Exhibit 99.1
October 14, 1998
To Certificateholders
Re: Amended and Restated Declaration and
Agreement of Trust dated as of
December 11, 1997
Ladies and Gentlemen:
Reference is made to that certain (i) Amended and Restated Declaration and
Agreement of Trust dated as of December 11, 1997 (the "Trust Agreement") among
the California Infrastructure and Economic Development Bank (the "Originator"),
Bankers Trust Delaware (the "Delaware Trustee"), and Bankers Trust Company of
California, N.A. ("BT California"), as certificate trustee (the "Certificate
Trustee"), (ii) First Supplemental Agreement of Trust dated as of December 11,
1997 (the "First Supplemental Agreement") among the Originator, the Delaware
Trustee and the Certificate Trustee, (iii) Indenture dated as of December 11,
1997 (the "Indenture") between SCE Funding LLC (the "Issuer") and BT California,
as note trustee (the "Note Trustee"), (iv) Series Supplement dated as of
December 11, 1997 (the "Series Supplement") between the Issuer and the Note
Trustee, and (v) Transition Property Servicing Agreement, dated as of December
11, 1997 (the "Servicing Agreement") between the Issuer and Southern California
Edison Company (the "Servicer"). The Trust Agreement, First Supplemental
Agreement, Indenture, Series Supplement and Servicing Agreement are collectively
referred to herein as the "Agreements." Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Agreements.
Purpose Of This Letter
The purpose of this letter is to notify Certificateholders that, on
November 3, 1998, the electorate of the State of California will vote on a
Proposed Act (as defined below), which, if passed and upheld by the courts,
would impair rights of Certificateholders and would lead to a default in the
payment of principal and interest on approximately $6 billion of certificates,
including the Certificates. A majority of the electorate voting "yes" would pass
the Proposed Act. The certificates that would be impaired are those issued
pursuant to (i) the Trust Agreement and the First Supplemental Agreement, (ii)
the Amended and Restated Declaration and Agreement of Trust dated as of December
8, 1997, and the First Supplemental Agreement of Trust dated as of December 8,
1997 (the "PG&E Trust Agreement"), and (iii) the Amended and Restated
Declaration and Agreement of Trust dated as of December 16, 1997, and the First
Supplemental Agreement of Trust dated as of December 16, 1997 (the "SDG&E Trust
Agreement").
Because the Proposed Act, if passed and upheld by the courts, would
adversely affect Certificateholders, the Certificate Trustee is requesting,
pursuant to Section 5.03(b) of the Trust Agreement, authorization and direction
from Certificateholders to commence suit to enforce the State Pledge, to enjoin
the implementation of Section 840.1 of the Proposed Act, to collect monetary
damages as a result of any breach of the State Pledge, and to provide other
appropriate relief. Under Section 8.02(d)(i) of the Indenture, these costs
should be payable quarterly from amounts held in the Collection Account.
Moreover, Sections 5.06 and 5.04 of the Servicing Agreement obligate the
Servicer to indemnify the Certificate Trustee for "all liabilities, obligations,
losses, damages, payments, claims, costs or expenses of any kind whatsoever"
incurred in connection with the Certificates, other than such expenses incurred
as a result of gross negligence or willful misconduct. Pursuant to Section
6.02(e) of the Trust Agreement, the Certificate Trustee requires indemnification
by Certificateholders to the extent these other amounts are not payable for such
purposes, as described more fully in the enclosed authorization and direction
letter (the "Authorization Letter").
The Proposed Act And
Consequences Of Its Passage
Under California law, the electorate has the right, through its initiative
powers, to propose statutes. The Utility Rate Reduction and Reform Act (the
"Proposed Act") has qualified for the ballot ("Initiative SA 97RF0064") and will
be voted upon by the electorate on November 3, 1998 ("Proposition 9"). A copy of
the Proposed Act is enclosed. If passed, the Proposed Act could be construed to
be effective on November 4, 1998 unless stayed by a court.
