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AB-33 Public Utilities: debt repayment.(2001-2002)



Current Version: 05/17/01 - Introduced

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AB33:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2001–2002 2nd Ext.

Assembly Bill
No. 33

Introduced  by  Assembly Member Florez
 (Principal Coauthor(s): Assembly Member Calderon, Leslie)

May 17, 2001

An act to add Article 4.5 (commencing with Section 41368) to Chapter 3 of Part 24 of the Education Code, relating to education energy costs, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. An act to add Division 1.5 (commencing with Section 3500) to the Public Resources Code, and to add Part 19.5 (commencing with Section 40500) to the Revenue and Taxation Code, relating to public utilities.


LEGISLATIVE COUNSEL'S DIGEST


AB 33, as introduced, Florez. Education energy expenses: Interruptible Service Program Contingency Revolving Loan Fund Public Utilities: debt repayment.
(1) Existing law requires every public utility to furnish and maintain adequate, efficient, just and reasonable service, instrumentalities, equipment, and facilities as are necessary to promote the safety, health and comfort, and convenience of its patrons, employees, and the public. Existing law requires the Public Utilities Commission to regulate public utilities, and makes a violation of the law governing public utilities a crime.
This bill would enact the California Electrical Rate Stabilization Act. The bill would establish the California Electrical Rate Stabilization Authority. The bill would define “electricity overpayment debt” and require the authority to arrange financing for electricity overpayment debts of Pacific Gas and Electric Company, Southern California Edison Company, and the San Diego Gas and Electric Company in an amount that the authority shall determine, but not to exceed ____ billion dollars ($____). The bill would permit the Authority to sell revenue anticipation bonds or notes, and to place an assessment against the property of the above investor owned utilities to pay for the bonds or notes. The bill would require the Public Utility Commission to determine and fix rates for the above investor owned utilities to provide the utilities with sufficient revenue to pay the amounts assessed.
(2) Because a violation of the rate of pay ordered by the commission would be a crime under existing law, the bill would impose a state-mandated local program by creating a new crime. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes the governing board of a school district that determines during a fiscal year that its revenues are less than the amount necessary to meet its current year expenditure obligations to request an emergency apportionment through the Superintendent of Public Instruction subject to requirements and repayment provisions.

This bill would establish the Interruptible Service Program Contingency Revolving Loan Fund, appropriated to, and administered by, the State Department of Education, to provide loans to school districts, community college districts, and private postsecondary educational institutions for the purpose of paying unexpected energy costs. The bill would require repayment of the loan, as specified, and would make a school district, community college district, or private postsecondary educational institution that defaults on a loan solely liable for repayment of the loan.

The bill would transfer an unspecified sum from the General Fund to the Interruptible Service Program Contingency Revolving Loan Fund for the purpose of making loans to school districts, community college districts, and private postsecondary institutions for the purpose of paying unexpected energy costs.

The bill would state that funds appropriated pursuant to this bill and allocated to school districts and community college districts shall be applied toward the minimum funding requirements for school districts and community college districts imposed by Section 8 of Article XVI of the California Constitution.

The bill would declare that it is to take effect immediately as an urgency statute.

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

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


SECTION 1.

It is the intent of the Legislature to provide

Division 1.5 (commencing with Section 3500) is added to the Public Utilities Code to read:

DIVISION 1.5. CALIFORNIA ELECTRICAL RATE STABILIZATION ACT

CHAPTER  1. General Provisions and Definitions

3500.
 This division shall be known and may be cited as the California Electrical Rate Stabilization Act.

3501.
 The California Electrical Rate Stabilization Authority is established in the office of the Treasurer. The authority constitutes a public instrumentality, and the exercise by the authority of the powers conferred by this part shall be deemed and held to be the performance of an essential public function.

