citation: PUC § 330

text:
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.

history: (History: Amended by Stats. 2001, 1st Ex. Sess., Ch. 2, Sec. 2. Effective January 18, 2001.)

chapter: 2.3. Electrical Restructuring

article: 1. General Provisions and Definitions

path: 1. REGULATION OF PUBLIC UTILITIES > 1. PUBLIC UTILITIES ACT > 2.3. Electrical Restructuring > 1. General Provisions and Definitions


kind: section

code: PUC

citation: PUC § 331

text:
The definitions set forth in this section shall govern the construction of this chapter.

(a) “Aggregator” means any marketer, broker, public agency, city, county, or special district, that combines the loads of multiple end-use customers in facilitating the sale and purchase of electric energy, transmission, and other services on behalf of these customers.

(b) “Broker” means an entity that arranges the sale and purchase of electric energy, transmission, and other services between buyers and sellers, but does not take title to any of the power sold.

(c) “Direct transaction” means a contract between any one or more electric generators, marketers, or brokers of electric power and one or more retail customers providing for the purchase and sale of electric power or any ancillary services.

(d) “Fire wall” means the line of demarcation separating residential and small commercial customers from all other customers as described in subdivision (e) of Section 367.

(e) “Marketer” means any entity that buys electric energy, transmission, and other services from traditional utilities and other suppliers, and then resells those services at wholesale or to an end-use customer.

(f) “Microcogeneration facility” means a cogeneration facility of less than one megawatt.

(g) “Restructuring trusts” means the two tax-exempt public benefit trusts established by Decision 96-08-038 of the Public Utilities Commission to provide for design and development of the hardware and software systems for the Power Exchange and the Independent System Operator, respectively, and that may undertake other activities, as needed, as ordered by the commission.

(h) “Small commercial customer” means a customer that has a maximum peak demand of less than 20 kilowatts.

history: (History: Amended by Stats. 2002, Ch. 664, Sec. 188. Effective January 1, 2003.)

division: 1. REGULATION OF PUBLIC UTILITIES

part: 1. PUBLIC UTILITIES ACT

article: 1. General Provisions and Definitions


text:
For purposes of this chapter, “community choice aggregator” means any of the following entities, if that entity is not within the jurisdiction of a local publicly owned electric utility that provided electrical service as of January 1, 2003:

(a) Any city, county, or city and county whose governing board elects to combine the loads of its residents, businesses, and municipal facilities in a communitywide electricity buyers’ program.

(b) Any group of cities, counties, or cities and counties whose governing boards have elected to combine the loads of their programs, through the formation of a joint powers agency established under Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of the Government Code.

(c) The Kings River Conservation District, the Sonoma County Water Agency, and any California public agency possessing statutory authority to generate and deliver electricity at retail within its designated jurisdiction, provided the entity may only combine the loads of residences, businesses, and governmental facilities of cities and counties within, or contiguous to, its jurisdiction that have, by resolution exercised pursuant to paragraph (12) of subdivision (c) of Section 366.2, requested the agency to implement a community choice aggregation program.

history: (History: Amended by Stats. 2011, Ch. 599, Sec. 3. (SB 790) Effective January 1, 2012.)

article: 1. General Provisions and Definitions


text:
(a) (1) It is the intent of the Legislature to enact Item 1 (revised) on the commission’s August 21, 2000 agenda, entitled “Opinion Modifying Decision (D.) D.00-06-034 and D.00-08-021 to Regarding Interim Rate Caps for San Diego Gas and Electric Company,” as modified below.

(2) It is also the intent of the Legislature that to the extent that the Federal Energy Regulatory Commission orders refunds to electrical corporations pursuant to their findings, the commission shall ensure that any refunds are returned to customers.

(b) The commission shall establish a ceiling of six and five-tenths cents ($0.065) per kilowatthour on the energy component of electric bills for electricity supplied to residential, small commercial, and street lighting customers by the San Diego Gas and Electric Company, through December 31, 2002, retroactive to June 1, 2000. If the commission finds it in the public interest, this ceiling may be extended through December 2003 and may be adjusted as provided in subdivision (d).

(c) The commission shall establish an accounting procedure to track and recover reasonable and prudent costs of providing electric energy to retail customers unrecovered through retail bills due to the application of the ceiling provided for in subdivision (b). The accounting procedure shall utilize revenues associated with sales of energy from utility-owned or managed generation assets to offset an undercollection, if undercollection occurs. The accounting procedure shall be reviewed periodically by the commission, but not less frequently than semiannually. The commission may utilize an existing proceeding to perform the review. The accounting procedure and review shall provide a reasonable opportunity for San Diego Gas and Electric Company to recover its reasonable and prudent costs of service over a reasonable period of time.

(d) If the commission determines that it is in the public interest to do so, the commission, after the date of the completion of the proceeding described in subdivision (g), may adjust the ceiling from the level specified in subdivision (b), and may adjust the frozen rate from the levels specified in subdivision (f), consistent with the Legislature’s intent to provide substantial protections for customers of the San Diego Gas and Electric Company and their interest in just and reasonable rates and adequate service.

(e) For purposes of this section, “small commercial customer” includes, but is not limited to, all San Diego Gas and Electric Company accounts on Rate Schedule A of the San Diego Gas and Electric Company, all accounts of customers who are “general acute care hospitals,” as defined in Section 1250 of the Health and Safety Code, all San Diego Gas and Electric Company accounts of customers who are public or private schools for pupils in kindergarten or any of grades 1 to 12, inclusive, and all accounts on Rate Schedule AL-TOU under 100 kilowatts.

(f) The commission shall establish an initial frozen rate of six and five-tenths cents ($0.065) per kilowatthour on the energy component of electric bills for electricity supplied to all customers by the San Diego Gas and Electric Company not subject to subdivision (b), for the time period ending with the end of the rate freeze for the Pacific Gas and Electric Company and the Southern California Edison Company pursuant to Section 368, retroactive to February 7, 2001. The commission shall consider the comparable energy components of rates for comparable customer classes served by the Pacific Gas and Electric Company and the Southern California Edison Company and, if it determines it to be in the public interest, the commission may adjust this frozen rate, and may do so, retroactive to the date that rate increases took effect for customers of Pacific Gas and Electric Company and Southern California Edison Company pursuant to the commission’s March 27, 2001, decision. The commission shall determine the Fixed Department of Water Resources Set-Aside pursuant to Section 360.5 for customers subject to this section, reflecting a retail rate consistent with the rate for the energy component of electric bills as determined in this subdivision, in place of the retail rate in effect on January 5, 2001. This section shall be construed to modify the payment provisions, but may not be construed to modify the electric procurement obligations of the Department of Water Resources, pursuant to any contract or agreement in accordance with Division 27 (commencing with Section 80000) of the Water Code, and in effect as of February 7, 2001, between the Department of Water Resources and San Diego Gas and Electric Company.

(g) The commission shall institute a proceeding to examine the prudence and reasonableness of the San Diego Gas and Electric Company in the procurement of wholesale energy on behalf of its customers, for a period beginning, at the latest, on June 1, 2000. If the commission finds that San Diego Gas and Electric Company acted imprudently or unreasonably, the commission shall issue orders that it determines to be appropriate affecting the retail rates of San Diego Gas and Electric Company customers including, but not limited to, refunds.