The Proposed Act would add Section 840.1(a) to the California Public
Utilities Code, prohibiting utility taxes, bond payments, surcharges or any
other assessments to pay for securitization bonds. Specifically, Section 840.1
provides:
"Section 840.1
Notwithstanding current Sections 840 through 847 of the Public Utilities
Code:
(a) No electric corporation, affiliate of an electric corporation or any
other financing entity shall assess or collect any utility tax, bond
payment, surcharge or any other assessment authorized by a Public
Utilities Commission financing order issued pursuant to Sections 840
through 847 of the Public Utilities Code for the purpose of paying
principle [sic], interest or any other costs of any bonds authorized
by those sections.
* * *
(c) Any electric corporation, affiliate of an electric corporation or any
other financing entity which is subject to a financing order issued
under Section 841 that is determined by a court of competent
jurisdiction to be enforceable despite subsection (a) of this section,
shall offset any utility tax, bond payment, surcharge, or other
assessment described in subsection (a) collected from any customer
with an equal credit to be applied concurrently with the collection of
the utility tax, bond payment surcharge or other assessment."
Therefore, if passed by the electorate on November 3, 1998, the Proposed
Act breaches the State Pledge by the State of California.
The State Pledge is set forth in Section 11.01 of the Trust Agreement and
in Section 841(c) of the California Public Utilities Code. Section 841(c)
provides:
" . . . the State of California does hereby pledge and agree with the
owners of transition property and holders of rate reduction bonds that the
state shall neither limit nor alter the fixed transition amounts,
transition property, financing orders, and all rights thereunder until the
obligations, together with the interest thereon, are fully met and
discharged, provided nothing contained in this section shall preclude the
limitation or alteration if and when adequate provision shall be made by
law for the protection of the owners and holders. The bank as agent for the
state is authorized to include this pledge and undertaking for the state in
these obligations."
Thus, Section 841(c) provides that the State of California will not limit
or alter the revenue stream that was created to pay principal and interest in
respect of the Certificates without making "adequate provision." The Proposed
Act would eliminate the revenue streams, but by its terms does not make
"adequate provision" for payment of principal or interest on the Certificates.
If passed by the electorate on November 3, 1998, the Proposed Act would
breach the State Pledge. A breach by the State of California of the State Pledge
is included in the definition of and constitutes an "Event of Default" in the
Trust Agreement. When there is an "Event of Default," the Certificate Trustee
can take all prudent actions, including instituting suits at law to enforce the
State Pledge and to obtain appropriate relief. Further, unless the State of
California provides sufficient revenues, a default in payment of principal and
interest to Certificateholders eventually would occur.
The Trust Agreement
Under Section 5.03(a) of the Trust Agreement, if there is a failure to make
payment of the principal of or interest on any Note, then the Certificate
Trustee, if directed in writing by the Holders of a majority of the Outstanding
Amount of the Certificates of all Series, shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or otherwise, for
the collection of the sums so due and unpaid on such Note.
Similarly, under Section 5.03(b) of the Trust Agreement, if there is a
breach of the State Pledge by the State of California, then the Certificate
Trustee, if directed in writing by the Holders of a majority of the Outstanding
Amount of the Certificates of all Series, shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or otherwise, to
enforce the State Pledge and to collect any monetary damages as a result of a
breach thereof.
Pursuant to Section 6.02(e) of the Trust Agreement, the Certificate Trustee
is under no obligation to exercise any of the rights or powers vested in it by
the Trust Agreement at the request or direction of any of the
Certificateholders, unless such Certificateholders shall have offered to the
Certificate Trustee reasonable security or indemnity satisfactory to it against
the cost, expenses (including reasonable legal fees and expenses) and
liabilities that might be incurred by it in compliance with such request or
direction.
As noted above, when there is an "Event of Default" under the terms of the
Trust Agreement, the Certificate Trustee can take all prudent actions, including
instituting suits at law to enforce the State Pledge and to obtain appropriate
relief.
The Servicers
Counsel for the Certificate Trustee has been informed by counsel for each
of Southern California Edison Company ("SCE"), Pacific Gas and Electric Company
("PG&E") and San Diego Gas and Electric Company ("SDG&E"), that, in their
respective capacities as Servicers, they intend immediately to commence
litigation to have the Proposed Act declared unconstitutional under the
constitutions of both the State of California and the United States, if it
should be passed by the electorate on November 3, 1998. Copies of letters from
SCE, PG&E and SDG&E to their respective Note Issuers are enclosed.