3502.
 As used in this division, the following words and terms have the following meanings:
(a) “Act” means the California Electrical Rate Stabilization Act.
(b) “Authority” means the California Electrical Rate Stabilization Authority created by this division.
(c) “Board” means the governing board of the authority created pursuant to Section 3503.
(d) “Electricity overpayment debt” means debts or other liabilities incurred by the Pacific Gas and Electric Company, the Southern California Edison Company, and the San Diego Gas and Electric Company during the period from June 1, 2000, to March 31, 2001, inclusive, through their respective purchases of electricity from generators or other electricity providers other than themselves, their parent companies, affiliates, or subdivisions and for which ratepayer revenues were insufficient to pay.
(e) “Utility company” means one of the following three companies:
(1) The Pacific Gas and Electric Company.
(2) San Diego Gas and Electric Company.
(3) The Southern California Edison Company.

CHAPTER  2. Establishment of Authority

3503.
 (a) The governing board of the authority shall consist of the following three members:
(1) The Governor, or his or her designee.
(2) The Treasurer, or his or her designee.
(3) The Controller, or her or his designee.
(b) The Treasurer shall serve as chairperson of the authority and the office of the Treasurer shall provide any administrative assistance and support staff that is needed for the authority to operate. The chairperson shall keep, or cause to be kept, minutes and other records and documents of the authority.
(c) Members of the authority shall serve without compensation.
(d) Two voting members of the authority shall constitute a quorum. The affirmative vote of two voting members of the authority shall be necessary for any action taken by the authority. However, the committee may, by unanimous vote, delegate to its chairperson the authority to carry out any acts empowered to it under this division.

3504.
 The mission and purpose of the authority is to assist in financing that portion of the electricity overpayment debts incurred by the Pacific Gas and Electric Company, the Southern California Edison Company, and the San Diego Gas and Electric Company during the period from June 1, 2000, through March 31, 2001, inclusive, in the amounts determined pursuant to Section 3505. It is the intent of the Legislature that the authority arrange financing for this purpose that will minimize the impact on electricity consumers in this state, by structuring the bonds so that repayment will be substantially deferred until the utility companies have returned to profitability and electricity rates have returned to reasonable levels.

3505.
 (a) The authority shall arrange financing for electricity overpayment debts of the Pacific Gas and Electric Company in an amount that the authority shall determine, but not to exceed ____ billion dollars ($____).
(b) The authority shall arrange financing for electricity overpayment debts of the Southern California Edison Company in an amount that the authority shall determine, but not to exceed ____ billion dollars ($____).
(c) The authority shall arrange financing for electricity overpayment debts of the San Diego Gas and Electric Company in an amount that the authority shall determine, but not to exceed ____ billion dollars ($____).

CHAPTER  3. Proceedings to Create an Electrical Rate Stabilization District

3510.
 The authority shall institute proceedings for the issuance of debt by the authority in furtherance of its mission and purpose by adoption of a resolution of intention to issue debt, which resolution shall do all of the following:
(a) State that the authority proposes to issue debt, specify the utility company identified in Section 3505 for which the debt will be issued, specify the principal amount of the proposed debt, and specify the maximum maturity of that debt, which may not exceed 40 years.
(b) Describe the boundaries of the territory proposed to be included in a district that will be subject to assessment to pay the principal and interest and other expenses associated with the debt, which may be accomplished by reference to a map on file in the office of the chairperson of the authority. The district may include parcels of property that are not contiguous. Each district shall include property of only one utility company, and may not include property owned by any other person. With respect to each utility company identified in Section 3260, the associated district shall include all real property owned by that company within the exterior boundaries of California, on March 1, 2001,including all long-term leasehold interests, except that the authority may determine to exempt individual parcels of property for reasonable cause that it shall describe. This real property included in the district shall include, but not be limited to, all of the following:
(1) All long distance transmission lines.
(2) All lakes, reservoirs, dams, generators, and watershed landholdings.
(3) All other power generating facilities.
(4) All local power distribution lines and associated facilities.
(5) All other real property of the utility company.
(c) Describe the electricity overpayment debts of the utility company that will be paid with the bond proceeds, including identifying each electrical power producer who supplied electrical power for which the utility incurred electricity overpayment debt, and the amount of that debt, for each week during the period from June 1, 2000, to March 31, 2001, inclusive. The authority shall also describe the amount of electricity overpayment that is due to each broker, exchange, or other intermediary for each week during that period.
(d) State the maximum annual amount of the assessment levied by or pursuant to Part 19.5 (commencing with Section 40500) of Division 2 of the Revenue and Taxation Code with respect to the relevant utility company. The authority may specify that the maximum annual assessment may increase over time according to a formula or a schedule determined by the authority, and may specify adjustments in the maximum annual assessment that may occur after or because of specified occurrences or events. The authority shall determine the actual assessment each year after the debt has been issued and its precise costs are known, but this annual assessment may not exceed the amount identified pursuant to this subdivision.
(e) Analyze the impact of assessments described in subdivision (d) on electricity ratepayers in this state.
(f) Identify the special benefits that the utility company will enjoy as a result of the proposed financing.
(g) Fix a time and a place for a public hearing on the proposed financing, which shall be not less than 30 nor more than 60 days after the date of the adoption of the resolution.

