Bill Text: CA SB350 | 2019-2020 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: The Golden State Energy Act.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Passed) 2020-07-01 - Chaptered by Secretary of State. Chapter 27, Statutes of 2020. [SB350 Detail]

Download: California-2019-SB350-Amended.html

Amended  IN  Assembly  May 14, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 350

Introduced by Senator Hertzberg Hill
(Principal coauthors: Senators Dodd and McGuire)
(Principal coauthor: Assembly Member Holden)

February 19, 2019

An act to amend Sections 365.1 and 380 of the Public Utilities Code, relating to electricity. An act to amend Section 564 of, and to add Sections 568.6 and 1240.655 to, the Code of Civil Procedure, to add Article 10 (commencing with Section 63049.70) to Chapter 2 of Division 1 of Title 6.7 of the Government Code, and to amend Sections 748.1, 3289, and 3292 of, to amend and renumber Section 855 of, to add Sections 222.5, 713, and 1769 to, to add Article 7 (commencing with Section 1825) to Chapter 9 of Part 1 of Division 1 of, and to add Division 1.7 (commencing with Section 3400) to, the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


SB 350, as amended, Hertzberg Hill. Electricity: resource adequacy: multiyear centralized resource adequacy mechanism. The Golden State Energy Act.
(1) Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law authorizes the commission to fix just and reasonable rates and charges for public utilities.
Existing law authorizes the commission to petition a court to appoint a receiver when the commission determines, after notice and hearing, that a water or sewer system corporation is unable or unwilling to adequately serve its ratepayers, has been actually or effectively abandoned by its owners, or is unresponsive to the commission’s rules or orders.
This bill would authorize the commission to petition a court to appoint a receiver to assume possession of Pacific Gas and Electric Company’s property and to operate its electrical and gas systems if the commission determines in a proceeding that the appointment of a receiver is warranted pursuant to the processes or procedures set forth in a specified commission investigation. The bill would authorize a court to appoint such a receiver and would require the receiver to control and operate Pacific Gas and Electric Company upon such terms and conditions as the court prescribes.
This bill would authorize the Governor, or the Governor’s designee, to incorporate Golden State Energy as a nonprofit public benefit corporation for the purpose of owning, controlling, operating, or managing electrical and gas services for its ratepayers and for the benefit of all Californians. The bill would require the Governor to appoint Golden State Energy’s 9-member initial board of directors, subject to confirmation by the Senate, and would require the initial board to amend Golden State Energy’s bylaws to include procedures for the election of subsequent board members by Golden State Energy’s customers, as specified.
This bill would expressly provide that Golden State Energy is a nonprofit public benefit corporation, subject to the regulatory authority of the commission as an electrical corporation and gas corporation, except as specified. The bill would require the commission, upon a specified event occurring, to initiate a proceeding to develop and adopt rules and processes to regulate Golden State Energy, including its rates, and implement policies pertaining to electrical and gas safety, wildfire mitigation, climate change mitigation and adaption, public purpose programs, and any other commission requirements applicable to an electrical corporation or gas corporation.
This bill would require Golden State Energy, in each general rate case or attrition year adjustment application, to apply for a revenue requirement sufficient to pay for operations and maintenance costs, pay for administrative and general expenses, service debt, pay the costs of commission approved capital expenditures not funded from debt, and fund and maintain necessary financial and operating reserves. The bill would require the commission, in each Golden State Energy general rate case or attrition year adjustment, to consider, modify if necessary, and adopt a revenue requirement adequate to furnish and maintain efficient, just and reasonable service, instrumentalities, equipment, and facilities to promote the safety, health, comfort, and convenience of Golden State Energy’s customers, employees, and the public, and to authorize Golden State Energy to issue debt as necessary to maintain and operate its assets consistent with the applicable revenue requirement.
Existing law authorizes a public utility to issue stocks and stock certificates or other evidence of interest or ownership, and bonds, notes, and other evidence of indebtedness for specified purposes, including for the acquisition of property.
This bill would authorize Golden State Energy to additionally issue debt to facilitate the acquisition of the property, as defined, of Pacific Gas and Electric Company, as specified.
Existing law authorizes specified parties, after an order or decision has been made by the commission, to apply for a rehearing, and prohibits a court action reviewing the order or decision unless the party has filed an application to the commission for a rehearing, as specified. Existing law authorizes any aggrieved party to petition for a writ of review in the court of appeal or the Supreme Court for the purpose of having the lawfulness of the original order or decision or of the order or decision on rehearing inquired into and determined, as specified.
This bill would authorize Golden State Energy or an aggrieved party, after the commission issues its decision on an application for a rehearing relating to the determination or implementation of rates and charges sufficient for Golden State Energy to satisfy its rate covenant and other revenue requirements, to petition for a writ of review in the California Supreme Court, rather than in the court of appeal or the Supreme Court, for the purposes of determining the lawfulness of the original order or decision or of the order or decision on the rehearing, as specified.
Existing law prohibits electrical corporations and gas corporations from recovering fines and penalties through rates approved by the commission.
This bill would exclude Golden State Energy from that prohibition.
Existing law authorizes electrical corporations and gas corporations to use eminent domain to acquire any property necessary for the construction and maintenance of their electric or gas plants.
This bill would authorize Golden State Energy to commence an eminent domain action to acquire Pacific Gas and Electric Company if the commission determines that Pacific Gas and Electric Company’s certificate of public convenience and necessity for the provision of electrical or gas service should be revoked pursuant to any processes or procedures adopted by the commission in a specified commission investigation. The bill would authorize Golden State Energy to take possession of Pacific Gas and Electric Company upon deposit in court, and prompt release, of an amount determined by the court to be the probable amount of just compensation.
Existing law provides mechanisms for electrical corporations to recover costs and expenses arising from covered wildfires, as defined, and establishes the Wildfire Fund to pay eligible claims arising from a covered wildfire. Existing law specifies the funding sources for the fund, which include, among other sources, contributions from electrical corporations and revenues generated from a specified charge imposed on the ratepayers of an electrical corporation.
This bill would authorize Golden State Energy to similarly participate in the fund following the closing of its acquisition of Pacific Gas and Electric Company, as specified.
The Bergeson-Peace Infrastructure and Economic Development Bank Act establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governor’s Office of Business and Economic Development. Existing law, among other things, authorizes the I-Bank to make loans, issue bonds, and provide financial assistance for various types of projects that qualify as economic development or public development facilities.
This bill would specify that the financing of energy and project costs on behalf of Golden State Energy is in the public interest and eligible for financing by the I-Bank or by a special purpose trust, as specified. The bill would authorize the I-Bank to issue bonds and loan the proceeds to Golden State Energy, as specified. The bill would specify that bonds or other indebtedness issued pursuant to this financing do not constitute a debt or liability of the state or of any political subdivision of the state other than the I-Bank or the special purpose trust, and are payable solely from the funds of, and any security provided by, Golden State Energy.
This bill would provide that any and all Golden State Energy indebtedness, their transfer, and the payments or income therefrom are at all times free from income taxation of every kind by the state.
Existing law prohibits a public utility from purchasing or acquiring, any part of the capital stock of any other public utility without having been first authorized to do so by the commission, as specified. Existing law prohibits a person or corporation from merging, acquiring, or controlling, either directly or indirectly, any public utility organized and doing business in this state without first securing authorization to do so from the commission.
This bill would exempt the acquisition of Pacific Gas and Electric Company by Golden State Energy from the above prohibitions if Golden State Energy, or its subsidiary, agrees to assume, take assignment of, and be bound by all collective bargaining agreements and related obligations, assume any obligations for funding under pension plans then in effect, and, in the event the transfer is made as part of Pacific Gas and Electric Company’s and Pacific Gas and Electric Corporation’s bankruptcy cases, adopt and be bound by the terms and provisions set forth in a specified reorganization plan.
(2) Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because certain of the above requirements would be a part of the act, and because a violation of an action of the commission implementing the above requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Existing law requires the commission, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities, including electrical corporations, electric service providers, and community choice aggregators, in accordance with specified objectives. Existing law further requires each load-serving entity to maintain physical generating capacity adequate to meet its load requirements, including peak demand and planning and operating reserves, deliverable to locations and at times as may be necessary to provide reliable electric service. Existing law authorizes the commission to consider a centralized resource adequacy mechanism, among other options, to most efficiently and equitably meet specified resource adequacy objectives.