The Authorization Letter
In order to protect the interests of the Certificateholders in the event
the Proposed Act is passed on November 3, 1998, counsel for the Certificate
Trustee, on behalf of the Certificateholders, must commence (and have commenced)
preparations immediately to challenge the constitutionality of the Proposed Act.
Counsel for the Certificate Trustee, on behalf of the Certificateholders, wants
to be prepared, on November 4, 1998, to challenge the constitutionality of the
Proposed Act, to seek an injunction against its enforcement while the legal
challenge is pursued in the courts and to seek other appropriate relief.
Enclosed is an Authorization Letter from each Certificateholder authorizing
and directing BT California in its capacity as Certificate Trustee, pursuant to
Section 5.03(b) of the Trust Agreement, to institute any suit to enforce the
State Pledge and to collect monetary damages as a result of any breach thereof.
As a condition to such direction, pursuant to Section 6.02(e) of the Trust
Agreement, Certificateholders must agree to indemnify BT California, Bankers
Trust Delaware, their respective officers, directors, agents and employees and
their affiliates and hold them harmless against any loss, liability, cost or
expense (including reasonable legal fees and expenses) arising out of such suit
to the extent amounts in the Collection Account may be insufficient, and if
indemnification from the Servicer is unavailing for that purpose.
Please review the Authorization Letter and if you decide to authorize and
direct the Certificate Trustee to take action, please sign and return it
immediately, and not later than 5:00 p.m. Eastern Standard Time on November 2,
1998.
If you have any questions with respect to the matters described above,
please contact the Information Agent, Xxxxxx & Co., Inc. at 0 (000) 000-0000,
fax (000) 000-0000.
By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Certificate Trustee
Enclosures: Authorization Letter
Letters from Servicers
Proposed Act
Enclosure 1
Bankers Trust Company of California, N.A.
c/o Bankers Trust Company
Four Albany Street
New York, New York 10006
Bankers Trust (Delaware)
E.A. Delle Donne, Corporate Center
Xxxxxxxxxx Building
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Re: Amended and Restated Declaration and
Agreement of Trust dated
as of December 11, 1997
Ladies and Gentlemen:
Reference is made to that certain (i) Amended and Restated Declaration and
Agreement of Trust dated as of December 11, 1997 (the "Trust Agreement") among
the California Infrastructure and Economic Development Bank (the "Originator"),
Bankers Trust Delaware (the "Delaware Trustee"), and Bankers Trust Company of
California, N.A. ("BT California"), as certificate trustee (the "Certificate
Trustee"), (ii) First Supplemental Agreement of Trust dated as of December 11,
1997 (the "First Supplemental Agreement") among the Originator, the Delaware
Trustee and the Certificate Trustee, (iii) Indenture dated as of December 11,
1997 (the "Indenture") between SCE Funding LLC (the "Issuer") and BT California,
as note trustee (the "Note Trustee"), (iv) the Series Supplement dated as of
December 11, 1997 (the "Series Supplement") between the Issuer and the Note
Trustee, and (v) the Transition Property Servicing Agreement, dated as of
December 11, 1997 (the "Servicing Agreement") between the Issuer and Southern
California Edison Company (the "Servicer"). The Trust Agreement, First
Supplemental Agreement, Indenture, Series Supplement and Servicing Agreement are
collectively referred to herein as the "Agreements." Capitalized terms used but
not defined herein shall have the meanings assigned to such terms in the
Agreements.
Each of the undersigned Certificateholders (the "Certificateholders")
hereby authorizes and directs BT California in its capacity as Certificate
Trustee, pursuant to Section 5.03(b) of the Trust Agreement, to institute any
suits, actions or proceedings at law, in equity or otherwise, to enforce the
State Pledge and to collect monetary damages as a result of any breach thereof
and to prosecute any such suit, action or proceeding to judgment or final decree
and to take any and all actions consistent with the foregoing including the
retention of counsel or counsels as may be appropriate or necessary in
connection therewith. An "Event of Default" is defined in the Trust Agreement to
include a breach by the State of California of the State Pledge. Independent of
any authorization and direction by Certificateholders, the Certificate Trustee
can take all prudent actions, including instituting suits at law to enforce the
State Pledge and to obtain appropriate relief when there is an "Event of
Default" as defined in the Trust Agreement.