3512.
 The chairperson of the authority shall cause notice of the proposed hearing to be published in the major newspapers of the state, and otherwise inform the news media of the scheduled hearing.

3513.
 At the hearing, support and opposition to the proposed financing, the matters included in the resolution of intention, or other matters determined by the board to be relevant may be presented orally or in writing by ratepayers, utility company officials, or other parties. The hearing may be continued from time to time, but shall be completed within 30 days of the date of commencement. The board may act to modify the resolution of intention at any time during the hearing. At the conclusion of the hearing, the board may abandon the proceedings or determine to proceed with establishing the district and issuing debt. If the board determines to establish the district and issue debt, it shall do both of the following:
(a) Determine whether all proceedings were valid and in conformity with the requirements of this division. If the board determines that all proceedings were valid and in conformity with the requirements of this division, it shall make a finding to that effect and that finding shall be final and conclusive.
(b) Adopt the resolution of intention as modified. The adopted resolution of intention shall control all further proceedings with respect to the district to which they apply unless the resolution is superceded by a new resolution of intention adopted pursuant to this division.

3514.
 (a) Upon adoption of the resolution of intention pursuant to Section 3263, the chairperson of the authority shall cause notice of the assessment lien provided for in Section 40532 of the Revenue and Taxation Code to be recorded in the office of the county recorder in each county in which any portion of the district is located. The county recorder of each county shall accept the recording documents in the form specified by the chairperson of the authority, but may charge a reasonable fee to pay the reasonable costs of recording those documents.
(b) Upon recordation of the notice of assessment lien pursuant to this section, a continuing lien to secure each annual assessment shall continue in force and effect until any and all debt issued or incurred on behalf of the district has been paid in full.

CHAPTER  4. Bonds

3520.
 Proceeds of bonds issued pursuant to this division may be used to pay all electricity overpayment debts of the public utility for which the district was created, costs incidental to or connected with the accomplishment of the purpose for which the debt was incurred, including, but not limited to, expenses incurred by the authority in establishing the district and arranging the financing; engineering, inspection, legal, fiscal, and financial consultant fees; bond and other reserve funds; discount fees; interest on bonds of the district estimated to be due and payable within five years of issuance of the bonds; and all costs of issuance of the bonds, including but not limited to, fees for bond counsel, cost of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs.

3521.
 The authority may sell bonds pursuant to this division only if it determines prior to the award of sale of bonds that the value of real property included in the district that will be subject to assessment to pay debt service on the bonds will be at least l.5 times the principal amount of the bonds to be sold. For purposes of making this determination, the authority may rely on the assessed value of the property for property tax purposes as the measure of value, although this does not limit the authority from using other value information.

3522.
 (a) The authority may sell revenue anticipation bonds or notes under this chapter upon unanimous approval by the board.
(b) (1) Revenue anticipation bonds or notes sold under this chapter do not constitute a debt or liability of the state or of any political subdivision thereof, do not constitute a pledge of the full faith and credit of the state or any of its political subdivisions, and are payable solely from the funds provided therefor under this division. The sale of the revenue anticipation bonds or notes and shall be consistent with Article XVI of the California Constitution. All the bonds and notes shall contain on the face thereof a statement to the following effect:
“Neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of, or interest on, this bond or note.”
(2) The issuance of revenue anticipation bonds or notes under this chapter shall not directly, indirectly, or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation therefor or to make any appropriation for their payment.
(c) The State of California does hereby pledge and agree with the holders of revenue anticipation bonds or notes sold under this chapter, that the state shall neither limit nor alter the assessments levied by the state pursuant to Part 19.5 (commencing with Section 40500) of Division 2 of the Revenue and Taxation Code to provide revenue sufficient to pay the principal and interest on revenue anticipation bonds and notes issued under this chapter until the obligations, together with interest, thereon are fully met and discharged, provided nothing contained in this section shall preclude the limitation or alteration if and when adequate provision shall be made by law for the protection of the holders.

