CC SR 20180417 F - Opposition Letter to AB 1912RANCHO PALOS VERDES CITY COUNCIL MEETING DATE: 04/17/2018
AGENDA REPORT AGENDA HEADING: Consent Calendar
AGENDA DESCRIPTION:
Consideration and possible action to oppose Assembly Bill No. 1912 regarding joint
powers authorities and pension liability
RECOMMENDED COUNCIL ACTION:
(1) Authorize the Mayor to sign a letter to Assemblymember Rodriguez in opposition
to Assembly Bill No. 1912 (AB 1912) regarding joint powers authorities and
pension liability.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: Kit Fox, AICP, Senior Administrative Analyst
REVIEWED BY: Gabriella Yap, Deputy City Manager
APPROVED BY: Doug Willmore, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Draft letter in opposition to AB 1912 (page A-1)
B. League of California Cities “Action Alert” regarding AB 1912 (page B-1)
C. AB 1912 (page C-1)
D. Letter in opposition to AB 1217 (page D-1)
BACKGROUND AND DISCUSSION:
As some members of the City Council may recall, the City Council urged Governor
Brown to veto proposed legislation in September 2016 (Attachment D) that would set a
dangerous precedent for State interference into the affairs of local joint powers
authorities (JPAs), which by definition are not matters of statewide concern. The City is
a party to a number of JPAs, including (but not limited to) the City’s Improvement
Authority, the Palos Verdes Peninsula Transit Authority (PVPTA), the South Bay Cities
Council of Governments (SBCCOG) and the Los Angeles Regional Interoperable
Communications System (LA-RICS) Authority. Unfortunately, Governor Brown signed
Assembly Bill No. 1217 (AB 1217) into law on September 23, 2016.
On April 9, 2018, the League of California Cities (League) advised Staff that
Assemblymember Rodriguez had introduced Assembly Bill No. 1912 (AB 1912) on
January 23, 2018 (Attachment C). As currently proposed, AB 1912 places substantial
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burdens and new unworkable requirements on local and state agencies. It applies
retroactive, as well as prospective, joint and several liability for all retirement-related
obligations to any current or former member of a JPA since its inception. In addition,
AB 1912 would mandate that a public retirement system (such as CalPERS) file suit
against all local or State agencies that have ever been a member of a terminated JPA
for all retirement-related obligations. It would also prohibit any retirement system from
approving a new JPA without a contract containing express joint and several liability
provisions. The League is opposed to AB 1912 (Attachment B) and has asked cities to
express their opposition to the bill as well.
The provisions set forth in AB 1912 create constitutional, fiscal, and operational
challenges, which would effectively eliminate the ability for local and State agencies to
create or maintain the use of most JPAs. The League asserts that AB 1912 would be
unconstitutional. It would hold all agencies of a JPA accountable for the investment
shortfalls, future discount rate reductions, and other assumptions changes made by
retirement agencies, even if the agencies are able to pay the lump-sum amount of the
current unfunded liability from the JPA. Furthermore, AB 1912 would give exclusive
authority to a retirement agency to unilaterally assign liabilities to all current and former
agencies of a JPA. This vague and ambiguous direction demonstrates a fundamental
misunderstanding of the formation, management and purpose of a JPA, which will
inevitability lead to a perpetual cycle of protracted and costly litigation contesting the
retirement agency’s discretion of proportional liability.
In light of the adverse impact that the enactment of AB 1912 could have upon the City’s
current and future participation in JPAs, Staff has prepared a letter in opposition to the
bill for the Mayor’s signature (Attachment A). A hearing on AB 1912 is expected in the
Assembly Public Employees, Retirement & Social Security Committee on April 18,
2018. If approved, Staff will immediately transmit this letter to the Assemblymember
Rodriguez and the League.
ALTERNATIVES:
In addition to the Staff recommendation, the following alternative action is available for
the City Council’s consideration:
1. Do not authorize the Mayor to sign the letter in opposition to AB 1912.
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April 17, 2018
VIA FAX: (916) 319-2152
The Honorable Freddie Rodriguez
Chair, Assembly Public Employees, Retirement & Social Security Committee
State Capitol, Rm. 2188
Sacramento, CA 95814
SUBJECT: AB 1912 (Rodriguez). Public Employees’ Retirement: Joint Powers
Agreements: Liability.