Under Section 8.02(d)(i) of the Indenture, the costs associated with the
implementation of the directions described herein should be payable quarterly
from amounts held in the Collection Account. Moreover, Sections 5.06 and 5.04 of
the Servicing Agreement obligate the Servicer to indemnify the Certificate
Trustee for "all liabilities, obligations, losses, damages, payments, claims,
costs or expenses of any kind whatsoever" incurred in connection with the
Certificates, other than such expenses incurred as a result of gross negligence
or willful misconduct. Pursuant to Section 6.02(e) of the Trust Agreement, the
Certificate Trustee requires indemnification by Certificateholders to the extent
these other amounts are not payable for such purposes.
In connection with the foregoing, by its execution hereof, each of the
Certificateholders hereto severally, and not jointly, in proportion to its
percentage interest of the aggregate principal amount of Certificates
outstanding, hereby agrees to indemnify BT California, Bankers Trust Delaware,
their respective officers, directors, agents and employees and their affiliates
(the "Indemnified Parties") and hold them harmless against any loss, liability,
cost or expense (including reasonable legal fees and expenses) arising out of or
in connection with the implementation of the directions described herein to the
extent amounts in the Collection Account may be insufficient, and if
indemnification from the Servicer is unavailing for that purpose, provided
however, that the foregoing indemnity shall not extend to any loss, liability,
costs or expenses incurred by the Indemnified Parties arising out of or in
connection with the gross negligence or willful misconduct of the Indemnified
Parties. The Indemnified Parties, at the expense of the Certificateholders,
retain the right to representation by counsel or multiple counsel of its own
choosing in any action, suit or any other proceeding brought against it in
relation to its execution of the directions set forth herein without affecting
the Indemnified Parties' right to indemnification hereunder or waiving any
rights afforded to it under the Agreements, any related agreement or applicable
law.
The provisions of this indemnity shall survive (i) the resignation or
removal of BT California, as Certificate Trustee, (ii) the resignation or
removal of BT California, as Note Trustee, (iii) the resignation or removal of
Bankers Trust Delaware, as Delaware Trustee, (iv) the execution or termination
of these instructions, and (v) the termination of any of the Agreements or any
related agreement or agreements. The Indemnified Parties shall promptly provide
the Certificateholders written notice of any such loss, liability, cost or
expense, or any pending or threatened claim or litigation of which the
Indemnified Parties has actual knowledge, provided, however, failure to provide
such notice shall in no way waive or limit the Certificateholders' duties or
obligations hereunder. The indemnity set forth herein or the Indemnified
Parties' election to seek relief hereunder does not constitute a waiver of any
rights, privileges, immunities and/or indemnities as provided to it pursuant to
the terms of the Agreements, and any related agreement or under applicable law.
The terms and provisions of this letter shall be governed by and construed
in accordance with the internal laws of the State of New York without regard to
its conflict of laws provisions. This letter may be countersigned in any number
of counterparts, each executed counterpart constituting an original, but
together only one instrument. Facsimile signatures shall be deemed to be
original signatures for all purposes hereunder.
Please return by not later than 5:00 p.m. Eastern Standard Time on November
2, 1998 to:
Xxxxxx & Co., Inc.
000 Xxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: 0 (000) 000-0000
Facsimile: (000) 000-0000
-------------------------
NAME OF BENEFICIAL OWNER
BY _________________________
Name:
Title:
Phone No.:
Fax No.:
Date:
---------------------------
NOMINEE NAME
Please enter dollar amount of consent next to each class.