3523.
 The authority may authorize incurring of indebtedness consistent with a resolution of intention adopted pursuant to Section 3263 by resolution as it determines to be appropriate, providing for all of the following:
(a) The form of the bonds.
(b) The execution of the bonds.
(c) The issuance of any part of the bonds.
(d) The appointment of one or more banks or trust companies within or without the state having the necessary trust powers as trustee, fiscal agent, paying agent, or bond registrar.
(e) The execution of a trust agreement or indenture securing the bonds.
(f) The pledge or assignment of any revenues of the electricity rate stabilization district to the repayment of the bonds.
(g) The investment of any bond proceeds and other revenues, including assessment revenues, by the trustee or fiscal agent in any securities or obligations described in the resolution, indenture, trust agreement, or other instrument providing for the issuance of the bonds. The resolution may provide for payment to the United States from any available revenues of a district of any excess investment earnings required to be rebated by federal law.
(h) The date or dates to be borne by the bonds and the time or times of maturity of the bonds and the place or places and time or times that the bonds shall be payable.
(i) The interest, fixed or variable, to be borne by the bonds.
(j) The denominations, form, and registration privileges of the bonds.
(k) Any other terms and conditions determined to be necessary by the board.

3524.
 The proceeds of any bond, note, or other security issued pursuant to this chapter, or the proceeds of any bond, note, or other security issued pursuant to any other authority where revenue collected pursuant to this chapter is pledged or otherwise committed to pay or repay principal, interest, or both, shall be deposited or invested only in one or more of the instruments, securities, or obligations that are eligible legal investments of the state of California.

3525.
 The bond indenture or other bond documents shall provide that the board agrees to notify one or more parties, including the underwriter or other first purchaser of the bonds, and an appropriate national repository for bond information approved by the federal Securities and Exchange Commission, if any events occur that may affect the market value of outstanding bonds. Those events may include, but are not limited to, any or all the following:
(a) Withdrawal of funds from any reserve fund for the bonds, such that the balance in the fund falls below a specified percentage of the amount required by bond documents.
(b) Draw upon a letter of credit or other credit enhancement for the bonds.
(c) Filing for bankruptcy by a utility company or any subsequent owner of more than a specified percentage of the area or property value within the district.
(d) Other unforeseen discoveries that may affect the revenue stream committed to payment of debt service on the bonds.

3526.
 The board may issue new bonds to refund any or all of any bonds issued pursuant to this division. The principal amount of any bonds issued to refund outstanding bonds may not count against the total authorized indebtedness specified in Section 3505.

3527.
 (a) As a cumulative remedy, if debt is outstanding, the board may, not later than four years after the due date of the last installment of principal thereof, order that any delinquent assessments levied in whole or in part for payment of the debt, together with any penalties, interest, and costs, be collected by an action brought in the superior court to foreclose the lien of assessment. The board may pursue this action with its own legal counsel, or with the assistance of the Attorney General.
(b) The board shall, by resolution, adopted prior to the issuance of debt under this division covenant for the benefit of debt holders to commence and diligently pursue any foreclosure action regarding delinquent installments of any amount levied as an assessment for the payment of interest or principal of any bonds that are issued. The resolution may specify a deadline for commencement of the foreclosure action and any other terms and conditions the board determines reasonable regarding the foreclosure action.
(c) All assessments, interest, penalties, costs, fees, and other charges that are delinquent at the time of the ordering of a foreclosure action shall be collected in the action. If a lot or parcel of property has not been sold pursuant to judgment in the foreclosure action at the time that subsequent assessments become delinquent, the court may include the subsequent assessments, interest, penalties, costs, fees, and other charges in the judgment or modified judgment.