This bill would authorize the commission to consider a multiyear centralized resource adequacy mechanism, among other options, to most efficiently and equitably meet specified resource adequacy objectives.

Existing law requires the commission to authorize and facilitate direct transactions between electricity suppliers and retail end-use customers, but suspends direct transactions, except as expressly authorized. Existing law expressly requires the commission to authorize direct transactions for nonresidential end-use customers, subject to an annual maximum allowable total kilowatthour limit established, as specified, for each electrical corporation, to be achieved following a now-completed 3-to 5-year phase-in period.

If the commission authorizes or orders 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, existing law requires the commission to ensure that the net capacity costs of those generation resources are allocated on a fully nonbypassable basis consistent with specified departing load provisions and to ensure that those resources meet a system or local reliability need in a manner that benefits all customers of the electrical corporation. Existing law suspends this latter requirement if the commission approves a centralized resource adequacy mechanism.

This bill would suspend this requirement if the commission approves a multiyear resource adequacy mechanism, and only if the mechanism, does not include a central procurement entity.

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

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


SECTION 1.

 Section 564 of the Code of Civil Procedure is amended to read:

564.
 (a) A receiver may be appointed, in the manner provided in this chapter, by the court in which an action or proceeding is pending in any case in which the court is empowered by law to appoint a receiver.
(b) A receiver may be appointed by the court in which an action or proceeding is pending, or by a judge thereof, of that court, in the following cases:
(1) In an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject any property or fund to the creditor’s claim, or between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff, or of any party whose right to or interest in the property or fund, or the proceeds thereof, of the property or fund, is probable, and where it is shown that the property or fund is in danger of being lost, removed, or materially injured.
(2) In an action by a secured lender for the foreclosure of a deed of trust or mortgage and sale of property upon which there is a lien under a deed of trust or mortgage, where it appears that the property is in danger of being lost, removed, or materially injured, or that the condition of the deed of trust or mortgage has not been performed, and that the property is probably insufficient to discharge the deed of trust or mortgage debt.
(3) After judgment, to carry the judgment into effect.
(4) After judgment, to dispose of the property according to the judgment, or to preserve it during the pendency of an appeal, or pursuant to the Enforcement of Judgments Law (Title 9 (commencing with Section 680.010)), or after sale of real property pursuant to a decree of foreclosure, during the redemption period, to collect, expend, and disburse rents as directed by the court or otherwise provided by law.
(5) Where a corporation has been dissolved, as provided in Section 565.
(6) Where a corporation is insolvent, or in imminent danger of insolvency, or has forfeited its corporate rights.
(7) In an action of unlawful detainer.
(8) At the request of the Public Utilities Commission pursuant to Section 855 1825 or 5259.5 1826 of the Public Utilities Code.
(9) In all other cases where necessary to preserve the property or rights of any party.
(10) At the request of the Office of Statewide Health Planning and Development, or the Attorney General, pursuant to Section 129173 of the Health and Safety Code.
(11) In an action by a secured lender for specific performance of an assignment of rents provision in a deed of trust, mortgage, or separate assignment document. The appointment may be continued after entry of a judgment for specific performance if appropriate to protect, operate, or maintain real property encumbered by a deed of trust or mortgage or to collect rents therefrom while a pending nonjudicial foreclosure under power of sale in a deed of trust or mortgage is being completed.
(12) In a case brought by an assignee under an assignment of leases, rents, issues, or profits pursuant to subdivision (g) of Section 2938 of the Civil Code.
(c) A receiver may be appointed, in the manner provided in this chapter, including, but not limited to, Section 566, by the superior court in an action brought by a secured lender to enforce the rights provided in Section 2929.5 of the Civil Code, to enable the secured lender to enter and inspect the real property security for the purpose of determining the existence, location, nature, and magnitude of any past or present release or threatened release of any hazardous substance into, onto, beneath, or from the real property security. The secured lender shall not abuse the right of entry and inspection or use it to harass the borrower or tenant of the property. Except in case of an emergency, when the borrower or tenant of the property has abandoned the premises, or if it is impracticable to do so, the secured lender shall give the borrower or tenant of the property reasonable notice of the secured lender’s intent to enter and shall enter only during the borrower’s or tenant’s normal business hours. Twenty-four hours’ notice shall be presumed to be reasonable notice in the absence of evidence to the contrary.
(d) Any action by a secured lender to appoint a receiver pursuant to this section shall not constitute an action within the meaning of subdivision (a) of Section 726.
(e) For purposes of this section:
(1) “Borrower” means the trustor under a deed of trust, or a mortgagor under a mortgage, where the deed of trust or mortgage encumbers real property security and secures the performance of the trustor or mortgagor under a loan, extension of credit, guaranty, or other obligation. The term includes any successor in interest of the trustor or mortgagor to the real property security before the deed of trust or mortgage has been discharged, reconveyed, or foreclosed upon.
(2) “Hazardous substance” means any of the following:
(A) Any “hazardous substance” as defined in subdivision (h) of Section 25281 of the Health and Safety Code.
(B) Any “waste” as defined in subdivision (d) of Section 13050 of the Water Code.
(C) Petroleum including crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof.
(3) “Real property security” means any real property and improvements, other than a separate interest and any related interest in the common area of a residential common interest development, as the terms “separate interest,” “common area,” and “common interest development” are defined in Section Sections 4095, 4100, and 4185 of the Civil Code, or real property consisting of one acre or less that contains 1 to 15 dwelling units.
(4) “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment, including continuing migration, of hazardous substances into, onto, or through soil, surface water, or groundwater.
(5) “Secured lender” means the beneficiary under a deed of trust against the real property security, or the mortgagee under a mortgage against the real property security, and any successor in interest of the beneficiary or mortgagee to the deed of trust or mortgage.

SEC. 2.