(h) Nothing in this section may be construed to limit the authority of the Department of Water Resources pursuant to Division 27 (commencing with Section 80000) of the Water Code.

history: (History: Amended by Stats. 2002, Ch. 664, Sec. 189. Effective January 1, 2003.)

article: 1. General Provisions and Definitions


text: Rates set by the commission that are subject to subdivision (f) of Section 332.1 may not result in any retroactive recovery of undercollections by the San Diego Gas and Electric Company. Any undercollection resulting from the retroactive rate reductions ordered pursuant to this chapter, retroactive to February 7, 2001, may not result in a revenue undercollection to San Diego Gas and Electric Company.

history: (History: Amended (as added by Stats. 2001, 1st Ex. Sess., Ch. 5) by Stats. 2002, Ch. 664, Sec. 190. Effective January 1, 2003. See identical section, as amended by Sec. 191 of Ch. 664.)

article: 1. General Provisions and Definitions


citation: PUC § 334

text: The Legislature finds and declares that in order to ensure the success of electric industry restructuring, in the transition to a new market structure it is important to ensure a reliable supply of electricity. Reliable electric service is of paramount importance to the safety, health, and comfort of the people of California. Transmission connections between electric utilities allow them to share generation resources and reduce the number of powerplants necessary to maintain a reliable system. The connections between utilities also create exposure to events that can cause widespread and extended transmission and service outages that reach far beyond the originating utility service area. California utilities and those in the western United States voluntarily adhere to reliability standards developed by the Western Electricity Coordinating Council. The economic cost of extended electricity outages, such as those that occurred in California and throughout the Western Electricity Coordinating Council on July 2, 1996, and August 10, 1996, to California’s residential, commercial, agricultural, and industrial customers is significant. The proposed restructuring of the electricity industry would transfer responsibility for ensuring short- and long-term reliability away from electric utilities and regulatory bodies to the Independent System Operator and various market-based mechanisms. The Legislature has an interest in ensuring that the change in the locus of responsibility for reliability does not expose California citizens to undue economic risk in connection with system reliability.

history: (History: Amended by Stats. 2003, Ch. 62, Sec. 256. Effective January 1, 2004.)

article: 2. Oversight Board

path: 1. REGULATION OF PUBLIC UTILITIES > 1. PUBLIC UTILITIES ACT > 2.3. Electrical Restructuring > 2. Oversight Board


citation: PUC § 335

text:
In order to ensure that the interests of the people of California are served, a five-member Electricity Oversight Board is hereby created as provided in Section 336. For purposes of this chapter, any reference to the Oversight Board shall mean the Electricity Oversight Board. Its functions shall be all of the following:

(a) To oversee the Independent System Operator and the Power Exchange.

(b) To determine the composition and terms of service and to exercise the exclusive right to decline to confirm the appointments of specific members of the governing board of the Power Exchange.

(c) To serve as an appeal board for majority decisions of the Independent System Operator governing board, as they relate to matters subject to exclusive state jurisdiction, as specified in Section 339.

(d) Those members of the Power Exchange governing board whose appointments the Oversight Board has the exclusive right to decline to confirm include proposed governing board members representing agricultural end users, industrial end users, commercial end users, residential end users, end users at large, nonmarket participants, and public interest groups.

(e) To investigate any matter related to the wholesale market for electricity to ensure that the interests of California’s citizens and consumers are served, protected, and represented in relation to the availability of electric transmission and generation and related costs, during periods of peak demand.

history: (History: Amended by Stats. 2001, Ch. 766, Sec. 1. Also amended, in identical language, by Stats. 2001, 2nd Ex. Sess., Ch. 16, effective August 8, 2002. Effective January 1, 2002.)

article: 2. Oversight Board


citation: PUC § 336

text:
(a) The five-member Oversight Board shall be comprised as follows:

(1) Three members, who are California residents and electricity ratepayers, appointed by the Governor from a list jointly provided by the Energy Commission and the Public Utilities Commission, and subject to confirmation by the Senate.

(2) One member of the Assembly appointed by the Speaker of the Assembly.

(3) One member of the Senate appointed by the Senate Committee on Rules.

(b) Legislative members shall be nonvoting members, however, they are otherwise full members of the board with all rights and privileges pertaining thereto.

(c) Oversight Board members shall serve three-year terms with no limit on reappointment. For purposes of the initial appointments set forth in paragraph (1), the Governor shall appoint one member to a one-year term, one to a two-year term, and one to a three-year term.

(d) The Governor shall designate one of the voting members as the chairperson of the Oversight Board who shall preside over meetings and direct the executive director in the routine administration of the Oversight Board’s business. The chairperson may designate one of the other voting members to preside over meetings in the absence of the chairperson.

(e) Two voting members shall constitute a quorum. Any decision or action of the Oversight Board shall be by majority vote of the voting members.

(f) The members of the Oversight Board shall serve without compensation, but shall be reimbursed for all necessary expenses incurred in the performance of their duties.

history: (History: Amended by Stats. 2019, Ch. 396, Sec. 16. (AB 1513) Effective January 1, 2020.)

article: 2. Oversight Board


citation: PUC § 337

text:
(a) The Independent System Operator governing board shall comprise a five-member independent governing board of directors appointed by the Governor and subject to confirmation by the Senate. Any reference in this chapter or in any other provision of law to the Independent System Operator governing board means the independent governing board appointed under this subdivision.

(b) A member of the independent governing board appointed under subdivision (a) may not be affiliated with any actual or potential participant in any market administered by the Independent System Operator.

(c) (1) All appointments shall be for three-year terms.

(2) There is no limit on the number of terms that may be served by any member.

(d) The Oversight Board shall require the articles of incorporation and bylaws of the Independent System Operator to be revised in accordance with this section, and shall make filings with the Federal Energy Regulatory Commission as the Oversight Board determines to be necessary.

(e) For purposes of the initial appointments to the Independent System Operator governing board, as provided in subdivision (a), the Governor shall appoint one member to a one-year term, two members to a two-year term, and two members to a three-year term.

history: (History: Amended by Stats. 2025, Ch. 116, Sec. 1. (AB 825) Effective January 1, 2026.)

article: 2. Oversight Board


citation: PUC § 338

text: The Oversight Board shall have the exclusive right to approve procedures and the qualifications for Power Exchange governing board members specified in subdivision (d) of Section 335, all of whom shall be required to be electricity customers in the area served by the Power Exchange. The Power Exchange governing board shall include, but not be limited to, representatives of investor-owned electric distribution companies, publicly owned electric distribution companies, nonutility generators, public buyers and sellers, private buyers and sellers, industrial end-users, commercial end-users, residential end-users, agricultural end-users, public interest groups, and nonmarket participant representatives. The structural composition of the Power Exchange governing board existing on July 1, 1999, shall remain in effect until an agreement with a participating state is legally in effect. However, prior to such an agreement, California shall retain the right to change the Power Exchange governing board into a nonstakeholder board. In the event of such a legislative change, revised bylaws shall be filed with the Federal Energy Regulatory Commission under Section 205 of the Federal Power Act (16 U.S.C.A. Sec. 824d).

history: (History: Amended by Stats. 1999, Ch. 510, Sec. 3. Effective January 1, 2000.)

article: 2. Oversight Board


citation: PUC § 339

text:
(a) The Oversight Board is the appeal board for majority decisions of the Independent System Operator governing board relating to matters that are identified in subdivision (b) as they pertain to the Independent System Operator.

(b) The following matters are subject to California’s exclusive jurisdiction:

(1) Selections by California of governing board members, as described in Sections 335, 337, and 338.

(2) Matters pertaining to retail electric service or retail sales of electric energy.

(3) Ensuring that the purposes and functions of the Independent System Operator and Power Exchange are consistent with the purposes and functions of California nonprofit public benefit corporations, including duties of care and conflict of interest standards for directors of the corporations.

(4) State functions assigned to the Independent System Operator and Power Exchange under state law.

(5) Open meeting standards and meeting notice requirements.

(6) Appointment of advisory representatives representing state interests.

(7) Public access to corporate records.

(8) The amendment of bylaws relevant to these matters.

(c) Only members of the Independent System Operator governing board may appeal a majority decision of the Independent System Operator related to any of the matters specified in subdivision (b) to the Oversight Board.

history: (History: Amended by Stats. 1999, Ch. 510, Sec. 4. Effective January 1, 2000.)

article: 2. Oversight Board


citation: PUC § 340

text: The Oversight Board shall take the steps that are necessary to ensure the earliest possible incorporation of the Independent System Operator and the Power Exchange as separately incorporated public benefit, nonprofit corporations under the Corporations Code.

history: (History: Added by Stats. 1996, Ch. 854, Sec. 10. Effective September 24, 1996.)

article: 2. Oversight Board


citation: PUC § 341

text:
The Oversight Board may do all of the following:

(a) Meet at the times and places it may deem proper.

(b) Accept appropriations, grants, or contributions from any public source, private foundation, or individual.

(c) Sue and be sued.

(d) Contract with state, local, or federal agencies for services or work required by the Oversight Board.

(e) Contract for or employ any services or work required by the Oversight Board that in its opinion cannot satisfactorily be performed by its staff or by other state agencies.

(f) Appoint advisory committees from members of other public agencies and private groups or individuals.