3578.
 (a) Any judgment shall decree the amount of the continuing lien against each parcel to be foreclosed and shall order the parcel to be sold on execution by action of the Treasurer. The foreclosure action shall be governed and regulated by the provisions of this division, and also where not in conflict with this chapter, by other provisions of law generally applicable to foreclosure actions.
(b) The authority shall categorize the property in the district into the following tiers:
(1) All long distance transmission lines.
(2) All lakes, reservoirs, dams, generators, and watershed landholdings.
(3) All other power generating facilities.
(4) All local power distribution lines and associated facilities.
(5) All other real property of the utility company.
(c) The Treasurer shall sell the property of the district by tier, beginning with the tier described in paragraph (1), until sufficient revenue has been raised to pay all amounts to be collected in the foreclosure action.
(d) If no other bids are cast, the state shall bid the amount to be collected in the foreclosure action, and shall take possession of the property being sold. If other bids are cast, the state shall be entitled to bid, and shall retain the right of first refusal to buy the property being sold for the amount of the otherwise high bid at the foreclosure sale.
(e) All assessments, interest, penalties, costs, fees, and other charges that are delinquent at the time of the ordering of a foreclosure action shall be collected in the action. If a lot or parcel of property has not been sold pursuant to judgment in the foreclosure action at the time that subsequent assessments become delinquent, the court may include the subsequent assessments, interest, penalties, costs, fees, and other charges in the judgment or modified judgment.

SEC. 2.

 Part 19.5 (commencing with Section 40500) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 19.5. CALIFORNIA ELECTRICAL RATE STABILIZATION ASSESSMENT

CHAPTER  1. General Provision and Definitions

40500.
 This part shall be known and may be cited as the “California Electrical Rate Stabilization Assessment Law.”

40501.
 As used in this part, the following terms have the following meanings:

40502.
 “Assessment” means the California Electrical Rate Stabilization Assessment levied by this state pursuant to this part with respect to the Pacific Gas and Electric Company, the Southern California Edison Company, or the San Diego Gas and Electric Company or their associated districts, as appropriate.

40503.
 “Authority” means the California Electrical Rate Stabilization Authority created by Division 1.3 (commencing with Section 3500) of the Public Utilities Code.

40505.
 “Electric utility” means any person engaged in producing, generating, transmitting, furnishing, distributing or delivering electrical energy for sale who is subject to regulation or is regulated by the Public Utilities Commission.

40506.
 “Person” includes any individual, firm, cooperative organization, corporation, limited liability company, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit.

CHAPTER  2. The Electrical Rate Stabilization Assessment
Article  1. Imposition of Assessments

40520.
 (a) An assessment is imposed by the State of California on the Pacific Gas and Electric Company for the special privilege and benefit of obtaining financing that will allow the company to remain solvent and avoid bankruptcy, and for the franchise granted to the company to operate an electrical utility in this state.
(b) The annual amount, dates when payments are due, and beginning and ending dates of the assessment imposed by this section are those fixed by the authority.
(c) The authority shall set the rate of the assessment for each calendar year to produce an amount of revenue sufficient to pay the principal and interest on bonds issued on behalf of the Pacific Gas and Electric Company district pursuant to Division 1.5 (commencing with Section 3500) of the Public Utilities Code, and to replenish the district’s bond reserve fund if the amount in the fund falls below the amounts specified in bond documents. If the amount collected in any year exceeds the amount needed to pay the principal and interest on the bonds and to replenish the bond reserve fund, the authority shall apply the extra revenue and any interest or other earnings from that revenue to the following year’s principal and interest payments, and shall reduce the amount of the assessment in that year accordingly.
(d) The Pacific Gas and Electric Company shall pay the amounts assessed when due.
(e) The rate and amount fixed by the authority pursuant to subdivision (b) shall apply with respect to years beginning with calendar year 2001.