 Section 568.6 is added to the Code of Civil Procedure, to read:

568.6.
 A receiver appointed at the request of the Public Utilities Commission pursuant to Section 1825 of the Public Utilities Code shall control and operate Pacific Gas and Electric Company upon such terms and conditions as the court prescribes.

SEC. 3.

 Section 1240.655 is added to the Code of Civil Procedure, to read:

1240.655.
 (a) If Golden State Energy commences an eminent domain action to acquire Pacific Gas and Electric Company property, including any franchise rights and stock, pursuant to Section 713 of the Public Utilities Code, that acquisition is for a more necessary public use pursuant to Section 1240.610.
(b) For purposes of this section, the following definitions apply:
(1) “Golden State Energy” has the same meaning as defined in Section 222.5 of the Public Utilities Code.
(2) “Pacific Gas and Electric Company” means Pacific Gas and Electric Company, Pacific Gas and Electric Corporation, any subsidiary or affiliate of the foregoing holding any assets related to the provision of electrical or gas service within Pacific Gas and Electric Company’s service territory, and any successor to any of the foregoing.

SEC. 4.

 Article 10 (commencing with Section 63049.70) is added to Chapter 2 of Division 1 of Title 6.7 of the Government Code, to read:
Article  10. Golden State Energy Financing

63049.70.
 (a) Notwithstanding this division, the financing of energy and project costs on behalf of Golden State Energy, as defined in Section 222.5 of the Public Utilities Code, shall be deemed to be in the public interest and eligible for financing by the bank or by a special purpose trust established pursuant to this division. That financing shall be treated as financing of an economic development facility for purposes of this division, except that Article 3 (commencing with Section 63040) and Article 5 (commencing with Section 63043) shall not apply to any financing undertaken on behalf of Golden State Energy.
(b) The bank may issue bonds pursuant to Chapter 5 (commencing with Section 63070) and may loan the proceeds thereof to Golden State Energy, and deposit the proceeds into a separate account, or use the proceeds to refund bonds previously issued under this article. Bond proceeds may also be used to fund necessary reserves, capitalized interest, credit enhancement costs, or costs of issuance.
(c) Bonds or other indebtedness issued pursuant to this article shall not be deemed to constitute a debt or liability of the state or of any political subdivision of the state other than the bank or any special purpose trust established pursuant to this division, but shall be payable solely from the funds of, and any security provided by, Golden State Energy.

SEC. 5.

 Section 222.5 is added to the Public Utilities Code, to read:

222.5.
 “Golden State Energy” means the nonprofit public benefit corporation that is incorporated and operating pursuant to Division 1.7 (commencing with Section 3400).

SEC. 6.

 Section 713 is added to the Public Utilities Code, to read:

713.
 (a) (1) If the commission determines that Pacific Gas and Electric Company’s certificate of public convenience and necessity for the provision of electrical or gas service should be revoked pursuant to any processes or procedures adopted by the commission in its Investigation 19-09-016, Golden State Energy may commence an eminent domain action to acquire Pacific Gas and Electric Company property.
(2) Golden State Energy may take possession of Pacific Gas and Electric Company property upon deposit in court, and prompt release, of an amount determined by the court to be the probable amount of just compensation.
(b) For purposes of this section, the following definitions apply:
(1) “Investigation 19-09-016” means Investigation 19-09-016 (September 26, 2019) Order Instituting Investigation on the Commission’s Own Motion to Consider the Ratemaking and Other Implications of a Proposed Plan for Resolution of Voluntary Case filed by Pacific Gas and Electric Company Pursuant to Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court, Northern District of California, San Francisco Division, In re Pacific Gas and Electric Corporation and Pacific Gas and Electric Company, Case No. 19-30088.
(2) “Pacific Gas and Electric Company” means Pacific Gas and Electric Company, Pacific Gas and Electric Corporation, any subsidiary or affiliate of the foregoing holding any assets related to the provision of electrical or gas service within Pacific Gas and Electric Company‘s service territory, and any successor to any of the foregoing.
(3) “Property” has the same meaning as defined in Section 1235.170 of the Code of Civil Procedure, including any franchise rights and stock.

SEC. 7.

 Section 748.1 of the Public Utilities Code is amended to read:

748.1.
 An Except for Golden State Energy, an electrical corporation or gas corporation shall not recover recover, through a rate approved by the commission commission, a fine or penalty.

SEC. 8.

 Section 855 of the Public Utilities Code is amended and renumbered to read:

855.1826.
 Whenever the commission determines, after notice and hearing, that any water or sewer system corporation is unable or unwilling to adequately serve its ratepayers or ratepayers, has been actually or effectively abandoned by its owners, or is unresponsive to the the rules or orders of the commission, the commission may petition the superior court for the county within which the corporation has its principal office or place of business for the appointment of a receiver to assume possession of its property and to operate its system upon such terms and conditions as the court shall prescribe. The court may require, as a condition to the appointment of such the receiver, that a sufficient bond be given by the receiver and conditioned upon compliance with the orders of the court and the commission, and the protection of all property rights involved. The court shall provide for disposition of the facilities and system in like manner as any other receivership proceeding in this state.

SEC. 9.

 Section 1769 is added to the Public Utilities Code, to read:

1769.
 (a) The following procedures shall apply to judicial review of an order or decision of the commission interpreting, implementing, or applying the provisions of Section 3434 that relates to the determination or implementation of rates and charges sufficient for Golden State Energy to satisfy its rate covenant and other revenue requirements.
(b) If Golden State Energy or an aggrieved party files an application for rehearing pursuant to Article 2 (commencing with Section 1731), within 30 days after the commission issues its order or decision denying an application for a rehearing or, if the application is granted, within 30 days after the commission issues its decision on rehearing, Golden State Energy or an aggrieved party may petition for a writ of review in the California Supreme Court for the purpose of determining the lawfulness of the original order or decision or of the order or decision on the rehearing. If the writ is issued, it shall be made returnable at a time and place specified by court order and shall direct the commission to certify its record in the case to the court within the time specified. An order of the commission interpreting, implementing, or applying the provisions of Section 3434 shall not be subject to review in the court of appeal.
(c) The petition for review shall be served upon the commission’s executive director and general counsel either personally or by service at the office of the commission.
(d) For purposes of this section, the issuance of a decision or the granting of an application shall be construed to have occurred on the date when the commission mails the decision or grant to the parties of the action or proceeding.
(e) (1) To the extent that the provisions do not conflict, this article’s provisions shall apply to a writ brought pursuant to this section.
(2) Section 1766 shall apply to any order issued by the Supreme Court pursuant to this section.

SEC. 10.