California Infrastructure and Economic Development Bank Special Purpose Trust
SCE-1, Series 1997-1 Rate Reduction Certificates
Class Cusip # Consented Amount
A-1 000000XX0 ________________
A-2 000000XX0 ________________
A-3 000000XX0 ________________
A-4 000000XX0 ________________
A-5 000000XX0 ________________
A-6 000000XX0 ________________
A-7 000000XX0 ________________
Enclosure 2
SCE LOGO
October 6, 1998
SCE Funding LLC
0000 Xxxxxx Xxxxx Xxx., Xxxx 000
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
On June 24, 1998, the California Secretary of State announced that
Proposition 9 had qualified for the November 3, 1998 ballot. At least one
portion of Proposition 9, proposed Section 840.1 of the California Public
Utilities Code, could have serious adverse consequences for SCE Funding LLC (the
"Note Issuer") and for holders of Rate Reduction Certificates issued by the
California Infrastructure and Economic Development Bank Special Purpose Trust
SCE-1 (the "Certificates"). Proposed Section 840.1 would prohibit the assessment
or collection of fixed transition amounts for the purpose of paying principal or
interest on the Certificates. If Proposition 9 is approved by the voters,
proposed Section 840.1 could be construed to take effect on November 4, 1998,
unless it is stayed by a court.
If Proposition 9 is approved by the voters, Southern California Edison
Company ("SCE") intends to comply with its obligations under Section 5.02(d) of
the Transition Property Servicing Agreement by "tak[ing] such legal or
administrative actions . . . as may be reasonably necessary to block or overturn
any attempts to cause a repeal of, modification of or supplement to the Statute
or the Financing Order or the rights of holders of Transition Property by
legislative enactment, voter initiative or constitutional amendment that would
be adverse to Certificateholders." Accordingly, if Proposition 9 is approved by
the voters, SCE intends to commence litigation immediately to cause Section
840.1 to be declared unconstitutional.
As with any litigation, the ultimate result of any such litigation is
uncertain. SCE believes that the chance of a successful outcome will be
maximized if Bankers Trust Company of California, N.A. immediately appears in
the litigation in its capacity as Certificate Trustee on behalf of
Certificateholders, the parties most directly and immediately impacted by
proposed Section 840.1.
Very truly yours,
/s/ Xxxxxxxx X. Xxxxxx, Xx.
-----------------------------
Xxxxxxxx X. Xxxxxx, Xx.
Senior Vice President and Treasurer
cc: Bankers Trust Company of California, N.A.
c/o Bankers Trust Company
Corporate Trust and Agency Services
Four Albany Street
New York, NY 10006
Attention: Structured Finance Group
Enclosure 3
October 5, 1998
PG&E Funding LLC
000 Xxxxxx Xxxxxx
Xxxx 000
Xxx Xxxxxxxxx, XX 00000
Re: Proposition 9
Ladies and Gentlemen:
On June 24, 1998, the California Secretary of State announced that
Proposition 9 had qualified for the November 3, 1998 ballot. At least one
portion of Proposition 9, proposed section 840.1 of the California Public
Utilities Code, could have serious adverse consequences for PG&E Funding LLC
(the "Note Issuer") and for holders of Rate Reduction Certificates issued by the
California Infrastructure and Economic Development Bank Special Purpose Trust
PG&E-1 (the "Certificates"). Proposed section 840.1 would prohibit the
assessment or collection of fixed transition amounts for the purpose of paying
principal or interest on the Certificates. If Proposition 9 is approved by the
voters, proposed section 840.1 could be construed to take effect on November 4,
1998, unless it is stayed by a court.
If Proposition 9 is approved by the voters, Pacific Gas and Electric
Company ("PG&E") intends to comply with its obligations under section 5.02(d) of
the Transition Property Servicing Agreement by "tak[ing] such legal or
administrative actions . . . as may be reasonably necessary to block or overturn
any attempts to cause a repeal of, modification of or supplement to the Statute
or the Financing Order or the rights of holders of Transition Property by
legislative enactment, voter initiative or constitutional amendment that would
be adverse to Certificateholders." Accordingly, if Proposition 9 is approved by
the voters, PG&E intends to commence litigation immediately to cause section
840.1 declared unconstitutional.
As with any litigation, the ultimate result of any such litigation is
uncertain. PG&E believes that the chance of a successful outcome will be
maximized if Bankers Trust Company of California, N.A., immediately appears in
the litigation in its capacity as Certificate Trustee on behalf of
Certificateholders, the parties most directly and immediately impacted by
proposed section 840.1.