40521.
 (a) An assessment is imposed by the State of California on the Southern California Edison Company for the special privilege and benefit of obtaining financing that will allow the company to remain solvent and avoid bankruptcy, and for the franchise granted to the company to operate an electrical utility in this state.
(b) The rate, amount, and beginning and ending dates of the assessment imposed by this section are those fixed by the authority.
(c) The authority shall set the rate of the assessment for each calendar year to produce an amount of revenue sufficient to pay the principal and interest on bonds issued on behalf of the Southern California Edison Company district pursuant to Division 1.5 (commencing with Section 3500) of the Public Utilities Code, and to replenish the district’s bond reserve fund if the amount in the fund falls below the amounts specified in bond documents. If the amount collected in any year exceeds the amount needed to pay the principal and interest on the bonds and to replenish the bond reserve fund, the authority shall apply the extra revenue and any interest or other earnings from that revenue to the following year’s principal and interest payments, and shall reduce the amount of the assessment in that year accordingly.
(d) The Southern California Edison Company shall pay the amounts assessed when due.
(e) The rate and amount fixed by the authority pursuant to subdivision (b) shall apply with respect to years beginning with calendar year 2001.

40522.
 (a)An assessment is imposed by the State of California on the San Diego Gas and Electric Company for the special privilege and benefit of obtaining financing that will allow the company to remain solvent and avoid bankruptcy, and for the franchise granted to the company to operate an electrical utility in this state.
(b) The rate, amount, and beginning and ending dates of the assessment imposed by this section are those fixed by the authority.
(c) The authority shall set the rate of the assessment for each calendar year to produce an amount of revenue sufficient to pay the principal and interest on bonds issued on behalf of the San Diego Gas and Electric Company district pursuant to Division 1.5 (commencing with Section 3500) of the Public Utilities Code, and to replenish the district’s bond reserve fund if the amount in the fund falls below the amounts specified in bond documents. If the amount collected in any year exceeds the amount needed to pay the principal and interest on the bonds and to replenish the bond reserve fund, the authority shall apply the extra revenue and any interest or other earnings from that revenue to the following year’s principal and interest payments, and shall reduce the amount of the assessment in that year accordingly.
(d) The San Diego Gas and Electric Company shall pay the amounts assessed when due.
(e) The rate and amount fixed by the authority pursuant to subdivision (b) shall apply with respect to years beginning with calendar year 2001.

Article  2. Payment of Assessments

40525.
 On or before dates each year specified by the authority, the Pacific Gas and Electric Company, the Southern California Edison Company, and the San Diego Gas and Electric Company shall pay the amount of assessments specified by the authority to the authority. The authority may require payment of the amount due each year in two or more installments. The authority may require that the payments be made by electronic funds transfer under procedures prescribed by the authority.

40526.
 If a specified company does not pay an amount of assessment by its due date, the amount due shall be increased by a penalty of 10 percent of the amount due, and by an interest charge of 2 percent for each month or portion of a month until the amount owed, including all penalties and interest, are paid in full.

Article  3. Court Challenges

40530.
 Any action or proceeding to attack, review, set aside, or annul any assessment or any change in any assessment levied by or pursuant to this part shall be commenced within 30 days after the effective date of the act adding this part. Any appeal from a final judgment in that action or proceeding shall be perfected within 30 days after the entry of judgment.

Article  4. Foreclosure and Lien Priority

40531.
 If any assessment levied by or pursuant to this part has not been paid in full within 120 days of its due date, including any penalties or interest determined by the authority to be due, the authority shall commence foreclosure proceedings. Those proceedings shall follow the procedures and standards set out in Division 1.5 (commencing with Section 3500) of the Public Utilities Code, as well as this part.

40532.
 Every assessment levied by or pursuant to this part shall be a lien on all real property within the district created pursuant to Division 1.5 (commencing with Section 3500) of the Public Utilities Code associated with the Pacific Gas and Electric Company, the Southern California Edison Company, or the San Diego Gas and Electric Company, as appropriate. Each lien created pursuant to this section shall have priority over all other liens on the property, regardless of the time of their creation. Notwithstanding any other provision of law, any assessment levied by or pursuant to this part shall be given priority over matters including, but not limited to, any recognizance, deed, lien, judgment, debt, obligation, trust, or responsibility with respect to which the subject real property may be or may become charged or liable.