(g) As a body, or on the authorization of the Oversight Board, as a subcommittee composed of one or more members, hold hearings at the times and places it may deem proper.

(h) Issue subpoenas to compel the production of books, records, papers, accounts, reports, and documents and the attendance of witnesses.

(i) Administer oaths.

(j) Adopt or amend rules and regulations to carry out the purposes and provisions of this chapter, and to govern the procedures of the Oversight Board.

(k) Exercise any authority consistent with this chapter delegated to it by a federal agency or authorized to it by federal law.

(l) Make recommendations to the Governor and the Legislature at the time or times the Oversight Board deems necessary.

(m) Participate in proceedings relevant to the purposes of this chapter or to the purposes of Division 4.9 (commencing with Section 9600) or, as part of any coordinated effort by the state, participate in activities to promote the formation of interstate agreements to enhance the reliability and function of the electricity system and the electricity market.

(n) Do any and all other things necessary to carry out the purposes of this chapter.

history: (History: Added by Stats. 1997, Ch. 261, Sec. 3. Effective January 1, 1998.)

article: 2. Oversight Board


text: Regulations adopted within 120 days of the effective date of this section may be adopted as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of the Government Code, and for the purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health, safety, and general welfare.

history: (History: Added by Stats. 1997, Ch. 261, Sec. 4. Effective January 1, 1998.)

article: 2. Oversight Board


text: The Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) applies to meetings of the Oversight Board. In addition to the allowances of that act, the Oversight Board may hold a closed session to consider the appointment of one or more candidates to the governing board of the Power Exchange, deliberate on matters involving the removal of a member of the governing board of the Power Exchange, or to consider a matter based on information that has received a grant of confidential status pursuant to regulations of the Oversight Board, provided that any action taken on such a matter shall be taken by vote in an open session.

history: (History: Amended by Stats. 2001, Ch. 766, Sec. 3. Effective January 1, 2002.)

article: 2. Oversight Board


text: Voting members of the Oversight Board shall be required to file financial disclosure statements with the Fair Political Practices Commission. The appointing authority for voting members shall avoid appointing persons with conflicts of interest.

history: (History: Added by Stats. 1997, Ch. 261, Sec. 6. Effective January 1, 1998.)

article: 2. Oversight Board


text: The Oversight Board shall appoint, and fix the salary of, an executive director who shall have charge of administering the affairs of the Oversight Board, including entering into contracts, subject to the direction and policies of the Oversight Board. Notwithstanding Sections 11042 and 11043 of the Government Code, the Oversight Board shall appoint an attorney who shall advise the Oversight Board and each member and represent the Oversight Board as a party in any state or federal action or proceeding related to the purposes of this chapter or to an action of the Oversight Board and who shall perform generally all the duties of attorney to the Oversight Board. For purposes of this section, the Oversight Board may appoint a person exempt pursuant to subdivision (e) of Section 4 of Article VII of the California Constitution. The executive director shall, in accordance with Article VII of the California Constitution and subject to the approval of the Oversight Board, appoint employees as may be necessary to carry out the Oversight Board’s duties and responsibilities.

history: (History: Added by Stats. 1997, Ch. 261, Sec. 7. Effective January 1, 1998.)

article: 2. Oversight Board


text:
(a) The Independent System Operator and Power Exchange bylaws shall contain provisions that identify those matters specified in subdivision (b) of Section 339 as matters within state jurisdiction. The bylaws shall also contain provisions which state that California’s bylaws approval function with respect to the matters specified in subdivision (b) of Section 339 shall not preclude the Federal Energy Regulatory Commission from taking any action necessary to address undue discrimination or other violations of the Federal Power Act (16 U.S.C.A. Sec. 791a et seq.) or to exercise any other commission responsibility under the Federal Power Act. In taking any such action, the Federal Energy Regulatory Commission shall give due respect to California’s jurisdictional interests in the functions of the Independent System Operator and Power Exchange and to attempt to accommodate state interests to the extent those interests are not inconsistent with the Federal Energy Regulatory Commission’s statutory responsibilities. The bylaws shall state that any future agreement regarding the apportionment of the Independent System Operator and Power Exchange board appointment function among participating states associated with the expansion of the Independent System Operator and Power Exchange into multistate entities shall be filed with the Federal Energy Regulatory Commission pursuant to Section 205 of the Federal Power Act (16 U.S.C.A. Sec. 824d).

(b) Any necessary bylaw changes to implement the provisions of Section 335, 337, 338, 339, or subdivision (a) of this section, or changes required pursuant to an agreement as contemplated by subdivision (a) of this section with a participating state for a regional organization, shall be effective upon approval of the respective governing boards and the Oversight Board and acceptance for filing by the Federal Energy Regulatory Commission.

history: (History: Added by Stats. 1999, Ch. 510, Sec. 5. Effective January 1, 2000.)

article: 2. Oversight Board


citation: PUC § 343

text:
(a) The Attorney General shall represent the Department of Finance and shall succeed to, and may exercise, all rights, claims, powers, and entitlements of the Electricity Oversight Board in any litigation or settlement to obtain ratepayer recovery for the effects of the 2000–02 energy crisis. This section does not require the Attorney General to litigate any claim, or take any other action, as successor to the Electricity Oversight Board.

(b) The Attorney General shall not distribute or expend the proceeds of any settlements of claims described in subdivision (a), except in accordance with Article 9.5 (commencing with Section 16428.1) of Chapter 2 of Part 2 of Division 4 of Title 2 of the Government Code and Division 27 (commencing with Section 80000) of the Water Code.

(c) The Attorney General shall not distribute or expend the proceeds of any settlements of claims allocated to the Electricity Oversight Board.

history: (History: Added by Stats. 2019, Ch. 150, Sec. 2. (SB 506) Effective January 1, 2020.)

article: 2. Oversight Board


citation: PUC § 345

text:
(a) The Independent System Operator shall ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.

(b) In furtherance of subdivision (a), the Independent System Operator may amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission through its rulemaking process, to be consistent with subdivision (a).

history: (History: Amended by Stats. 2024, Ch. 713, Sec. 2. (AB 2368) Effective January 1, 2025.)

article: 3. Independent System Operator

path: 1. REGULATION OF PUBLIC UTILITIES > 1. PUBLIC UTILITIES ACT > 2.3. Electrical Restructuring > 3. Independent System Operator


text: The chair of the board of governors and the chief executive officer of the Independent System Operator shall appear annually before the appropriate policy committees of the Assembly and Senate to present the report required pursuant to Section 345.2.

history: (History: Added by Stats. 2025, Ch. 116, Sec. 2. (AB 825) Effective January 1, 2026.)

article: 3. Independent System Operator


text:
(a) The Independent System Operator shall develop, publish, and annually update a report that includes all of the following information:

(1) Any changes to its federal tariff sought, and those changes approved, by the Federal Energy Regulatory Commission.

(2) The status of policy initiatives and recurring processes considered by the Independent System Operator during the prior year.

(3) Actions undertaken by the Independent System Operator governing board and, if applicable, the governing board of an independent regional organization whose electricity market California entities participate in.

(4) An assessment of market activity during the prior year by any independent market monitor and, if applicable, independent market analysis maintained by an independent regional organization used by the Independent System Operator.

(5) Actions undertaken within the transmission planning process of the Independent System Operator and the implementation of projects approved in that process.

(b) If the Independent System Operator uses a voluntary energy market governed by an independent regional organization, that organization shall provide the Independent System Operator with the information required for the report required by this section, as applicable.

(c) (1) The Independent System Operator shall submit the report required pursuant to subdivision (a) to the Governor and the Legislature, in compliance with Section 9795 of the Government Code, no later than February 1 of each year.

(2) The Independent System Operator shall post the report in a conspicuous area of its internet website and shall have a program to disseminate the information in the report using computer mailing lists to provide regular updates on the information to those members of the public and organizations that request that information.

history: (History: Added by Stats. 2025, Ch. 116, Sec. 3. (AB 825) Effective January 1, 2026.)

article: 3. Independent System Operator


text:
(a) The Independent System Operator, as a nonprofit, public benefit corporation, shall conduct its operations consistent with applicable state and federal laws and consistent with the interests of the people of the state.