Very truly yours,
/s/ Xxxx X. Xxxxxx
--------------------------
Sr. Vice President, Treasurer &
Chief Financial Officer
cc: Bankers Trust Company of California, N.A.
c/o Bankers Trust Company
Corporate Trust and Agency Services
Four Albany Street
New York, NY 10006
Attention: Structured Finance Group
Enclosure 4
October 6, 1998
SDG&E Funding LLC
000 Xxx Xxxxxx
Xxxx 000
Xxx Xxxxx, XX 00000
Re: Proposition 9
Ladies and Gentlemen:
On June 24, 1998, the California Secretary of State announced that Proposition 9
had qualified for the November 3, 1998 ballot. At least one portion of
Proposition 9, proposed section 840.1 of the California Public Utilities Code,
could have serious adverse consequences for SDG&E Funding LLC (the "Note
Issuer") and for holders of Rate Reduction Certificates issued by the California
Infrastructure and Economic Development Bank Special Purpose Trust SDG&E-1 (the
"Certificates"). Proposed section 840.1 would prohibit the assessment or
collection of fixed transition amounts for the purpose of paying principal or
interest on the Certificates. If Proposition 9 is approved by the voters,
proposed section 840.1 could be construed to take effect on November 4, 1998,
unless it is stayed by a court.
If Proposition 9 is approved by the voters, San Diego Gas and Electric Company
("SDG&E) intends to comply with its obligations under section 5.02(d) of the
Transition Property Servicing Agreement by "tak[ing] such legal or
administrative actions . . . as may be reasonably necessary to block or overturn
any attempts to cause a repeal of, modification of or supplement to the Statute
or the Financing Order or the rights of holders of Transition Property by
legislative enactment, voter initiative or constitutional amendment that would
be adverse to Certificateholders." Accordingly, if proposition 9 is approved by
the voters, SDG&E intends to commence litigation immediately to cause section
840.1 declared unconstitutional.
As with any litigation, the ultimate result of any such litigation is uncertain.
SDG&E believes that the chance of a successful outcome will be maximized if
Bankers Trust Company of California, N.A., immediately appears in the litigation
in its capacity as Certificate Trustee on behalf of Certificateholders, the
parties most directly and immediately impacted by proposed section 840.1
Sincerely yours,
/s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
cc: Bankers Trust Company of California, N.A.
c/o Bankers Trust Company
Corporate Trust and Agency Services
Four Albany Street
New York, NY 10006
Attention: Structured Finance Group
Enclosure 5
The Utility Rate Reduction and Reform Act
SECTION 1. Findings and Declaration
The People of California find and declare as follows:
The cost and dependability of California's electric utility service are
threatened by a new law that was intended to reduce regulation of electric
utility companies in this state.
Any change in the way electricity is sold should benefit all electric utility
customers, including residential and small business customers, and should result
in a fair and competitive marketplace.
Instead of creating a fully competitive market for electricity, the new law
unfairly favors existing electric utility monopolies by forcing customers to pay
rates more than 40 percent higher than the market price in order to bail out
utilities for their past bad investments.
As a result of this $28 billion bailout for electric utility companies, the
average California household will pay more than $250 more per year for
electricity than they would in a fully competitive market.
Residential and small business customers should not be required to bear the
costs of bonds used by utility companies to pay for past bad investments.
It is against public policy for residential and small business customers to be
required to pay for the imprudent and uneconomic decisions of electric utility
companies to invest in nuclear power plants which the public did not want and
which threaten the health and safety of this state.
Under the new law, deregulation of electric utility companies may result in
marketing abuses that harm residential and small business customers. Such abuses
may include the selling of information about these customers to other companies
for profit.
Therefore, the People of California declare that it is necessary to protect
residential and small business customers from unfair and unjustified taxes and
surcharges that will force them to subsidize electric utility companies. It is
also necessary to ensure that residential and small business customers directly
benefit from deregulation of electric utility companies.
