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SB-173 Energy.(2003-2004)

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SB173:v95#DOCUMENT

Amended  IN  Senate  April 03, 2003
Amended  IN  Senate  April 22, 2003
Amended  IN  Senate  May 06, 2003
Amended  IN  Senate  May 20, 2003

CALIFORNIA LEGISLATURE— 2003–2004 REGULAR SESSION

Senate Bill
No. 173

Introduced  by  Senator Dunn

February 12, 2003

An act to add Section 17206.7 to the Business and Professions Code, and to add Section 391.1 to amend Section 390.1 of, and to add Section 391.1 to, the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


SB 173, as amended, Dunn. Energy.
(1) Existing law prohibits unfair competition, including any unlawful, unfair, or fraudulent business act or practices. In an action brought in the name of the people by the Attorney General or any district attorney, and in specified instances by a county counsel, city prosecutor, or city attorney, existing law provides that any person who engages, has engaged, or proposes to engage in unfair competition, is liable for a civil penalty not to exceed $2,500 for each violation.
This bill would provide that any person knowingly making a false statement or report for use in a gas index price, commits a fraudulent business act constituting unfair competition and is liable for a civil penalty not to exceed $25,000 for each violation.
(2) Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, and authorizes the commission to fix just and reasonable rates and charges. Existing law authorizes any nonutility power generator using renewable fuels that has entered into a contract with an electrical corporation prior to December 31, 2001, specifying fixed energy prices for 5 years of output to negotiate a contract for an additional 5 years of fixed energy payments upon expiration of the initial 5-year term, at a price to be determined by the commission.
This bill would instead authorize such an entity to elect an additional 5 years of fixed energy payments upon expiration of the initial 5-year term, at a price to be determined by the commission.
(3) Existing law provides for a short-run avoided cost methodology for the price paid by a public utility electrical corporation for electricity generated by a nonutility, qualifying small power production or qualifying cogeneration facility (QF), as defined. This methodology includes adjustments to prices based upon gas index prices.
This bill would restrict the commission to the use of gas price indexes determined by the commission to be reliable and verified, and meeting listed requirements, and would require the commission to establish standards for reliability and verification for gas price indexes used to establish or adjust prices paid to QFs by a public utility electrical corporation. The bill would also restrict the commission, if it establishes a price benchmark used to determine the reasonability of utility natural gas purchases for the purpose of determining a utility bonus payment, to the use of index prices that meet those listed requirements. The bill would further provide that if the commission determines that no reliable and verifiable gas price index exists meeting the standards adopted by the commission, the commission is required to establish and adjust the prices paid to QFs by a public utility electrical corporation in a manner that is just and reasonable, in the public interest, and without discrimination against nonutility generators, consistent with the requirements of the federal Public Utility Regulatory Policies Act of 1978.

(2)Existing law prohibits unfair competition, including any unlawful, unfair, or fraudulent business act or practices. In an action brought in the name of the people by the Attorney General or any district attorney, and in specified instances by a county counsel, city prosecutor, or city attorney, existing law provides that any person who engages, has engaged, or proposes to engage in unfair competition, is liable for a civil penalty not to exceed $2,500 for each violation.

This bill would provide that any person knowingly making a false statement or report for use in a gas index price, commits a fraudulent business act constituting unfair competition and is liable for a civil penalty not to exceed $25,000 for each violation.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


Section 17206.7 is added to the Business and Professions Code, to read:

17206.7.
 (a) Knowingly making a false statement or report for use in an energy price index is a fraudulent business act constituting unfair competition.
(b) Notwithstanding the maximum civil penalty in Section 17206, any person who knowingly makes a false statement or report for use in a gas price index pursuant to Section 390 of the Public Utilities Code, shall be liable for a civil penalty not to exceed twenty-five thousand dollars ($25,000) for each violation.

Section 390.1 of the Public Utilities Code is amended to read:

390.1.
 Any nonutility power generator using renewable fuels that has entered into a contract with an electrical corporation prior to December 31, 2001, specifying fixed energy prices for five years of output may negotiate a contract for elect an additional five years of fixed energy payments upon expiration of the initial five-year term, at a price to be determined by the commission.

Section 391.1 is added to the Public Utilities Code, to read:

391.1.
 (a) Any gas price index used to establish or adjust prices for electricity paid to a nonutility generator by a public utility electrical corporation, pursuant to Section 390, must be reliable and verified, as determined by the commission.
(b) The commission may determine that a gas price index is reliable and verified only if the gas price index meets all of the following characteristics:
(1) All transactions that comprise the gas price index price calculations are transacted on an organized exchange subject to regulation by the federal Commodity Futures Trading Commission.
(2) The Commodity Futures Trading Commission requires the organized exchange to maintain and enforce an internal auditing mechanism and to maintain records of trading activity for the transactions, so that a clear audit trail is possible.
(3) The Commodity Futures Trading Commission requires the organized exchange to conduct market surveillance and trade surveillance of transactions, with oversight by the Commodity Futures Trading Commission, to prevent market manipulation and other anticompetitive activity.
(4) The transactions that comprise the published index price are reported to the organized exchange and time-stamped within one minute of the transaction.
(5) The transactions reported to the organized exchange include all of the following information:
(A) Price.
(B) Volume.
(C) Delivery point.
(D) Duration.
(E) Date and time of transaction.
(F) Whether the transaction is a purchase or a sale.
(G) Counterparty.
(c) If the commission establishes a gas price benchmark, based on a single gas price index or a combination of gas indexes, and this benchmark is used to determine the reasonableness of natural gas purchases by a gas corporation for the purposes of determining a gas corporation shareholder award, the commission may use only gas index prices that meet the requirements of subdivision (b).
(d) Notwithstanding Section 390, if the commission determines that no reliable and verifiable gas price index exists meeting the standards adopted pursuant to this section, the commission shall establish and adjust the prices for electricity paid to nonutility generators by a public utility electrical corporation in a manner that is just and reasonable, in the public interest, and without discrimination against nonutility generators, consistent with the federal Public Utility Regulatory Policies Act of 1978 (Public Law 95-617), any amendments to that act, and the regulations adopted under that act by the Federal Energy Regulatory Commission.

SEC. 2.Section 17206.7 is added to the Business and Professions Code, to read:
17206.7.

(a) Knowingly making a false statement or report for use in an energy price index is a fraudulent business act constituting unfair competition.

(b)Notwithstanding the maximum civil penalty in Section 17206, any person who knowingly makes a false statement or report for use in a gas price index pursuant to Section 390 of the Public Utilities Code, shall be liable for a civil penalty not to exceed twenty-five thousand dollars ($25,000) for each violation.
SEC. 3.

SEC. 4.

 (a) Subdivision (a) of Section 17206.7 of the Business and Professions Code does not constitute a change in, but is declaratory of, existing law.
(b) It is the intention of the Legislature in adding subdivision (b) of Section 17206.7 of the Business and Professions Code, to change existing law by providing for civil penalties in an amount higher than would be available pursuant to Section 17206.