 Article 7 (commencing with Section 1825) is added to Chapter 9 of Part 1 of Division 1 of the Public Utilities Code, to read:
Article  7. Receiverships

1825.
 (a) If the commission determines in a proceeding that the appointment of a receiver is warranted pursuant to the processes or procedures adopted by the commission in its Investigation 19-09-016, the commission may petition the superior court for the county within which Pacific Gas and Electric Corporation has its principal office or place of business for the appointment of a receiver, as provided in paragraph (8) of subdivision (b) of Section 564 of the Code of Civil Procedure, to assume possession of Pacific Gas and Electric Company’s property and to operate its system.
(b) For purposes of this section, both of the following definitions apply:
(1) “Investigation 19-09-016” means Investigation 19-09-016 (September 26, 2019) Order Instituting Investigation on the Commission’s Own Motion to Consider the Ratemaking and Other Implications of a Proposed Plan for Resolution of Voluntary Case filed by Pacific Gas and Electric Company Pursuant to Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court, Northern District of California, San Francisco Division, In re Pacific Gas and Electric Corporation and Pacific Gas and Electric Company, Case No. 19-30088.
(2) “Pacific Gas and Electric Company” means Pacific Gas and Electric Company, Pacific Gas and Electric Corporation, any subsidiary or affiliate of the foregoing holding any assets related to the provision of electrical or gas service within Pacific Gas and Electric Company‘s service territory, and any successor to any of the foregoing.

SEC. 11.

 Section 3289 of the Public Utilities Code is amended to read:

3289.
 (a) (1) No later than July 26, 2019, the commission shall initiate a rulemaking proceeding to consider using its authority pursuant to Section 701 to require each electrical corporation, except a regional electrical corporation that chooses not to participate in any fund pursuant to Chapter 3 (commencing with Section 3291), to collect a nonbypassable charge from ratepayers of the electrical corporation to support the fund, including the payment of any bonds issued pursuant to Division 28 (commencing with Section 80500) of the Water Code, as follows:
(A) For a large electrical corporation, a charge in an amount sufficient to fund the revenue requirement, as established pursuant to Section 80524 of the Water Code.
(B) For a regional electrical corporation, the amount equal to one-half cent per kilowatt-hour ($0.005/kWh).
(2) If the commission determines that the imposition of the charge described in paragraph (1) is just and reasonable, and that it is appropriate to exercise its authority pursuant to Section 701 to do so, the commission shall direct each electrical corporation to impose and collect that charge commencing in the month immediately following the month in which the final imposition of the revenue requirement with respect to bonds previously issued pursuant to Division 27 (commencing with Section 80000) of the Water Code is made. The charge shall be collected in the same manner as that for the payments made to reimburse the Department of Water Resources pursuant to Division 27 (commencing with Section 80000) of the Water Code.
(b) Notwithstanding any other law, no later than 90 days after the initiation of the rulemaking proceeding, the commission shall adopt a decision regarding the imposition of the charge.
(c) Notwithstanding Section 455.5 or 1708, or any other law, the commission shall not revise, amend, or otherwise modify a decision to impose a charge made pursuant to this section at any time prior to before January 1, 2036.
(d) If the administrator authorizes Golden State Energy to participate in the fund pursuant to subdivision (d) of Section 3292, Golden State Energy’s ratepayers shall be subject to the nonbypassable charge previously imposed by the commission pursuant to this section.

SEC. 12.

 Section 3292 of the Public Utilities Code is amended to read:

3292.
 (a) If, no later than July 27, 2019, each large electrical corporation not subject to an insolvency proceeding on July 12, 2019, notifies the commission of its commitment to provide the initial contribution and the annual contributions, and subsequently provides its initial contribution as set forth in paragraph (3) of subdivision (b), the fund shall be established to pay eligible claims as set forth in subdivision (f) and obtain reimbursement from electrical corporations as set forth in subdivision (h).
(b) Except as provided in subdivision (d), to participate in the fund established pursuant to subdivision (a), an electrical corporation shall satisfy the following conditions by no later than June 30, 2020:
(1) The electrical corporation is not, and has not been since July 12, 2019, the subject of an insolvency proceeding or on criminal probation unless the electrical corporation meets the following conditions:
(A) The electrical corporation’s insolvency proceeding has been resolved pursuant to a plan or similar document not subject to a stay.
(B) The bankruptcy court or a court of competent jurisdiction, in the insolvency proceeding, has determined that the resolution of the insolvency proceeding provides funding or establishes reserves for, provides for assumption of, or otherwise provides for satisfying any prepetition wildfire claims asserted against the electrical corporation in the insolvency proceeding in the amounts agreed upon in any pre-insolvency proceeding settlement agreements or any post-insolvency settlement agreements, authorized by the court through an estimation process or otherwise allowed by the court.
(C) The commission has approved the reorganization plan and other documents resolving the insolvency proceeding, including the electrical corporation’s resulting governance structure as being acceptable in light of the electrical corporation’s safety history, criminal probation, recent financial condition, and other factors deemed relevant by the commission.
(D) The commission has determined that the reorganization plan and other documents resolving the insolvency proceeding are (i) consistent with the state’s climate goals as required pursuant to the California Renewables Portfolio Standard Program and related procurement requirements of the state and (ii) neutral, on average, to the ratepayers of the electrical corporation.
(E) The commission has determined that the reorganization plan and other documents resolving the insolvency proceeding recognize the contributions of ratepayers, if any, and compensate them accordingly through mechanisms approved by the commission, which may include sharing of value appreciation.
(2) For a regional electrical corporation, it has voluntarily established a charge required by the commission pursuant to Section 3289. This charge shall be included on monthly bills for customers. Collections on that charge shall be remitted, on a monthly basis, to the administrator for deposit into the fund.
(3) Except as provided in subdivision (e), the electrical corporation has provided its initial contribution to the fund no later than September 10, 2019. Initial contributions shall not be recovered from the ratepayers of an electrical corporation. corporation, except Golden State Energy.
(c) Each participating electrical corporation shall make its annual contribution by January 1 of each calendar year, including, without limitation, any annual contributions for calendar years in which the electrical corporation, or another electrical corporation to which the electrical corporation is the successor, was not a participating electrical corporation. Annual contributions shall not be recovered from the ratepayers of an electrical corporation. corporation, except Golden State Energy.
(d) (1) The administrator may may, and in the case of Golden State Energy shall, authorize an electrical corporation that is formed after July 12, 2019, to participate in the fund if the administrator determines that the electrical corporation meets the requirements of this section. Authorization of an electrical corporation that is formed after July 12, 2019, shall be effective as of a date determined by the administrator and shall apply to covered wildfires after the date of authorization.
(2) If Golden State Energy is the successor to Pacific Gas and Electric Company and Pacific Gas and Electric Company made its initial contribution and, if applicable, annual contributions to the fund, the administrator shall not require Golden State Energy to commit to making, or make, its own initial contribution, or annual contributions for a period for which Pacific Gas and Electric Company already made its annual contributions, in order to participate in the fund and the administrator shall authorize Golden State Energy to participate in the fund if Golden State Energy, within 15 days of closing of the acquisition of Pacific Gas and Electric Company, notifies the commission of its commitment to make annual contributions to the fund.
(e) An electrical corporation that is the subject of an insolvency proceeding on July 12, 2019, that wishes to participate in the fund shall (1) no later than July 27, 2019, provide written notification to the commission of its election to participate in the fund, and (2) no later than September 10, 2019, obtain approval from the bankruptcy court or a court of competent jurisdiction of its determination to pay, and approval of its payment of, the initial contribution and, as they become due, annual contributions to the fund, provided that the contributions shall not be due to the fund until the date the electrical corporation exits the insolvency proceeding. The electrical corporation shall not be entitled to seek payments from the fund pursuant to subdivision (f) until it has funded its initial contribution and has met the other conditions provided in subdivision (b). Participation of an electrical corporation that is the subject of an insolvency proceeding that satisfies the requirements of this subdivision shall be effective as of July 12, 2019, and shall apply to covered wildfires, provided that the fund shall not pay more than 40 percent of the allowed amount of a claim arising between July 12, 2019, and the date the electrical corporation exits bankruptcy, with the balance of those claims being addressed through the insolvency proceeding.
(f) (1) An electrical corporation meeting the applicable requirements of subdivision (b) may seek payment from the fund to satisfy settled or finally adjudicated eligible claims. Only eligible claims shall be made against or paid by the fund. In accordance with the procedures established by the administrator, the administrator shall review and approve any settlement of an eligible claim as being in the reasonable business judgment of the electrical corporation before releasing funds to the electrical corporation for payment. Settlements of subrogation claims that are less than or equal to 40 percent of total asserted claim value as determined by the administrator shall be paid unless the administrator finds that the exceptional facts and circumstances surrounding the underlying claim do not justify the electrical corporation’s exercise of such business judgment. To the extent approved by the administrator, a settlement shall not be subject to further review by the commission.
(2) The administrator shall approve a settlement of an eligible claim that is a subrogation claim if the settlement exceeds 40 percent of the total asserted claim value, as determined by the administrator, and includes a full release of the balance of the asserted claim so long as the administrator finds that the electrical corporation exercised its reasonable business judgment in determining to settle for a higher percentage or on different terms based on a determination that the specific facts and circumstances surrounding the underlying claim justify a higher settlement percentage or different terms. A subrogation claim that is finally adjudicated shall be paid in the full judgment amount.
(g) All Except for Golden State Energy, all initial and annual contributions shall be excluded from the measurement of the authorized capital structure.
(h) (1) Except as provided in paragraph (2), within six months after the commission adopts a decision in an application filed pursuant to Section 1701.8, the electrical corporation shall reimburse the fund for the full amount of costs and expenses the commission determined were disallowed pursuant to Section 1701.8.
(2) (A) The obligation of an electrical corporation to reimburse the fund shall be the lesser amount of subparagraph (B) or (C).
(B) The costs and expenses disallowed determined not to be just and reasonable pursuant to Section 1701.8.
(C) The amount determined pursuant to clause (i) minus the amount determined pursuant to clause (ii).
(i) Twenty (I) Except as specified in subclause (II), for each electrical corporation, 20 percent of the electrical corporation’s total transmission and distribution equity rate base, including, but not limited to, its Federal Energy Regulatory Commission (FERC) assets, as determined by the administrator for the calendar year in which the disallowance occurred.
(II) For Golden State Energy’s first twelve months of participation in the fund, an amount equal to 20 percent of Pacific Gas and Electric Company’s total transmission and distribution equity rate base, including, but not limited to, its Federal Energy Regulatory Commission assets, at the time of the closing of the acquisition of Pacific Gas and Electric Company, as determined by the commission. For Golden State Energy’s subsequent years of participation in the fund, an amount determined by the commission that is equivalent to the amount specified in subclause (I) for electrical corporations with an equity rate base.
(ii) The sum of (I) the amounts actually reimbursed to the fund for costs and expenses that were disallowed determined not to be just and reasonable pursuant to Section 1701.8 during the measurement period, added to (II) the amount of any reimbursements to the fund owed by the electrical corporation for costs and expenses disallowed during the measurement period that have not yet been paid.
(iii) For purposes of this subparagraph, “measurement period” means the period of three consecutive calendar years ending on December 31 of the year in which the calculation is being performed.
(D) The administrator shall publish calculations of the amounts determined pursuant to subparagraphs (B) and (C) on or before January 1 of each calendar year for each electrical corporation.
(E) Except as provided in paragraph (3), the electrical corporation shall not be required to reimburse the fund for any additional amounts in any three-calendar-year period.
(F) The limitation set forth in this section shall apply only so long as the fund has not been terminated pursuant to subdivision (i).
(3) Paragraph (2) does not apply under either of the following circumstances:
(A) If the administrator determines that the electrical corporation’s actions or inactions that resulted in the covered wildfire constituted conscious or willful disregard of the rights and safety of others.
(B) If the electrical corporation fails failed to maintain a valid safety certification on the date of the ignition.
(i) (1) The administrator shall, to the extent practicable, manage the fund to prioritize the use of contributions of the electrical corporations corporation contributions before the use of contributions by ratepayers. ratepayer contributions.
(2) The fund shall terminate when the administrator determines that the fund resources are exhausted, taking into account the amount of any unpaid liabilities including necessary reserves, any remaining unpaid annual contributions from participating electrical corporations, and the charges authorized pursuant to Section 3289. Upon the determination of the administrator that the fund shall be terminated, the administrator shall pay all remaining eligible claims and fund expenses, and liquidate any remaining assets. The remaining funds shall be transferred to the General Fund. It is the intent of the Legislature that any funds transferred to the General Fund pursuant to this paragraph shall be appropriated to support wildfire mitigation.
(j) Notwithstanding subdivision (f), a regional electrical corporation’s access to the fund to pay eligible claims shall be limited to three times the sum of the regional electrical corporation’s initial contribution and any funded annual contributions per covered wildfire.

(k)This section shall become inoperative if timely payment of the initial contribution is not made pursuant to paragraph (3) of subdivision (b) by each large electrical corporation not subject to an insolvency proceeding on July 12, 2019, and is repealed on the first January 1 more than three months after the initial contributions are due but not all paid. The administrator shall notify the Secretary of State as to whether those payments were timely made.

SEC. 13.

 Division 1.7 (commencing with Section 3400) is added to the Public Utilities Code, to read:

DIVISION 1.7. Golden State Energy Act

PART 1. General Provisions

CHAPTER  1. Preliminary Matters

3400.
 This division shall be known, and may be cited, as the Golden State Energy Act.

3401.
 (a) The Legislature finds and declares all of the following:
(1) The safe, efficient, and reliable generation, procurement, transmission, distribution, and storage of energy for residents and businesses in California is essential for living and doing business in California. The economic strength and productivity of California and its residents require the availability of energy with which to operate their businesses and live safely in their homes.
(2) Californians residing, working, or doing business within Pacific Gas and Electric Company’s service territory deserve to be served by a utility that prioritizes operational safety and efficiency, is prudently managed and soundly financed, and has a capital structure that enables it to make critical safety investments.
(3) The Legislature recognizes that Pacific Gas and Electric Company may meet the requirements of Chapter 79 of the Statutes of 2019 and emerge from bankruptcy as a transformed utility that is positioned to provide Californians with access to safe, reliable, and affordable service.
(4) The purpose of this division is to ensure that if Pacific Gas and Electric Company fails to emerge from bankruptcy as a transformed utility, then Golden State Energy is duly empowered to serve in that critical role.
(5) It is the intent of the Legislature that Golden State Energy act pursuant to this division only in the event that a transformed utility does not emerge from the bankruptcy or the transformed utility fails to meet its duty to provide safe, reliable, and affordable energy services.
(6) It is the intent of the Legislature that the commission regulate Golden State Energy as an electrical and gas corporation, except that the commission should recognize its status as a nonprofit public benefit corporation, which does not have shareholders and operates for its customers and for the benefit of the people of California. Due to this difference, it is necessary to establish alternative procedures for Golden State Energy.