SECTION 2. Purpose
The purpose of this chapter is to:
1. Reduce residential and small commercial electricity rates by 20 percent to
assure that these customers receive a direct benefit from the transition to the
competitive marketplace for electricity. 2. Prohibit taxes, surcharges, bond
payments or any other assessment from being added to electricity bills to pay
off utility companies' past bad investments in nuclear power plants and other
generation-related costs. 3. Prohibit bonds from being used to force residential
and small business customers to pay for past bad investments by electric utility
companies. 4. Provide for fair and public review of California Public Utilities
Commission decisions related to electricity price and services. 5. Protect the
privacy of utility customers and provide the information consumers need to
obtain low cost and high quality electric service.
SECTION 3. The following Sections are added to the Public Utilities Code:
Electric Utility Rate Reduction
Section 368.1
(a) No later than January 1, 1999, electricity rates for residential and small
commercial customers shall be reduced so that these customers receive rate
reductions of at least 20 percent on their total electricity bill as compared to
the rate schedules in effect for these customers on June 10, 1996.
(b) The rate reductions described in subsection (a) shall be achieved through
cutting payments to electric corporations for their nuclear and other uneconomic
generation costs as described in Section 367.1 and 367.2.
(c) No utility tax, bond payment, surcharge, or any other assessment in any form
shall be levied against any electric utility customer to pay for the rate
reductions described in subsections (a) and (b).
Prohibition Against Utility Taxes, Bond Payments, Surcharges or Any Other
Assessments to Pay For Nuclear Power Plants
Section 367.1
(a) Effective immediately, costs for nuclear generation plants and related
assets and obligations shall not be paid for by electric utility customers,
except to the extent that such costs are recovered by the sale of electricity at
competitive market prices as reflected in independent Power Exchange revenues or
in contracts with the Independent System Operator.
(b) No utility tax, bond payment, surcharge or other assessment in any form
shall be levied against any electric utility customer for the recovery of
nuclear costs described in subsection (a).
(c) This section shall not apply to reasonable nuclear decommissioning costs as
referenced in Section 379 of the Public Utilities Code.
Limitation On Utility Taxes, Bond Payments, Surcharges, and Any Other
Assessments To Pay for Electric Utility Company Investments in
Non-Nuclear Generation Assets
Section 367.2
(a) Effective immediately, costs for non-nuclear generation plants and related
assets and obligations shall not be recovered from electric utility customers
under the cost recovery mechanism provided for by sections 367 through 376 of
the Public Utilities Code except to the extent that such costs are recovered by
the sale of electricity at competitive market rates from independent Power
Exchange revenues or from contracts with the Independent System Operator, unless
the electric utility first demonstrates to the satisfaction of the Commission at
a public hearing that failure to recover such costs would deprive it of the
opportunity to earn a fair rate of return.
(b) This section shall not apply to costs associated with renewable non-nuclear
electricity generation facilities described in Section 381(c)(3), or to costs
associated with power purchases from qualifying facilities pursuant to the
Public Utility Regulatory Policies Act of 1978 and related commission decisions.
Prohibition Against Utility Taxes, Bond Payments, Surcharges and Any Other
Assessment to Pay for Securitization Bonds.
Section 840.1
Notwithstanding current Sections 840 through 847 of the Public Utilities Code:
(a) No electric corporation, affiliate of an electric corporation or any other
financing entity shall assess or collect any utility tax, bond payment,
surcharge or any other assessment authorized by a Public Utilities Commission
financing order issued pursuant to Sections 840 through 847 of the Public
Utilities Code for the purpose of paying principle, interest or any other costs
of any bonds authorized by those sections.
(b) The Public Utilities Commission shall not issue any financing order pursuant
to Sections 840 through 847 after the effective date of this measure.
(c) Any electric corporation, affiliate of an electric corporation or any other
financing entity which is subject to a financing order issued under Section 841
that is determined by a court of competent jurisdiction to be enforceable
despite subsection (a) of this section, shall offset any utility tax, bond
payments, surcharge, or other assessment described in subsection (a) collected
from any customer with an equal credit to be applied concurrently with the
collection of the utility tax, bond payment, surcharge or other assessment.