(b) To ensure the reliability of electric service and the health and safety of the public, the Independent System Operator shall manage the transmission grid and related energy markets in a manner that is consistent with all of the following:

(1) Making the most efficient use of available energy resources. For purposes of this section, “available energy resources” include energy, capacity, ancillary services, and demand bid into markets administered by the Independent System Operator. “Available energy resources” do not include a schedule submitted to the Independent System Operator by an electrical corporation or a local publicly owned electric utility to meet its own customer load.

(2) Reducing, to the extent possible, overall economic cost to the state’s consumers.

(3) Applicable state law intended to protect the public’s health and the environment.

(4) Maximizing availability of existing electric generation resources necessary to meet the needs of the state’s electricity consumers.

(5) Conducting internal operations in a manner that minimizes cost impact on ratepayers to the extent practicable and consistent with the provisions of this chapter.

(6) Communicating with all balancing area authorities in California in a manner that supports electrical reliability.

(c) The Independent System Operator shall do all of the following:

(1) Consult and coordinate with appropriate state and local agencies to ensure that the Independent System Operator operates in furtherance of state law regarding consumer and environmental protection.

(2) Ensure that the purposes and functions of the Independent System Operator are consistent with the purposes and functions of nonprofit, public benefit corporations in the state, including duties of care and conflict-of-interest standards for officers and directors of a corporation.

(3) Maintain open meeting standards and meeting notice requirements consistent with the general policies of the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and affording the public the greatest possible access, consistent with other duties of the corporation. The Independent System Operator’s Open Meeting Policy, as adopted on April 23, 1998, and in effect as of May 1, 2002, meets the requirements of this paragraph. The Independent System Operator shall maintain a policy that is no less consistent with the Bagley-Keene Open Meeting Act than its policy in effect as of May 1, 2002.

(4) Provide public access to corporate records consistent with the general policies of the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) and affording the public the greatest possible access, consistent with the other duties of the corporation. The Independent System Operator’s Information Availability Policy, as adopted on October 22, 1998, and in effect as of May 1, 2002, meets the requirements of this paragraph. The Independent System Operator shall maintain a policy that is no less consistent with the California Public Records Act than its policy in effect as of May 1, 2002.

history: (History: Amended by Stats. 2021, Ch. 615, Sec. 395. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Section 463 of Stats. 2021, Ch. 615.)

article: 3. Independent System Operator


text:
(a) Notwithstanding the requirements related to energy markets in subdivision (b) of Section 345.5, the Independent System Operator and the electrical corporations that are participating transmission owners whose transmission systems are operated by the Independent System Operator may use voluntary energy markets governed by an independent regional organization only if all of the following requirements are satisfied:

(1) The independent regional organization is a nonprofit corporation whose governance documents, and the tariff approved by the Federal Energy Regulatory Commission, include a requirement to respect the authority of each state that has a load-serving entity or balancing authority participating in the market to set its own procurement, resource adequacy, environmental, reliability, and other public interest policies and exercise oversight over its regulated entities.

(2) The governing board of the independent regional organization maintains a public policy committee consisting of members of the governing board of the independent regional organization that engages with states, local power authorities, and federal power marketing administrations about potential impacts to state, local, or federal policies before it approves a tariff change for filing at the Federal Energy Regulatory Commission.

(3) The governing board of the independent regional organization maintains a relationship with and seeks input from a body of state regulators or similar body to receive the views of state regulators.

(4) The independent regional organization makes funding available for a consumer advocate organization that represents the interests of one or more consumer advocate offices authorized in state law, including the Public Advocate’s Office of the Public Utilities Commission, and facilitates engagement by those offices with the independent regional organization.

(5) The independent regional organization maintains an office of public participation to provide information and education to members of the public about issues and initiatives at the independent regional organization, including facilitating engagement in those processes.

(6) In addition to any independent market monitoring activity required by a Federal Energy Regulatory Commission order, the independent regional organization maintains access to independent market analysis for the governing board of the independent regional organization on the impacts of market dynamics or rule changes to minimize overall costs to end-use consumers.

(7) Subject to reasonable confidentiality provisions, market data is available to the commission and the Public Advocate’s Office of the Public Utilities Commission, and other states’ commissions and public advocate offices, to the same or greater extent as existed on December 31, 2024, for the markets governed by the Independent System Operator.

(8) There is a stakeholder process designed to provide nonbinding advice to the governing board of the independent regional organization.

(9) The independent regional organization is obligated to conduct meetings and make decisions in an open process with transparent, documented rationales, and all meetings of the governing board of the independent regional organization are publicly noticed and, excluding executive sessions, are available to remote participants, recorded and posted on the independent regional organization’s internet website, open to the public, and subject to open record requirements. The obligations in this paragraph shall be substantially similar to those that apply to the Independent System Operator at the time a resolution is adopted pursuant to subdivision (b).

(10) The Independent System Operator continues to operate the energy markets, subject to the market rules determined by the independent regional organization as accepted by the Federal Energy Regulatory Commission.

(11) The market rules of the independent regional organization provide greenhouse gas emissions information and protocols sufficient to enable compliance with the requirements of any state agency.

(12) All independent regional organization services are offered on a voluntary basis with each participant retaining its decisionmaking autonomy regarding the extent of its participation.

(13) The tariff approved by the Federal Energy Regulatory Commission for the independent regional organization provides a procedure for unilateral withdrawal from the independent regional organization’s energy markets by any participant on their own accord, or as required by an applicable regulatory authority or state statute, with reasonable prior notice and without any penalties, unreasonable costs, or further discretionary approvals.

(b) On or after January 1, 2028, the Independent System Operator may implement tariff modifications accepted by the Federal Energy Regulatory Commission to operate the energy markets whose rules are governed by an independent regional organization, as provided in subdivision (a), if the governing board of the Independent System Operator has adopted a resolution finding that each of the requirements of paragraphs (1) to (13), inclusive, of subdivision (a) have been or will be adopted by the independent regional organization. The governing board of the Independent System Operator may adopt the resolution if the Independent System Operator satisfies all of the following requirements before adopting the resolution:

(1) The meeting is open to the public, available to remote participants, recorded, and posted on the Independent System Operator’s internet website.

(2) The Independent System Operator issues a notice of the meeting and proposed findings not less than 90 days before the meeting.

(3) The notice explains the basis for finding that each requirement of paragraphs (1) to (13), inclusive, of subdivision (a) will be met.

(4) The notice provides an opportunity for written comments on the proposed findings.

(5) The Independent System Operator issues written responses to any comments not less than 20 days before the meeting.

(6) After issuing the written responses described in paragraph (5), but before adopting the resolution, the Independent System Operator shall offer to provide testimony to the legislative committee in each house of the Legislature with primary jurisdiction over electrical corporations on its proposed findings and responses and shall provide testimony to hearings of those committees if those committees request testimony.

(7) The Independent System Operator receives and accepts written comments from the commission, Public Advocate’s Office, and Energy Commission provided pursuant to paragraph (4) regarding the proposed findings.

(c) The commission shall make a determination through a formal decision in an existing or new proceeding that the requirements in subdivisions (a) and (b) have been satisfied before electrical corporations participate in an energy market governed by an independent regional organization.

(d) This section does not diminish the commission’s authority to direct an electrical corporation to withdraw from an energy market governed by an independent regional organization. The commission may direct an electrical corporation to withdraw from an energy market governed by an independent regional organization on its own volition through a proceeding or any other commission process, including if the commission identifies any activities of the independent regional organization that would undermine or jeopardize the commission’s authority regarding resource adequacy, integrated resource planning, or procuring resources under Section 380, 454.51, or 454.52.

(e) (1) The Independent System Operator shall maintain the necessary technical capability to operate energy markets in a manner that enables California electrical corporations, local publicly owned electric utilities, and other applicable market participants to withdraw from the markets governed by the independent regional organization and instead the Independent System Operator would provide separate market services for those entities.

(2) Beginning one year after the implementation of the independent regional organization’s markets, and annually thereafter, the Independent System Operator, in consultation with the independent regional organization, shall report to the commission, Energy Commission, and the legislative committees with primary jurisdiction over electrical corporations, in compliance with Section 9795 of the Government Code, on the status of the development and compliance with this section.

(3) The commission and Energy Commission shall review each report required pursuant to paragraph (2) and shall publicly post an acknowledgment to their internet websites that they have reviewed the contents of each report.