3402.
 It is the intent of the Legislature that all of the following occur if Golden State Energy commences energy operations:
(a) The operation of Golden State Energy, as the successor to Pacific Gas and Electric Company, will be for the benefit of its customers and will lessen the burdens on the State of California. The purpose of any acquisition of Pacific Gas and Electric Company’s property, including franchise rights and stock, pursuant to this division is to provide more reliable energy services with greater attention on public safety.
(b) Golden State Energy should take into account rate impacts on all customer classes and manage its operations to benefit customers throughout its entire service territory.
(c) Golden State Energy should manage its operations to best benefit the public that it serves, demonstrating leadership in the delivery of safe, reliable, clean, affordable energy.
(d) Golden State Energy should adopt procedures to encourage the election of board members who collectively reflect attributes, expertise, and experience relevant to the operation of a safe and reliable utility.

CHAPTER  2. Definitions

3410.
 Unless the context otherwise requires, the definitions set forth in this chapter govern the construction of this division.

3411.
 “Act” means the Golden State Energy Act.

3411.5.
 “Acquisition of Pacific Gas and Electric Company” means the acquisition of the property, as defined in Section 1235.170 of the Code of Civil Procedure, including any franchise rights and stock, of Pacific Gas and Electric Company, including by eminent domain.

3412.
 “Board” means Golden State Energy’s board of directors described in Part 2 (commencing with Section 3420).

3415.
 “Indebtedness” means bonds, notes, commercial paper, variable rate and variable maturity securities, other obligations, and any other evidences of indebtedness issued by Golden State Energy.

3415.5.
 “Investigation 19-09-016” means commission Investigation 19-09-016 (September 26, 2019) Order Instituting Investigation on the Commission’s Own Motion to Consider the Ratemaking and Other Implications of a Proposed Plan for Resolution of Voluntary Case filed by Pacific Gas and Electric Company Pursuant to Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court, Northern District of California, San Francisco Division, In re Pacific Gas and Electric Corporation and Pacific Gas and Electric Company, Case No. 19-30088.

3416.
 “Pacific Gas and Electric Company” means Pacific Gas and Electric Company, Pacific Gas and Electric Corporation, any subsidiary or affiliate of the foregoing holding any assets related to the provision of electrical or gas service within Pacific Gas and Electric Company’s service territory, and any successor to any of the foregoing.

3417.
 “Pacific Gas and Electric Company’s service territory” means the boundaries and specifications of the company’s service territory on the date of the closing of the acquisition of Pacific Gas and Electric Company.

3418.
 “Wildfire Fund” means the Wildfire Fund created pursuant to Section 3284.

PART 2. Golden State Energy Board Governance

3420.
 (a) The Governor, or the Governor’s designee, may incorporate Golden State Energy as a nonprofit public benefit corporation pursuant to the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code) for the purpose of owning, controlling, operating, or managing electrical and gas services for its ratepayers and for the benefit of all Californians.
(b) (1) Golden State Energy’s initial board of directors shall consist of nine members.
(2) The initial board members shall be appointed by the Governor, subject to confirmation by the Senate. Of the initial board members, three board members shall initially serve two-year terms, three board members shall initially serve four-year terms, and three board members shall initially serve six-year terms.
(3) (A) The initial board of directors shall amend Golden State Energy’s bylaws to include procedures for the election of subsequent board members by Golden State Energy’s customers.
(B) These election procedures shall include all of the following:
(i) Nominations based on a skills matrix.
(ii) Measures to maximize board member diversity and the selection of California residents.
(iii) Selection by the board, or a committee of the board, of a slate of candidates for election using search firms to identify, evaluate, and recommend the most qualified candidates for election.
(iv) Incorporation of stakeholder input into the board selection process.
(4) Upon the amendment of Golden State Energy’s bylaws pursuant to paragraph (3), the board shall submit the amended bylaws to the Governor and the Legislature.

PART 3. Golden State Energy Regulation and Oversight

3430.
 (a) Except as otherwise provided in this division, the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code) shall apply to Golden State Energy, and Golden State Energy shall have all the powers of a nonprofit public benefit corporation formed pursuant to that part.
(b) Golden State Energy is an electrical corporation and gas corporation subject to the regulatory authority of the commission as such, except as otherwise provided in this division.
(c) Insofar as this division is inconsistent with any other law, including the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code), this division shall prevail.
(d) Insofar as there is overlap in the application of oversight authority over Golden State Energy, including between the commission and the Attorney General, the commission’s authority shall prevail.

3432.
 (a) Golden State Energy shall be exempt from the Attorney General’s supervisory authority described in each of the following provisions:
(1) Paragraph (5) of subdivision (a) of Section 5142 of the Corporations Code.
(2) Section 5250 of the Corporations Code.
(3) Section 5813.5 of the Corporations Code.
(4) Section 5913 of the Corporations Code.
(5) Section 6010 of the Corporations Code.
(6) Chapter 15 (commencing with Section 6510) of Part 2 of Division 2 of Title 1 of the Corporations Code.
(7) Section 6611 of the Corporations Code.
(8) Section 6612 of the Corporations Code.
(9) Sections 6615 to 6617, inclusive, of the Corporations Code.
(10) The Supervision of Trustees and Fundraisers for Charitable Purposes Act (Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code).
(b) Golden State Energy shall not be required to give notice to the Attorney General pursuant to the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code).

3433.
 A person who, pursuant to a specific provision of Golden State Energy’s articles or bylaws, has the right to vote for the election of a director, on a disposition of all or substantially all of the assets of a corporation, on a merger, or on a dissolution, shall not be a member of Golden State Energy for purposes of the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code), unless the articles or bylaws designate the person as a member.