Notice of Opposition (as amended 03/19/2018)
Dear Assemblymember Rodriguez:
The City of Rancho Palos Verdes must respectfully oppose your Assembly Bill (AB) 1912 relating
to retirement liabilities of Joint Powers Authorities (JPA).
JPA’s play a vital role in addressing public needs that cannot be effectively achieved by a local
agency acting on its own. Our city faces unique local challenges and a limited budget, but we
continue to innovate in order to obtain expertise and provide high quality services through the use
of JPAs. Rancho Palos Verdes currently participates in several JPAs with nearby jurisdictions to
collectively address unique local needs and challenges, including:
• The City’s Improvement Authority (remediation of local geologic hazards);
• The Palos Verdes Peninsula Transit Authority (local transit service for students and senior
citizens);
• The South Bay Cities Council of Governments (sub-regional intergovernmental
coordination); and,
• The Los Angeles Regional Interoperable Communications System Authority (emergency
communications).
City of Rancho Palos Verdes is deeply concerned that JPAs will no longer be a viable tool should
AB 1912 become law.
As amended, AB 1912 places substantial burdens and new unworkable requirements on cities by
applying retroactive, as well as prospective, joint and several liability for all retirement-related
obligations to any current or former member of a JPA throughout its existence. Such obligations
include active employee normal pension costs, retiree unfunded accrued liabilities (UAL) as well
as both active and retiree healthcare and other post-employment retirement benefits (OPEB).
According to the State Controller’s Office most recently available data, the unfunded liability of
California’s 130 state and local government pension plans stand at $241.3 billion and $125 billon
for retiree healthcare costs. These costs and their impact on local governments cannot be
overstated.
Additionally, the measure would mandate that a public retirement agency file suit against all
agencies that have ever been a member of a terminated JPA for all retirement-related obligations
and prohibits any retirement system from approving a new JPA without express joint and several
liability provisions. The provisions in AB 1912 create constitutional, fiscal and operational
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challenges, which would effectively eliminate the ability for use to create or maintain the use of
most JPA’s. Specifically AB 1912:
• Conflicts with Provisions of the California State Constitution:
The California constitutional debt limit prohibits an agency from incurring indebtedness beyond
the agency’s ability to pay the debt back from revenues received in the same fiscal year without
the approval of two-thirds of its voters (Cal Const. art XVI, §18). These safeguards were placed
in the State’s constitution to avoid a situation in which bond issuers might compel an increase in
taxes or foreclose on local government assets (City of Redondo Beach v Taxpayers, Property
Owners, Citizens & Electors (1960) 54 C2d 126, 131; County of Shasta v County of Trinity (1980)
106 CA3d 30, 35).
By applying retroactive joint and several liability to existing contracts, we have strong concerns
that City of Rancho Palos Verdes will incur significant debts that may exceed our annual revenue
without receiving voter approval—thus violating the cited provision.
Further, it can be argued that retroactively incurring debts of another agency violates article XVI,
§6 of the California Constitution which prohibits an agency from giving or lending public funds to
any person, public or private entity. A JPA is an independent governmental body whereby the
City of Rancho Palos Verdes generally has no legal, statutory oversight or managing authority.
Liabilities from such entities retroactively applied to each member agency would constitute a gift
of public funds to an individual(s) and/or public entity.
• Gives Retirement Agency Authority to Increase the Amount Owed Through
Assumption Changes and/or Investment Losses:
Retirement obligations are unlike other forms of traditional debts and liabilities. Unfunded
retirement liabilities are particularly volatile and can grow to insurmountable costs based on no
fault of the agencies who contract with a retirement system for health and pension benefits. It is
estimated that in fiscal year 2008-2009 the California Public Employee Retirement System
(CalPERS) lost approximately $100 billion dollars in assets resulting in a gross loss of 34.75
percent of the fund’s total value. According to CalPERS (CL#200-004-17) employer contributions
are projected to double by Fiscal Year 2024-2025. Additionally, those numbers are poised to
grow even more in the short term when factoring CalPERS recent decision to modify its
amortization schedule from 30 years to 20 years.