Article  5. Public Utilities Commission Rate Setting

40535.
 Expenditures by the Pacific Gas and Electric Company, the Southern California Edison Company, and the San Diego Gas and Electric Company to pay assessments levied pursuant to this part are in the public interest and deemed prudent. The Public Utilities Commission shall determine and fix rates applicable to these three public utilities that provide the utilities with sufficient revenues to pay the amounts assessed pursuant to this part and Division 1.5 (commencing with Section 3500) of the Public Utilities Code.

SEC. 3.

 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.

interim funding to school districts, community college districts, and private postsecondary educational institutions to meet the unexpected rise in energy costs currently being experienced by those entities.

SEC. 2.Article 4.5 (commencing with Section 41368) is added to Chapter 3 of Part 24 of the Education Code, to read:
4.5.Interruptible Service Program Contingency Revolving Loan Fund
41368.

(a)The Interruptible Service Program Contingency Revolving Loan Fund is hereby created in the State Treasury, to be administered by the State Department of Education, for the purpose of providing loans to school districts, community college districts, and private postsecondary educational institutions to pay unexpected energy costs. Notwithstanding Section 13340 of the Government Code, the fund is continuously appropriated to the department for purposes of this article.

(b)Loans from the fund shall be allocated to school districts, community college districts, and private postsecondary educational institutions that currently participate in an interruptible service program related to electrical energy consumption, who have incurred additional expense related to electrical energy consumption during a Stage 2 or Stage 3 emergency, as designated by the Independent System Operator, because they were unable to curtail their energy consumption in accordance with the terms and conditions of the service contract due to the necessity of maintaining and operating the school, community college, or private postsecondary educational facility during regular school hours.

(c)To be eligible for financial assistance pursuant to this article, an applicant shall determine the difference between the electrical utility charges that the applicant would have incurred if it had been able to curtail its electrical energy consumption during a Stage 2 or Stage 3 emergency, and the charges that were actually incurred because it was unable to curtail its consumption in order to maintain its normal daily operation during regular school hours; shall provide proof of these charges to the department; and shall submit an application to the department seeking reimbursement for 80 percent of that additional expense.

(d)Priority for loans from the fund shall be given to applicants who demonstrate any of the following:

(1)The school district, community college district, or private postsecondary educational institution has incurred a significant increase in energy costs.

(2)Lack of funds would result in a fiscal impact that would lead to a disruption of normal, ongoing programs.

(3)There is a decrease in the school district’s or community college district’s local fund reserves.

(e)(1)Commencing with the first fiscal year following the fiscal year that the school district or community college district receives the loan, the Controller shall deduct from apportionments made to the school district or community school district, as appropriate, an amount equal to the annual repayment of the amount loaned to the school district or community college district under this section and pay the same amount into the Interruptible Service Program Contingency Revolving Loan Fund in the State Treasury. Repayment of the full amount loaned to the school district or community college district shall be deducted by the Controller in equal annual amounts over a number of years agreed upon between the loan recipient and the State Department of Education, not to exceed five years for any loan.

(2)The department shall establish a repayment plan for private postsecondary educational institutions that receive loans under this article that guarantees repayment within five years of the date of the loan.

(f) Notwithstanding any other provision of law, in the case of default of a loan made directly to a school district, community college district, or private postsecondary educational institution pursuant to this article, the loan recipient shall be solely liable for repayment of the loan.
SEC. 3.

The sum of ____ dollar ($____) is hereby transferred from the General Fund to the Interruptible Service Program Contingency Revolving Loan Fund, as established by Section 41368 of the Education Code, for the purpose of providing loans to school districts, community college districts, and private postsecondary educational institutions to pay unexpected energy costs.
SEC. 4.

Funds appropriated pursuant to the act and allocated to school districts and community college districts shall be applied toward the minimum funding requirements for school districts and community college districts imposed by Section 8 of Article XVI of the California Constitution.
SEC. 5.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to provide financial assistance to school districts, community college districts, and private postsecondary educational institutions that have incurred unanticipated costs for electrical energy during a Stage 2 or Stage 3 emergency, it is necessary that this measure take effect immediately.