3434.
 (a) In addition to the purposes described in Section 817, Golden State Energy may issue debt to facilitate the acquisition of Pacific Gas and Electric Company consistent with this section.
(b) Golden State Energy may provide a rate covenant to all of its debt holders, including holders of debt issued to facilitate the acquisition of Pacific Gas and Electric Company.
(c) Before issuing debt pursuant to this section, Golden State Energy shall submit an application to the commission for the authority to do so pursuant to Section 818. Notwithstanding Section 819, with respect to debt issued to facilitate the acquisition of Pacific Gas and Electric Company, the commission shall issue an order resolving the application within 100 days of the application’s submittal. Notwithstanding subdivision (d) of Section 311 and any other law, with respect to debt issued to facilitate the acquisition of Pacific Gas and Electric Company, the commission may issue an order resolving the application not sooner than 15 days following the filing and service of the proposed decision by the assigned commissioner or the administrative law judge or the filing of any alternate decision pursuant to Section 311.
(d) Pursuant to the rate covenant, in each general rate case or attrition year adjustment application, Golden State Energy shall apply for a revenue requirement sufficient to do all of the following:
(1) Pay for operations and maintenance costs, and administrative and general expenses.
(2) Service debt and satisfy any debt service coverage margin associated with the rate covenant’s requirements for debt, or for the refinancing of that debt, (A) issued to fund the formation of Golden State Energy and to acquire Pacific Gas and Electric Company, (B) issued by Golden State Energy between the acquisition of Pacific Gas and Electric Company and the approval of Golden State Energy’s first general rate case application, and (C) approved by the commission pursuant to a general rate case application filed by Golden State Energy, including for compliance with the regulatory requirements described in subdivision (f).
(3) Pay the costs of commission approved capital expenditures not funded from debt.
(4) Fund and maintain necessary financial and operating reserves.
(e) Concurrent with each general rate case or attrition year application, Golden State Energy shall file with the commission a debt issuance and retirement forecast summarizing the prospective estimated necessary debt issuance and estimated debt repayment during the term of the general rate case and the additional revenue requirement necessary to meet the rate covenant’s requirements taking into account any additional debt issuance and repayment.
(f) In each Golden State Energy general rate case or attrition year adjustment, the commission shall do both of the following:
(1) Consider, modify if necessary, and adopt a revenue requirement adequate to furnish and maintain efficient, just and reasonable service, instrumentalities, equipment, and facilities to promote the safety, health, comfort, and convenience of its customers, employees, and the public. The commission shall only approve just and reasonable rates; however, in no event shall the commission set the revenue requirement below the amount necessary to satisfy the rate covenant’s requirements.
(2) Authorize Golden State Energy to issue debt as necessary to maintain and operate its assets consistent with the revenue requirement approved by the commission for the applicable period of the general rate case.
(g) (1) No later than 45 days after (A) the earliest occurrence of a material bankruptcy event described in paragraph (2), (B) the commission determines that Pacific Gas and Electric Company’s certificate of public convenience and necessity for the provision of electrical or gas service should be revoked pursuant to any processes or procedures adopted by the commission in its Investigation 19-09-016, or (C) the initiation by Pacific Gas and Electric Company of a sale process for its assets or stock, the commission shall initiate a proceeding to develop and adopt rules and processes to regulate Golden State Energy, including its rates, and implement policies pertaining to electrical and gas safety, wildfire mitigation, climate change mitigation and adaption, public purpose programs, and any other commission requirements applicable to an electrical corporation or gas corporation.
(2) For purposes of this subdivision, each of the following is a material bankruptcy event:
(A) Termination of “Tort Claimants Committee Restructuring Support Agreement” (as amended) (Case 19-30088; Document No. 5143-1 (entered December 16, 2019)).
(B) Termination of “Noteholder Restructuring Support Agreement” (Case 19-30088; Document No. 5519-1 (entered January 27, 2020)).
(C) Denial of confirmation of “Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization Dated March 16, 2020” (Case 19-30088; Document No. 6320 (entered March 16, 2020)).
(D) Failure to confirm on or before June 30, 2020, a plan for Pacific Gas and Electric Company to exit bankruptcy.
(E) Failure of the confirmed plan for Pacific Gas and Electric Company to exit bankruptcy to become effective on or before September 30, 2020.
(F) The termination of plan proposal’s exclusivity period for any party other than the debtors.
(G) The filing of a plan for Pacific Gas and Electric Company to exit bankruptcy by any party other than the debtors.
(H) The appointment of a trustee, conversion to a case under Chapter 7 (commencing with Section 701) of the United State Bankruptcy Code (Title 11 of the United States Code), or dismissal of the bankruptcy cases.
(h) (1) Following the closing of the acquisition of Pacific Gas and Electric Company by Golden State Energy, the revenue requirement in effect for Pacific Gas and Electric Company on the date of the closing of the acquisition shall remain in effect until the revenue requirement is modified pursuant to this section.
(2) The commission may adopt a new revenue requirement in a general rate case proceeding for Golden State Energy no sooner than three years from the date of the closing of the acquisition of Pacific Gas and Electric Company.
(3) During the interim period between the closing of the acquisition of Pacific Gas and Electric Company and the commission’s adoption of a new revenue requirement in a general rate case proceeding pursuant to paragraph (2), both of the following may occur.
(A) The commission may direct Golden State Energy to file for attrition year adjustment of the existing revenue requirement.
(B) Golden State Energy may increase the existing revenue requirement without the approval of the commission to satisfy the rate covenant, including, without limitation, factoring in capital expenses, debt issuances, operation and maintenance of the utility, funding reserves, and working capital needs. Golden State Energy shall provide the commission 30 days’ notice before implementing a revenue requirement increase pursuant to this subdivision.

PART 4. GOLDEN STATE ENERGY FINANCING POWER

3440.
 Any and all Golden State Energy indebtedness, their transfer, and the payments or income therefrom shall at all times be free from income taxation of every kind by the state.

3442.
 (a) Golden State Energy indebtedness shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof, or a pledge of the faith and credit of the state or of any political subdivision of the state.
(b) Golden State Energy indebtedness shall be payable solely from the funds available to it.
(c) The issuance of indebtedness shall not directly, indirectly, or contingently obligate the state or any other political subdivision of the state to levy or pledge any form of taxation or to make any appropriation for its repayment.

3444.
 (a) Chapter 9 (commencing with Section 5700) of Division 6 of Title 1 of the Government Code shall not apply to any bonds or other forms of indebtedness issued for the benefit, or on behalf, of Golden State Energy.
(b) Notwithstanding any other law, whenever Golden State Energy deems that it will be in the best interests of its ratepayers, it may exercise an exclusive right to select and retain, or have any conduit issuer issuing bonds or other forms of indebtedness for its benefit or on its behalf select and retain, the services of private entities, including, but not limited to, underwriters, bond counsels, tax counsels, disclosure counsels, financial advisers, bond insurers, or other entities providing risk management services for bonds or other forms of indebtedness issued for its benefit or on its behalf. Payment for any of these private entities may be made out of the proceeds of the sale of the bonds or other forms of indebtedness issued for the benefit, or on behalf, of Golden State Energy.

3446.
 While any indebtedness issued by or on behalf of Golden State Energy remains outstanding, the State of California pledges to the holders of any such indebtedness that the state will not limit or alter the rights vested in Golden State Energy to fulfill the terms of any loan agreement, lease, or other contract with the holders of such indebtedness, or in any way impair the rights or remedies of those holders or of the parties to the related loan agreement, lease, or contract. Golden State Energy may include this pledge in any instrument under which that indebtedness is incurred or issued or other documents entered into in connection with that indebtedness as a covenant for the benefit of the holders thereof.

PART 5. Other Matters

3450.
 The Legislature hereby ratifies and deems proper all acts by representatives of the state before the effective date of this division taken in furtherance of the establishment of Golden State Energy, including, but not limited to, any offers made to purchase the property, including any franchise rights and stock, of Pacific Gas and Electric Company, and any acquisition by Golden State Energy thereunder.

3452.
 This division, being necessary for the prosperity of the state and its residents, shall be liberally construed to effect its purposes.