(f) (1) The Independent System Operator shall conduct a study of the impacts of implementing subdivision (a) on the creation or retention of jobs in California. The study shall specifically include the impact on jobs constructing and maintaining powerplants in California.

(2) The Independent System Operator shall host public workshops on the study methodology and the results of the study.

(3) The Independent System Operator shall complete the study on or before December 31, 2026. Upon completion, the Independent System Operator shall provide the study to the legislative committee in each house of the Legislature with primary jurisdiction over electrical corporations.

(4) The results of the study shall be included in the Independent System Operator’s findings and resolution described in subdivision (b).

(5) The study submitted pursuant to paragraph (3) shall be in compliance with Section 9795 of the Government Code.

(g) (1) The Independent System Operator shall continue its functions and responsibilities as a balancing authority as they existed before enactment of this section, and maintain compliance with applicable reliability standards as developed, adopted, and enforced by the North American Electric Reliability Corporation, the Western Electricity Coordinating Council, or the Federal Energy Regulatory Commission.

(2) The Independent System Operator shall not change its balancing authority area from that which existed on December 31, 2024, except as follows:

(A) Standard addition or removal of transmission lines, substations, and other equipment by participating transmission owners or other asset owners.

(B) The Independent System Operator may combine its balancing authority area with another California balancing authority if the combination is mutually agreed upon.

(C) The Independent System Operator may use its subscriber participating transmission owner tariff.

(3) Except as provided in subdivision (a) with respect to managing energy markets as provided in this section, this section does not change the responsibilities of the Independent System Operator under Section 345.5, including managing the transmission grid, planning for transmission expansion, reliability, resource adequacy, and complying with Section 25308 of the Public Resources Code.

(h) (1) (A) This section does not change any requirement related to the California Renewables Portfolio Standard Program as provided in Article 16 (commencing with Section 399.11).

(B) The independent regional organization is not a California balancing authority.

(C) The geographic footprint of the independent regional organization is not a balancing authority area.

(2) This section does not change the policy of the state to reach specified targets by specified dates for supplying eligible renewable energy resources and zero-carbon resources as provided in subdivision (a) of Section 454.53.

(3) This section does not change the authority of the commission regarding resource adequacy, integrated resource planning, or procuring resources under Section 380, 454.51, 454.52, or any other law.

(4) This section does not change the authority of the commission over an electrical corporation’s participation in any additional products or services offered by the independent regional organization and the electrical corporations shall not participate in any additional products and services offered by the independent regional organization unless authorized by the commission.

(i) The Independent System Operator may act as a vendor, through a contract with the independent regional organization, of market operation services, generation dispatch services, transmission operation services, transmission planning services, reliability coordination, balancing authority compliance or operation services, or other electrical system services.

(j) This section does not prohibit the independent regional organization from offering additional products or services on a voluntary basis, including, but not limited to, cooptimization of ancillary services, administration of a resource adequacy program, or transmission planning or service.

(k) For purposes of this section, both of the following definitions apply:

(1) “Balancing authority,” “balancing authority area,” and “California balancing authority” have the same meanings as provided in Section 399.12.

(2) “Load-serving entity” has the same meaning as provided in Section 380.

history: (History: Added by Stats. 2025, Ch. 116, Sec. 4. (AB 825) Effective January 1, 2026.)

article: 3. Independent System Operator


citation: PUC § 346

text: The Independent System Operator shall immediately participate in all relevant Federal Energy Regulatory Commission proceedings. The Independent System Operator shall ensure that additional filings at the Federal Energy Regulatory Commission request confirmation of the relevant provisions of this chapter and seek the authority needed to give the Independent System Operator the ability to secure generating and transmission resources necessary to guarantee achievement of planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.

history: (History: Amended by Stats. 2003, Ch. 62, Sec. 258. Effective January 1, 2004.)

article: 3. Independent System Operator


citation: PUC § 347

text: The Independent System Operator governing board may form appropriate technical advisory committees composed of market and nonmarket participants to advise the Independent System Operator governing board on issues including, but not limited to, rules and protocols and operating procedures.

article: 3. Independent System Operator


citation: PUC § 348

text: The Independent System Operator shall adopt inspection, maintenance, repair, and replacement standards for the transmission facilities under its control no later than September 30, 1997. The standards, which shall be performance or prescriptive standards, or both, as appropriate, for each substantial type of transmission equipment or facility, shall provide for high quality, safe, and reliable service. In adopting its standards, the Independent System Operator shall consider: cost, local geography and weather, applicable codes, national electric industry practices, sound engineering judgment, and experience. The Independent System Operator shall also adopt standards for reliability, and safety during periods of emergency and disaster. The Independent System Operator shall report to the Oversight Board, at such times as the Oversight Board may specify, on the development and implementation of the standards in relation to facilities under the operational control of the Independent System Operator. The Independent System Operator shall require each transmission facility owner or operator to report annually on its compliance with the standards. That report shall be made available to the public.

history: (History: Amended by Stats. 1997, Ch. 261, Sec. 8. Effective January 1, 1998.)

article: 3. Independent System Operator


citation: PUC § 349

text:
(a) The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operator’s operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner.

(b) (1) If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.

(2) (A) If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficiency of the electricity supply available to serve the electrical load within its balancing area authority, the Independent System Operator shall post on its internet website the finding and recommendations to prevent future shortfalls and share the finding and recommendations with the commission, the Energy Commission, and the Legislature.

(B) Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.

history: (History: Amended by Stats. 2024, Ch. 713, Sec. 3. (AB 2368) Effective January 1, 2025.)

article: 3. Independent System Operator


text:
(a) Beginning January 15, 2002, and at least once monthly thereafter, the Independent System Operator shall notify each air pollution control district and air quality management district of the name and address of each entity within the district’s boundaries within the Independent System Operator’s control area with whom the Independent System Operator enters into an interruptible service contract or similar arrangement.

(b) For the purposes of this section, “interruptible service contract or similar arrangement” means any arrangement in which a nonresidential entity agrees to reduce or consider reducing its electrical consumption during periods of peak demand or at the request of the Independent System Operator in exchange for compensation, or for assurances not to be blacked out or other similar nonmonetary assurances.

(c) The local air pollution control district or air quality management district shall maintain in a confidential manner the information received pursuant to this section. However, nothing in this subdivision shall affect the applicability of Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code, or of any other similar open records statute or ordinance, to information provided pursuant to this section.

history: (History: Amended by Stats. 2021, Ch. 615, Sec. 396. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Section 463 of Stats. 2021, Ch. 615.)

article: 3. Independent System Operator


citation: PUC § 350

text:
(a) Notwithstanding Section 10231.5 of the Government Code, upon approval by the Independent System Operator of each transmission plan produced through the transmission planning process, or a successor process, the Independent System Operator shall report to the commission and the relevant policy committees of both houses of the Legislature any new use of any grid enhancing technology that is deemed reasonable by the Independent System Operator in that plan and the costs and efficiency savings of the deployment of that grid enhancing technology.

(b) The report submitted to the relevant policy committees of the Legislature pursuant to subdivision (a) shall be submitted in accordance with Section 9795 of the Government Code.

history: (History: Added by Stats. 2024, Ch. 741, Sec. 1. (AB 2779) Effective January 1, 2025.)

article: 3. Independent System Operator


text:
(a) The Independent System Operator shall make publicly available a list of all power plants located in the state that are not operational due to a planned or unplanned outage.

(b) For the purposes of complying with subdivision (a), the Independent System Operator shall make the list available over the Internet.

(c) The Independent System Operator shall update the list established pursuant to subdivision (a) on a daily basis.

history: (History: Added by Stats. 2001, 1st Ex. Sess., Ch. 1, Sec. 6. Effective January 18, 2001.)

article: 3. Independent System Operator


text:
(a) It shall be unlawful for a person to intentionally disclose proprietary information obtained in the negotiation, execution, or performance of a consulting services contract, as defined in Section 10335.5 of the Public Contract Code, or an information technology contract, as defined in Section 11702 of the Government Code, with the Independent System Operator when the contracting party knew or should have known that the disclosure was likely to cause harm.

(b) A violation of this section shall be punishable as a misdemeanor and may be prosecuted by the Attorney General or by a local district attorney in the district in which the disclosure took place.

