning and operating reserves, where and when it is needed.
(3) Adequate and timely investment in new generating capacity to meet future load requirements, including planning and operating reserves.
(4) Market power mitigation.
(5) Deliverability.
(6) In order to ensure that new resources can be constructed if necessary to meet the need, resource commitments by load serving entities shall be made sufficiently far in advance, and no less than three years in advance of need.
(e) Load serving entities may procure physical generating capacity through a market-based mechanism, provided that the commission, after a hearing, determines that there is convincing factual evidence that the mechanism will achieve all of the following:
(1) Adequate physical generating capacity dedicated to serve all load requirements when and where the electricity is needed, including planning and operating reserves to ensure local area reliability and system reliability.
(2) Adequate and timely investment in new generating capacity to meet future load requirements, including planning and operating reserves.
(3) Electricity that is purchased through the market is deliverable to the load for which it is purchased.
(4) Reliability of the electrical grid is not impaired.
(5) A prospective market monitoring process and market power mitigation measures are in place that are sufficient to ensure a well-functioning wholesale electricity market.
(f) The commission shall adopt rules and regulations necessary to enforce resource adequacy requirements established pursuant to this section uniformly among all load serving entities, including establishing a uniform accounting mechanism to identify, count, track, and verify all capacity needed to meet these resource adequacy requirements for each load serving entity. Pursuant to its authority to revoke or suspend registration pursuant to Section 394.25, the commission shall suspend the registration for a specified period, or revoke the registration, of an electric service provider that fails to comply with the rules and regulations adopted by the commission to enforce resource adequacy requirements.
(g) For purposes of this chapter, “load serving entity” does not include a local publicly owned electric utility as defined in Section 9604, the State Water Resources Development System commonly known as the State Water Project, or customer generation, if the customer generation (1) takes standby service from the electrical corporation on a commission-approved rate schedule that requires the customer’s load serving entity to provide for adequate backup planning and operating reserves for that customer generation or (2) is not physically interconnected to the transmission grid, so that if the customer generation fails, backup power is not supplied from the electricity grid.
400.30.
 To ensure that the obligation to provide customers with reliable electric service at just and reasonable rates is met by an electrical corporation, the commission shall adopt rules and regulations consistent with the policies and provisions of this chapter.
400.40.
 Nothing in this chapter shall alter or affect any outcome of a competitive procurement process conducted by an electrical corporation pursuant to any other law, including Section 454.5, prior to January 1, 2005.
400.50.
 Nothing in this chapter shall alter or affect the implementation of the California Renewables Portfolio Standard Program pursuant to Article 16 (commencing with Section 399.11).
400.60.
 (a) Nothing in this chapter limits the ability of any customer to participate in a community choice aggregation program pursuant to Section 366.2.
(b) In designating the earliest possible date for implementation of a community choice aggregation program, the commission shall ensure that there will be no cost-shifting or stranding of investments made pursuant to a long-term integrated resource plan of the electrical corporation that has been approved by the commission pursuant to Section 400.11. In considering approval of the electrical corporation’s long-term integrated resource plan, the commission shall also ensure that the plan includes a reasonable estimate of the customer load departure through community choice aggregation, as such estimate is provided for by a community choice aggregator pursuant to Section 366.2.
400.70.
 On or before June 30, 2006, the commission shall prepare and submit to the Legislature a report describing the extent to which existing rate allocations for each customer class reflect cost of service and describing how the continuing costs resulting from the energy crisis of 2000–01, including, but not limited to, bond charges and above-market contract costs incurred by the Department of Water Resources, are being recovered from each customer class.

SEC. 4.

 Section 454.05 is added to the Public Utilities Code, to read:

454.05.
 Except as provided in Section 455, every decision of the commission pursuant to Section 454 that approves a change in rates or an alteration of any utility classification, contract, practice, project, or rule that affects rates directly or indirectly pursuant to Section 454, or the settlement of any judicial or administrative proceeding to which the commission is a party and that results in a change in rates or a change in a utility classification, contract, practice, project, or rule that affects rates directly or indirectly, shall be made by vote of a majority of the commission membership in a public meeting of the commission. A decision made in violation of this section is void.

SEC. 5.

 Section 1001.7 is added to the Public Utilities Code, to read:

1001.7.
 (a) Prior to approving a certificate of public convenience and necessity for generation resources proposed to be constructed by an applicant electrical corporation, the commission shall do all of the following:
(1) Include in the proceeding a timely opportunity for any other creditworthy party to submit a proposal for construction of alternative generation resources if the proposal meets the same or higher standards for cost to ratepayers and local area and system-wide reliability as the proposal of the applicant electrical corporation.
(2) Evaluate and determine whether a proposal for an alternative generation resources project submitted pursuant to subdivision (a), other than the proposal of the applicant electrical corporation, would provide the same or lower cost to ratepayers, same or better local area and system-wide reliability, and the same or superior environmental benefits.
(b) The commission shall reject the certificate of public convenience and necessity for generation resources proposed to be constructed by an applicant electrical corporation if the commission determines that an alternative generation resources project submitted pursuant to subdivision (a) provides all of the following:
(1) The same or superior local area and systemwide reliability than the generation resource proposed to be constructed by an applicant electrical corporation.
(2) The same or superior environmental benefits than the generation resource proposed to be constructed by an applicant electrical corporation.
(3) A lower cost to ratepayers than the generation resource proposed to be constructed by an applicant electrical corporation.
SEC. 6.
 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.