3454.
 The acquisition of Pacific Gas and Electric Company by Golden State Energy, for any reason including pursuant to Section 713, shall not be subject to Sections 851 to 854, inclusive, if Golden State Energy, or its subsidiary, as part of such acquisition, agrees to do all of the following:
(a) Assume, take assignment of, and be bound by all collective bargaining agreements and related obligations, including pension and benefit agreements, then in effect that cover the business being acquired.
(b) Assume any obligations for funding under pension plans then in effect.
(c) In the event the transfer is made as part of Pacific Gas and Electric Company’s and Pacific Gas and Electric Corporation’s bankruptcy cases pursuant to Chapter 11 (commencing with Section 1101) of the United States Bankruptcy Code (Title 11 of the United States Code) (Case No. 19-30088), adopt and be bound by the terms and provisions set forth on Exhibit B to the Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization Dated March 16, 2020.

3558.
 Nothing in this act shall be construed as diminishing or enlarging any valid existing rights under any license or franchise previously issued pursuant to federal or state law.

SEC. 14.

 The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SEC. 15.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
SECTION 1.Section 365.1 of the Public Utilities Code is amended to read:
365.1.

(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 allow 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 the effective date of this section. Within six months of the effective date of this section, or by July 1, 2010, whichever is sooner, 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 the effective date of this section, 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 are applicable 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), and 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). 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, as well as 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 multiyear centralized resource adequacy mechanism pursuant to subdivisions (h) and (i) of Section 380, upon the implementation of the multiyear centralized resource adequacy mechanism the requirements of paragraph (2) of subdivision (c) shall be suspended if the mechanism does not include a central procurement entity. If the commission later orders that load-serving entities 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 multiyear 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 the provisions of paragraph (2) of subdivision (c).

(3)Nothing in this subdivision supplants 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.

(f)(1)On or before June 1, 2020, the commission shall provide recommendations to the Legislature on implementing a further direct transactions reopening schedule, including, but not limited to, the phase-in period over which the further direct transactions shall occur for all remaining nonresidential customer accounts in each electrical corporation’s service territory.

(2)In developing the recommendations pursuant to paragraph (1), the commission shall find all of the following:

(A)The recommendations are consistent with the state’s greenhouse gas emission reduction goals.

(B)The recommendations do not increase criteria air pollutants and toxic air contaminants.

(C)The recommendations ensure electric system reliability.

(D)The recommendations do not cause undue shifting of costs to bundled service customers of an electrical corporation or to direct transaction customers.

(3)(A)The recommendations shall be provided in compliance with Section 9795 of the Government Code.

(B)Pursuant to Section 10231.5 of the Government Code, this subdivision is inoperative on June 1, 2024.

SEC. 2.Section 380 of the Public Utilities Code is amended to read:
380.

(a)The commission, in consultation with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.

(b)In establishing resource adequacy requirements, the commission shall ensure the reliability of electrical service in California while advancing, to the extent possible, the state’s goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:

(1)Facilitate development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economic and needed.

(2)Establish new or maintain existing demand response products and tariffs that facilitate the economic dispatch and use of demand response that can either meet or reduce an electrical corporation’s resource adequacy requirements, as determined by the commission.

(3)Equitably allocate the cost of generating capacity and demand response in a manner that prevents the shifting of costs between customer classes.

(4)Minimize enforcement requirements and costs.

(5)Maximize the ability of community choice aggregators to determine the generation resources used to serve their customers.

(c)Each load-serving entity shall maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves. The generating capacity or electrical demand response shall be deliverable to locations and at times as may be necessary to maintain electrical service system reliability, local area reliability, and flexibility.

(d)Each load-serving entity shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the Board of Directors of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.

(e)The commission shall implement and enforce the resource adequacy requirements established in accordance with this section in a nondiscriminatory manner. Each load-serving entity shall be subject to the same requirements for resource adequacy and the renewables portfolio standard program that are applicable to electrical corporations pursuant to this section, or otherwise required by law, or by order or decision of the commission. The commission shall exercise its enforcement powers to ensure compliance by all load-serving entities.

(f)The commission shall require sufficient information, including, but not limited to, anticipated load, actual load, and measures undertaken by a load-serving entity to ensure resource adequacy, to be reported to enable the commission to determine compliance with the resource adequacy requirements established by the commission.

(g)An electrical corporation’s costs of meeting or reducing resource adequacy requirements, including, but not limited to, the costs associated with system reliability, local area reliability, and flexibility, that are determined to be reasonable by the commission, or are otherwise recoverable under a procurement plan approved by the commission pursuant to Section 454.5, shall be fully recoverable from those customers on whose behalf the costs are incurred, as determined by the commission, at the time the commitment to incur the cost is made, on a fully nonbypassable basis, as determined by the commission. The commission shall exclude any amounts authorized to be recovered pursuant to Section 366.2 when authorizing the amount of costs to be recovered from customers of a community choice aggregator or from customers that purchase electricity through a direct transaction pursuant to this subdivision.

(h)The commission shall determine and authorize the most efficient and equitable means for achieving all of the following:

(1)Meeting the objectives of this section.

(2)Ensuring that investment is made in new generating capacity.

(3)Ensuring that existing generating capacity that is economic is retained.

(4)Ensuring that the cost of generating capacity and demand response is allocated equitably.

(5)Ensuring that community choice aggregators can determine the generation resources used to serve their customers.

(6)Ensuring that investments are made in new and existing demand response resources that are cost effective and help to achieve electrical grid reliability and the state’s goals for reducing emissions of greenhouse gases.

(7)Minimizing the need for backstop procurement by the Independent System Operator.

(i)In making the determination pursuant to subdivision (h), the commission may consider a multiyear centralized resource adequacy mechanism among other options.

(j)The commission shall ensure appropriate valuation of both supply and load modifying demand response resources. The commission, in an existing or new proceeding, shall establish a mechanism to value load modifying demand response resources, including, but not limited to, the ability of demand response resources to help meet distribution needs and transmission system needs and to help reduce a load-serving entity’s resource adequacy obligation pursuant to this section. In determining this value, the commission shall consider how these resources further the state’s electrical grid reliability and the state’s goals for reducing emissions of greenhouse gases. The commission, Energy Commission, and Independent System Operator shall jointly ensure that changes in demand caused by load modifying demand response are expeditiously and comprehensively reflected in the Energy Commission’s Integrated Energy Policy Report forecast, as well as in planning proceedings and associated analyses, and shall encourage reflection of these changes in demand in the operation of the grid.

(k)For purposes of this section, “load-serving entity” means an electrical corporation, electric service provider, or community choice aggregator. “Load-serving entity” does not include any of the following:

(1)A local publicly owned electric utility.

(2)The State Water Resources Development System commonly known as the State Water Project.

(3)Customer generation located on the customer’s site or providing electric service through arrangements authorized by Section 218, if the customer generation, or the load it serves, meets one of the following criteria:

(A)It takes standby service from the electrical corporation on a commission-approved rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.

(B)It is not physically interconnected to the electrical transmission or distribution grid, so that, if the customer generation fails, backup electricity is not supplied from the electrical grid.

(C)There is physical assurance that the load served by the customer generation will be curtailed concurrently and commensurately with an outage of the customer generation.

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