(c) (1) For the purposes of this section “proprietary information” shall include any information agreed by the contracting parties to be proprietary, or any information that is designated by the Independent System Operator to be proprietary. The Independent System Operator shall provide written notification to a contracting party of any information that, subsequent to the execution of the contract, is identified to be proprietary. The Independent System Operator shall make this designation only in cases where the Independent System Operator has reason to believe that the release of this information poses an immediate threat to the health, safety, or welfare of the public or the Independent System Operator has reason to believe that the contracting party intends to sell the information. If the Independent System Operator makes a designation of proprietary information subsequent to the execution of the contract, the Independent System Operator shall make a good faith effort to amend the contract to incorporate the subsequent designation of proprietary information. The Independent System Operator shall specifically identify in the contract any information that is considered to be proprietary. A contracting party is not in violation of this section if that party discloses information prior to the receipt of the written notification.

(2) Any information that is required to be released or disclosed by a contracting party pursuant to a legal requirement, including an order of a court or regulatory agency, shall not be considered a violation of this section.

history: (History: Added by Stats. 2002, Ch. 1097, Sec. 2. Effective January 1, 2003.)

article: 3. Independent System Operator


text:
As used in this article, “distributed energy resources” means electric generation technology that meets all of the following criteria:

(a) Commences initial operation between May 1, 2001, and June 1, 2003, except that gas-fired distributed energy resources that are not operated in a combined heat and power application shall commence operation no later than September 1, 2002.

(b) Is located within a single facility.

(c) Is five megawatts or smaller in aggregate capacity.

(d) Serves onsite loads or over-the-fence transactions allowed under Sections 216 and 218.

(e) Is powered by any fuel other than diesel.

(f) Complies with emission standards and guidance adopted by the State Air Resources Board pursuant to Sections 41514.9 and 41514.10 of the Health and Safety Code. Prior to the adoption of those standards and guidance, for the purpose of this article, distributed energy resources shall meet emission levels equivalent to nine parts per million oxides of nitrogen, or the equivalent standard taking into account efficiency as determined by the State Air Resources Board, averaged over a three-hour period, or best available control technology for the applicable air district, whichever is lower, except for distributed generation units that displace and therefore significantly reduce emissions from natural gas flares or reinjection compressors, as determined by the State Air Resources Board. These units shall comply with the applicable best available control technology as determined by the air pollution control district or air quality management district in which they are located.

history: (History: Amended by Stats. 2008, Ch. 179, Sec. 193. Effective January 1, 2009.)

article: 3.5. Distributed Energy Resources

path: 1. REGULATION OF PUBLIC UTILITIES > 1. PUBLIC UTILITIES ACT > 2.3. Electrical Restructuring > 3.5. Distributed Energy Resources


text:
(a) As used in this article, “ultraclean and low-emission distributed generation” means any electric generation technology that meets both of the following criteria:

(1) Commences initial operation between January 1, 2003, and December 31, 2008.

(2) Produces zero emissions during its operation or produces emissions during its operation that are equal to or less than the 2007 State Air Resources Board emission limits for distributed generation, except that technologies operating by combustion must operate in a combined heat and power application with a 60-percent system efficiency on a higher heating value.

(b) In establishing rates and fees, the commission may consider energy efficiency and emissions performance to encourage early compliance with air quality standards established by the State Air Resources Board for ultraclean and low-emission distributed generation.

history: (History: Amended by Stats. 2005, Ch. 22, Sec. 167. Effective January 1, 2006.)

article: 3.5. Distributed Energy Resources


text:
(a) The commission shall require each electrical corporation under the operational control of the Independent System Operator as of January 1, 2001, to modify its tariffs so that all customers installing new distributed energy resources in accordance with the criteria described in Section 353.1 are served under rates, rules, and requirements identical to those of a customer within the same rate schedule that does not use distributed energy resources, and to withdraw any provisions in otherwise applicable tariffs that activate other tariffs, rates, or rules if a customer uses distributed energy resources.

(b) To qualify for the tariffs described in subdivision (a), each customer with distributed energy resources that meet the criteria of Section 353.1 shall participate in a real-time metering and pricing program, when these programs become available, in which rates for any energy purchased from the electrical corporation reflect the actual cost to the electrical corporation of energy it purchases at the time it is consumed by the customer. Prior to the time these programs become available, the customer shall participate in a time-of-use pricing tariff. On or before December 31, 2001, the commission shall adopt a real time pricing tariff for the purpose of this section.

(c) Except as specified in Section 353.7, customers may not be subject to the application of additional rates or tariffs solely because of their use of distributed energy resources to serve onsite loads or over-the-fence transactions allowed under Sections 216 and 218.

history: (History: Added by Stats. 2001, 1st Ex. Sess., Ch. 12, Sec. 11. Effective May 22, 2001.)

article: 3.5. Distributed Energy Resources


text: Each electrical corporation, as part of its distribution planning process, shall consider nonutility owned distributed energy resources as a possible alternative to investments in its distribution system in order to ensure reliable electric service at the lowest possible cost.

article: 3.5. Distributed Energy Resources


text: Notwithstanding Section 353.3, nothing in this article may result in any exemption from reasonable interconnection charges, lead to any reduction in contributions by each customer class to public purpose programs funded under Section 399.8, or relieve any customer of any obligation determined by the commission to result from participation in the purchase of power through the Department of Water Resources pursuant to Division 27 (commencing with Section 80000) of the Water Code.

article: 3.5. Distributed Energy Resources


text: In establishing the rates required under this article, the commission shall create a firewall that segregates distribution cost recovery so that any net costs, taking into account the actual costs and benefits of distributed energy resources, proportional to each customer class, as determined by the commission, resulting from the tariff modifications granted to members of each customer class may be recovered only from that class.

article: 3.5. Distributed Energy Resources


text: A local publicly owned electric utility or a local publicly owned utility otherwise providing electrical service, shall review at the earliest practicable date its rates, tariffs, and rules to identify barriers to and determine the appropriate balance of costs and benefits of distributed energy resources in order to facilitate the installation of these resources in the interests of their customer-owners and the state, and shall hold at least one noticed public meeting to solicit public comment on the review and any recommended changes. However, notwithstanding any other provision of this article, such an entity has the sole authority to undertake such a review and to make modifications to its rates, tariffs, and rules as the governing body of that utility determines to be necessary.

history: (History: Amended by Stats. 2008, Ch. 558, Sec. 11. Effective January 1, 2009.)

article: 3.5. Distributed Energy Resources


text:
(a) The commission shall require each electrical corporation to establish new tariffs on or before January 1, 2003, for customers using distributed energy resources, including, but not limited to, those that do not meet all of the criteria described in Section 353.1. However, after January 1, 2003, distributed energy resources that meet all of the criteria described in Section 353.1 shall continue to be subject only to those tariffs in existence pursuant to Section 353.3, until June 1, 2011, except that installations that do not operate in a combined heat and power application will be subject to those tariffs in existence pursuant to Section 353.3 only until June 1, 2006. Those tariffs required pursuant to this section shall ensure that all net distribution costs incurred to serve each customer class, taking into account the actual costs and benefits of distributed energy resources, proportional to each customer class, as determined by the commission, are fully recovered only from that class. The commission shall require each electrical corporation, in establishing those rates, to ensure that customers with similar load profiles within a customer class will, to the extent practicable, be subject to the same utility rates, regardless of their use of distributed energy resources to serve onsite loads or over-the-fence transactions allowed under Sections 216 and 218. Customers with dedicated facilities shall remain responsible for their obligations regarding payment for those facilities.

(b) In establishing the tariffs, the commission shall consider coincident peakload, and the reliability of the onsite generation, as determined by the frequency and duration of outages, so that customers with more reliable onsite generation and those that reduce peak demand pay a lower cost-based rate.

history: (History: Amended by Stats. 2016, Ch. 842, Sec. 9. (SB 1222) Effective January 1, 2017.)

article: 3.5. Distributed Energy Resources


text:
(a) In order to evaluate the efficiency, emissions, and reliability of distributed energy resources with a capacity greater than 10 kilowatts, customers that install those resources pursuant to this article shall report to the commission, on an annual basis, all of the following information, as recorded on a monthly basis:

(1) Heat rate for the resource.

(2) Total kilowatthours produced in the peak and off-peak periods, as determined by the ISO.