Section 841.1
Any underwriter or bond purchaser who purchases rate reduction bonds after
November 24, 1997 issued pursuant to current Sections 840 through 847 shall be
deemed to have notice of the provisions of Sections 367.1, 367.2, 368.1, and
840.1
Public Participation and Judicial Review for Consumer Protection and Electric
Company Accountability
Section 1701.5
(a) Any action or proceeding of the Public Utilities Commission pursuant to
Section 367.1, 367.2, 368.1 and 840.1 of the Public Utilities Code shall require
a public hearing where evidence is taken by and discretion is vested in the
Public Utilities Commission.
(b) Any change to the amount of above-market costs for non-nuclear generation
plants and related assets and obligations being recovered from utility customers
shall only be made after the electrical corporation has provided notice to the
public pursuant to Section 454 of the Public Utilities Code.
(c) Any action or proceeding to attack, review, set aside, void or annul a
determination, finding, or decision of the Public Utilities Commission relating
to electric restructuring under Chapter 2.3 of Part I of Division 1 of the
Public Utilities code and financing of transition costs as described in Article
5.5 of Chapter 4 of Part I of Division 1 of the Public Utilities Code shall be
in accordance with the provisions of Section 1094.5 of the Code of Civil
Procedure. In any such action the writ of mandate shall lie from the court of
appeals to the Public Utilities Commission. The court shall not exercise its
independent judgment but shall only determine whether the determination, finding
or decision of the Public Utilities Commission is supported by substantial
evidence in light of the whole record.
Electric Utility Customer Privacy Protection
Section 394.1
The confidentiality of residential and small commercial customer information
shall be fully protected as provided by law. No entity providing electricity
services including an electric corporation shall provide information about a
residential or small commercial customer to any third party without the express
written consent of the customer.
Electric Utility Customer Information
Section 393
The Public Utilities Commission shall require each electric utility or electric
service provider to provide such information or materials with each utility bill
issued to residential and small commercial customers as the Commission
determines to be necessary to assist consumers in obtaining low cost, high
quality electric service options, including electric service options that reduce
environmental impacts such as those that rely on renewable energy sources and to
protect consumers' interest in all matters concerning safe and dependable
delivery of electric service.
Definitions
Section 330.1 Definitions of Charges
(a) "Utility Tax" "bond payments" "surcharge", "assessment" or "involuntary
payment" mean any charge that serves to permit an electric corporation to
recover the value of uneconomic assets from ratepayers, and includes but is not
limited to a "fixed transition amount" as defined by Section 840(d), and the
"competition transition charge" that is the nonbypassable charge referred to in
Sections 367 to 376, inclusive.
(b) For purposes of Sections 330.1, 367.1, 367.2, 368.1, 393, and 840.1, the
terms "electric utility", "electric utility company", and "electric corporation"
have the same meaning as the term "electrical corporation" as defined in Section
218 of the Public Utilities Code.
Repeal of Existing Law
Sections 367(a), 368(d), 368(h) of the Public Utilities code are repealed.
SECTION 4. Initiative Integrity
(a) This act shall be broadly construed and applied in order to fully promote
its underlying purposes, and to be consistent with the United states
Constitution and the Constitution of the State of California. If any provision
of this initiative conflicts directly or indirectly with any other provisions of
law, including but not limited to the cost recovery mechanism provided for by
Sections 367 through 376 of the Public Utilities Code, or any other statute
previously enacted by the Legislature, it is the intent of the voters that those
other provisions shall be null and void to the extent that they are inconsistent
with this initiative and are hereby repealed.
(b) No provision of this act may be amended by the Legislature except to further
the purpose of that provision by a statute passed in each house by roll call
vote entered in the journal, two thirds of the membership concurring, or by a
statute that becomes effective only when approved by the electorate. No
amendment by the Legislature shall be deemed to further the purposes of this act
unless it furthers the purpose of the specific provision of this act that is
being amended. In any judicial action with respect to any legislative amendment,
the court shall exercise its independent judgment as to whether or not the
amendment satisfies the requirements of this subsection.
(c) If any provisions of this act or the application thereof to any person or
circumstances is held invalid, that invalidity shall not effect other provisions
or applications of the act that can be given effect in the absence of the
invalid provision or application. To this end, the provisions of this act are
severable.
(d) It is the will of the People that any legal challenges to the validity of
any provision of this act be acted upon by the courts upon an expedited basis.