(3) Emissions data for the resource, as required by the State Air Resources Board or the appropriate air quality management district or air pollution control district.

(b) The commission shall release the information submitted pursuant to subdivision (a) in a manner that does not identify the individual user of the distributed energy resource.

history: (History: Amended by Stats. 2016, Ch. 842, Sec. 10. (SB 1222) Effective January 1, 2017.)

article: 3.5. Distributed Energy Resources


citation: PUC § 360

text: The commission shall ensure that existing, and if necessary, additional filings at the Federal Energy Regulatory Commission request confirmation of the relevant provisions of this chapter and seek the authority needed to give the Independent System Operator the ability to secure generating and transmission resources necessary to guarantee achievement of planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.

history: (History: Amended by Stats. 2003, Ch. 62, Sec. 260. Effective January 1, 2004.)

path: 1. REGULATION OF PUBLIC UTILITIES > 1. PUBLIC UTILITIES ACT > 2.3. Electrical Restructuring > 6. Requirements for the Public Utilities Commission


text: The commission shall determine that portion of each existing electrical corporation’s retail rate effective on January 5, 2001, that is equal to the difference between the generation related component of the retail rate and the sum of the costs of the utility’s own generation, qualifying facility contracts, existing bilateral contracts, and ancillary services. That portion of the retail rate shall be known as the California Procurement Adjustment. The commission shall further determine the amount of the California Procurement Adjustment that is allocable to the power sold by the department. That amount shall be payable, by each electrical corporation, upon receipt by the electrical corporation of the revenues from its retail end use customers, to the department for deposit in the Department of Water Resources Electric Power Fund, established by Section 80200 of the Water Code. The amount determined pursuant to this subdivision shall be known as the Fixed Department of Water Resources Set-Aside.

history: (History: Added by Stats. 2001, 1st Ex. Sess., Ch. 4, Sec. 2. Effective February 1, 2001.)

article: 6. Requirements for the Public Utilities Commission


citation: PUC § 361

text: The commission shall ensure that any funds secured by the restructuring trusts established for the purposes of developing the Independent System Operator and the Power Exchange shall be placed at the disposal of the Independent System Operator and the Power Exchange respectively.

history: (History: Added by Stats. 1996, Ch. 854, Sec. 10. Effective September 24, 1996.)


citation: PUC § 362

text:
(a) In proceedings pursuant to Section 455.5, 851, or 854, the commission shall ensure that facilities needed to maintain the reliability of the electric supply remain available and operational, consistent with maintaining open competition and avoiding an overconcentration of market power. In order to determine whether the facility needs to remain available and operational, the commission shall use standards that are no less stringent than the Western Electricity Coordinating Council and North American Electric Reliability Council standards for planning reserve criteria.

(b) The commission shall require that generation facilities located in the state that have been disposed of in proceedings pursuant to Section 851 are operated by the persons or corporations who own or control them in a manner that ensures their availability to maintain the reliability of the electric supply system.

(c) Consistent with Section 851 and the commission’s regulation of transfers of operational control of electrical corporation facilities, an electrical corporation subject to commission Decision 98-01-053 (January 21, 1998), Joint Application of Pacific Gas and Electric Company (U 39-E), San Diego Gas and Electric Company (U 902-E), and Southern California Edison Company (U 388-E) for an Order under Public Utilities Code Section 853 Exempting Them from the Provisions of Section 851 or in the Alternative for Authority to Convey Operational Control of Designated Transmission Lines and Associated Facilities to an Independent System Operator, shall participate in the Independent System Operator.

(d) An electrical corporation shall not withdraw a facility from the operational control of the Independent System Operator without commission approval pursuant to Section 851.

history: (History: Amended by Stats. 2022, Ch. 251, Sec. 24. (AB 209) Effective September 6, 2022.)


citation: PUC § 363

text:
(a) In order to ensure the continued safe and reliable operation of public utility electric generating facilities, the commission shall require in any proceeding under Section 851 involving the sale, but not spinoff, of a public utility electric generating facility, for transactions initiated prior to December 31, 2001, and approved by the commission by December 31, 2002, that the selling utility contract with the purchaser of the facility for the selling utility, an affiliate, or a successor corporation to operate and maintain the facility for at least two years. The commission may require these conditions to be met for transactions initiated on or after January 1, 2002. The commission shall require the contracts to be reasonable for both the seller and the buyer.

(b) Subdivision (a) shall apply only if the facility is actually operated during the two-year period following the sale. Subdivision (a) shall not require the purchaser to operate a facility, nor shall it preclude a purchaser from temporarily closing the facility to make capital improvements.

(c) For those bayside fossil fueled electric generation and associated transmission facilities that an electrical corporation has proposed to divest in a public auction and for which the Legislature has appropriated state funds in the Budget Act of 1998 to assist local governmental entities in acquiring the facilities or to mitigate environmental and community issues, and where the local governmental entity proposes that the closure of the power plant would serve the public interest by mitigating air, water and other environmental, health and safety, and community impacts associated with the facilities, and where the local governmental entity and electrical corporation have engaged in significant negotiations with the purpose of shutting down the power plant, and where there is an agreement between the electrical corporation and the local governmental entity for closure of the facilities or for the local governmental entity to acquire the facilities, the commission shall approve the closure of these facilities or the transfer of these electric generation and associated transmission facilities to the local governmental entity and shall consider the utility transactions with the community to be just and reasonable for its ratepayers. For purposes of calculating the Competition Transition Charge, the commission shall not use any inferred market value for the facilities predicated on the continued use of the plant, the construction of successor facilities or alternative use of the site and shall net the costs of the depreciated book value of the power plant and the unrecovered costs of decommissioning, environmental remediation and site restoration against the net proceeds received from the local governmental entity for the acquisition or closure of the facilities. Thereafter, any net proceeds received from the ultimate disposition, by the electrical corporation, of the site shall be credited to recovery of Competition Transition Charges.

history: (History: Amended by Stats. 1998, Ch. 328, Sec. 16. Effective August 21, 1998.)


citation: PUC § 364

text:
(a) The commission shall adopt inspection, maintenance, repair, and replacement standards, and shall, in a new proceeding, or new phase of an existing proceeding, to commence on or before July 1, 2015, consider adopting rules to address the physical security risks to the distribution systems of electrical corporations. The standards or rules, which shall be prescriptive or performance based, or both, and may be based on risk management, as appropriate, for each substantial type of distribution equipment or facility, shall provide for high-quality, safe, and reliable service.

(b) In setting its standards or rules, the commission shall consider: cost, local geography and weather, applicable codes, potential physical security risks, national electric industry practices, sound engineering judgment, and experience. The commission shall also adopt standards for operation, reliability, and safety during periods of emergency and disaster.

(c) The commission shall conduct a review to determine whether the standards or rules prescribed in this section have been met. If the commission finds that the standards or rules have not been met, the commission may order appropriate sanctions, including penalties in the form of rate reductions or monetary fines. The review shall be performed after every major outage. Any money collected pursuant to this subdivision shall be used to offset funding for the California Alternative Rates for Energy Program.

(d) The commission may, consistent with other provisions of law, withhold from the public information generated or obtained pursuant to this section that it deems would pose a security threat to the public if disclosed.

history: (History: Amended by Stats. 2015, Ch. 612, Sec. 10. (SB 697) Effective January 1, 2016.)


citation: PUC § 365

text:
The actions of the commission pursuant to this chapter shall be consistent with the findings and declarations contained in Section 330. In addition, the commission shall do all of the following:

(a) Facilitate the efforts of the state’s electrical corporations to develop and obtain authorization from the Federal Energy Regulatory Commission for the creation and operation of an Independent System Operator and an independent Power Exchange, for the determination of which transmission and distribution facilities are subject to the exclusive jurisdiction of the commission, and for approval, to the extent necessary, of the cost recovery mechanism established as provided in Sections 367 to 376, inclusive. The commission shall also participate fully in all proceedings before the Federal Energy Regulatory Commission in connection with the Independent System Operator and the independent Power Exchange, and shall encourage the Federal Energy Regulatory Commission to adopt protocols and procedures that strengthen the reliability of the interconnected transmission grid, encourage all publicly owned utilities in California to become full participants, and maximize enforceability of such protocols and procedures by all market participants.

(b) (1) Authorize direct transactions between electricity suppliers and end use customers, subject to implementation of the nonbypassable charge referred to in Sections 367 to 376, inclusive. Direct transactions shall commence simultaneously with the start of an Independent System Operator and Power Exchange referred to in subdivision (a). The simultaneous commencement shall occur as soon as practicable, but no later than January 1, 1998. The commission shall develop a phase-in schedule at the conclusion of which all customers shall have the right to engage in direct transactions. Any phase-in of customer eligibility for direct transactions ordered by the commission shall be equitable to all customer classes and accomplished as soon as practicable, consistent with operational and other technological considerations, and shall be completed for all customers by January 1, 2002.

(2) Customers shall be eligible for direct access irrespective of any direct access phase-in implemented pursuant to this section if at least one-half of that customer’s electrical load is supplied by energy from a renewable resource provider certified pursuant to Section 383, provided however that nothing in this section shall provide for direct access for electric consumers served by municipal utilities unless so authorized by the governing board of that municipal utility.


text:
(a) Except as expressly authorized by this section, and subject to the limitations in subdivisions (b) and (c), the right of retail end-use customers pursuant to this chapter to acquire service from other providers is suspended until the Legislature, by statute, lifts the suspension or otherwise authorizes direct transactions. For purposes of this section, “other provider” means any person, corporation, or other entity that is authorized to provide electric service within the service territory of an electrical corporation pursuant to this chapter, and includes an aggregator, broker, or marketer, as defined in Section 331, and an electric service provider, as defined in Section 218.3. “Other provider” does not include a community choice aggregator, as defined in Section 331.1, and the limitations in this section do not apply to the sale of electricity by “other providers” to a community choice aggregator for resale to community choice aggregation electricity consumers pursuant to Section 366.2.

(b) The commission shall authorize individual retail nonresidential end-use customers to acquire electric service from other providers in each electrical corporation’s distribution service territory, up to a maximum allowable total kilowatthours annual limit. The maximum allowable annual limit shall be established by the commission for each electrical corporation at the maximum total kilowatthours supplied by all other providers to distribution customers of that electrical corporation during any sequential 12-month period between April 1, 1998, and October 11, 2009. Within six months of October 11, 2009, the commission shall adopt and implement a reopening schedule that commences immediately and will phase in the allowable amount of increased kilowatthours over a period of not less than three years, and not more than five years, raising the allowable limit of kilowatthours supplied by other providers in each electrical corporation’s distribution service territory from the number of kilowatthours provided by other providers as of October 11, 2009, to the maximum allowable annual limit for that electrical corporation’s distribution service territory. The commission shall review and, if appropriate, modify its currently effective rules governing direct transactions, but that review shall not delay the start of the phase-in schedule.

(c) Once the commission has authorized additional direct transactions pursuant to subdivision (b), it shall do both of the following:

(1) Ensure that other providers are subject to the same requirements that apply to the state’s three largest electrical corporations under any programs or rules adopted by the commission to implement the resource adequacy provisions of Section 380, the renewables portfolio standard provisions of Article 16 (commencing with Section 399.11), the requirements for the electricity sector adopted by the State Air Resources Board pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code), and the requirements of the integrated resource planning process as specified in Sections 454.52 to 454.54, inclusive. This requirement applies notwithstanding any prior decision of the commission to the contrary.

(2) (A) Ensure that, in the event that the commission authorizes, in the situation of a contract with a third party, or orders, in the situation of utility-owned generation, an electrical corporation to obtain generation resources that the commission determines are needed to meet system or local area reliability needs for the benefit of all customers in the electrical corporation’s distribution service territory, the net capacity costs of those generation resources are allocated on a fully nonbypassable basis consistent with departing load provisions as determined by the commission, to all of the following:

(i) Bundled service customers of the electrical corporation.

(ii) Customers that purchase electricity through a direct transaction with other providers.

(iii) Customers of community choice aggregators.

(B) If the commission authorizes or orders an electrical corporation to obtain generation resources pursuant to subparagraph (A), the commission shall ensure that those resources meet a system or local reliability need in a manner that benefits all customers of the electrical corporation. The commission shall allocate the costs of those generation resources to ratepayers in a manner that is fair and equitable to all customers, whether they receive electric service from the electrical corporation, a community choice aggregator, or an electric service provider.

(C) The resource adequacy benefits of generation resources acquired by an electrical corporation pursuant to subparagraph (A) shall be allocated to all customers who pay their net capacity costs. Net capacity costs shall be determined by subtracting the energy and ancillary services value of the resource from the total costs paid by the electrical corporation pursuant to a contract with a third party or the annual revenue requirement for the resource if the electrical corporation directly owns the resource. An energy auction shall not be required as a condition for applying this allocation, but may be allowed as a means to establish the energy and ancillary services value of the resource for purposes of determining the net costs of capacity to be recovered from customers pursuant to this paragraph, and the allocation of the net capacity costs of contracts with third parties shall be allowed for the terms of those contracts.

(D) It is the intent of the Legislature, in enacting this paragraph, to provide additional guidance to the commission with respect to the implementation of subdivision (g) of Section 380, and to ensure that the customers to whom the net costs and benefits of capacity are allocated are not required to pay for the cost of electricity they do not consume.

(d) (1) If the commission approves a centralized resource adequacy mechanism pursuant to subdivisions (h) and (i) of Section 380, upon the implementation of the centralized resource adequacy mechanism the requirements of paragraph (2) of subdivision (c) shall be suspended. If the commission later orders that electrical corporations cease procuring capacity through a centralized resource adequacy mechanism, the requirements of paragraph (2) of subdivision (c) shall again apply.

(2) If the use of a centralized resource adequacy mechanism is authorized by the commission and has been implemented as set forth in paragraph (1), the net capacity costs of generation resources that the commission determines are required to meet urgent system or urgent local grid reliability needs, and that the commission authorizes to be procured outside of the Section 380 or Section 454.5 processes, shall be recovered according to paragraph (2) of subdivision (c).

(3) This subdivision does not supplant the resource adequacy requirements of Section 380 or the resource procurement procedures established in Section 454.5.

(e) On or before June 1, 2019, the commission shall issue an order regarding direct transactions that provides as follows:

(1) Increase the maximum allowable total kilowatthours annual limit by 4,000 gigawatthours and apportion that increase among the service territories of the electrical corporations.

(2) All residential and nonresidential customer accounts that are on direct access as of January 1, 2019, remain authorized to participate in direct transactions.

history: (History: Amended by Stats. 2023, Ch. 367, Sec. 5. (AB 1373) Effective October 7, 2023.)


text: The commission shall ensure that bundled retail customers of an electrical corporation do not experience any cost increases as a result of retail customers of an electrical corporation electing to receive service from other providers. The commission shall also ensure that departing load does not experience any cost increases as a result of an allocation of costs that were not incurred on behalf of the departing load.

history: (History: Added by Stats. 2015, Ch. 547, Sec. 14. (SB 350) Effective January 1, 2016.)


text:
(a) The commission shall post, in a consolidated location on its internet website, each load-serving entity’s residential electric rate tariffs and programs to enable customers and local governments to compare rates, services, environmental attributes, and other offerings. The documents posted shall include, but not be limited to, joint comparison rates for each community choice aggregator and electrical corporation and the disclosures required of retail sellers pursuant to Sections 398.4 and 398.5. This information shall be available and easily accessible on the load-serving entities’ internet websites.

(b) Pursuant to subdivision (a), each load-serving entity shall make available to the commission all information about its residential electric rate tariffs and programs.

(c) Dissemination of publicly available and factual information pursuant to subdivision (a) by a load-serving entity to a customer shall not constitute a violation of Section 707.

(d) For purposes of this section, “load-serving entity” has the same meaning as in Section 380.

history: (History: Amended by Stats. 2020, Ch. 370, Sec. 246. (SB 1371) Effective January 1, 2021.)


text: Nothing in this chapter shall prevent the commission from exercising its authority to investigate a process for certification and regulation of the rates, charges, terms, and conditions of default service. If the commission determines that a process for certification and regulation of default service is in the public interest, the commission shall submit its findings and recommendations to the Legislature for approval.

history: (History: Added by Stats. 1997, Ch. 275, Sec. 4. Effective August 15, 1997.)