The measure would hold all agencies of a JPA accountable for the investment shortfalls, future
discount rate reductions, and other assumptions changes made by the retirement agencies even
if the agencies are able to pay the lump sum amount of the current unfunded liability from the
JPA.
• Gives Exclusive Authority to the Retirement Agency to Assign Liability:
As stated in SEC 6 subsection (d), AB 1912 would grant exclusive authority to the public
retirement agency to unilaterally assign liabilities to all current and former agencies of a JPA “in
an equitable manner”. JPAs have been in existence in California for nearly 100 years with state
and local agencies—some as many as 500 entering and exiting these governmental bodies as
service demands shift and evolve. It would be virtually impossible for the JPAs governmental
body, let alone a retirement agency, to retroactively assign “equitable” retirement specific liabilities
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to potentially hundreds of agencies. This is especially concerning when you factor in the various
assumptions changes outlined in the section above.
This vague and ambiguous direction demonstrates a fundamental misunderstanding of the
formation, management and purpose of a JPA, which will inevitability lead to a perpetual cycle of
protracted and costly litigation contesting the retirement agency’s discretion of proportional
liability.
• Creates Funding and Operational Impairments:
The Governmental Accounting Standards Board (GASB) issued regulations (GASB 68, 2012 and
76, 2015) that require each state and local agency to report all financial liabilities associated with
public pension and OPEB liabilities. These reporting standards play a vital role in assessing the
fiscal health and viability of an agency. Incurring retroactive debt would require each originating
agency of a JPA to report these liabilities as debts impacting an agency’s net financial position.
A drastic spike in liability could contribute to the downgrading of an agency’s credit rating, which
in turn would make issuing and servicing future bonds more costly through higher interest costs
and additional required insurance.
JPAs are tools state and local government agencies use to address service demands and
infrastructure needs in a cost effective manner. Removing this tool makes it that much more
problematic to address statewide critical issues such as housing, transportation, water, air quality,
workforce development, public safety, and much more. While the intended goals of your measure
are laudable, for the reasons stated above the City of Rancho Palos Verdes must strongly oppose
Assembly Bill 1912.
Sincerely,
Susan Brooks
Mayor
cc: Senator Ben Allen, FAX (916) 651-4926
Assemblymember Al Muratsuchi, FAX (916) 319-2166
Michael Bolden, Chief Consultant, Assembly Committee Public Employees, Retirement,
and Social Security
Joshua White, Consultant, Assembly Republican Caucus
Rancho Palos Verdes City Council
Doug Willmore, City Manager
Gabriela Yap, Deputy City Manager
Kit Fox, Senior Administrative Analyst
Jeff Kiernan, League of California Cities
Meg Desmond, League of California Cities
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ACTION ALERT!!
AB 1912 (Rodriguez)
Public Employees’ Retirement: JPA: Liability
OPPOSE
BACKGROUND:
Local governments have a long history of addressing service delivery challenges with creativity, self-
reliance and innovation. Unique local challenges and limited resources continue to fuel innovative
efforts to obtain expertise and provide high quality services. Joint Powers Authorities (JPAs) play a vital
role in promoting regional and, in some cases, statewide collaboration in addressing public needs that
cannot be effectively achieved by each local government agency acting on its own. These activities
include regional public improvements, local and statewide infrastructure for water and roadways,
emergency communications systems, law enforcement, fire protection, emergency medical services,
and public financing, among others.
We are deeply concerned that JPAs will no longer be a viable tool should AB 1912 become law.
WHAT DOES AB 1912 DO?
As amended, AB 1912 places substantial burdens and new unworkable requirements on local and state
agencies. It applies retroactive as well as prospective joint and several liability for all retirement related
obligations to any current or former member of a JPA since inception. Such obligations include active
employee normal pension costs, retiree unfunded accrued liabilities (UAL), as well as both active and
retiree healthcare and other post-employment retirement benefits (OPEBs). These costs cannot be
overstated.
Additionally, AB 1912 would mandate that a public retirement systems, like California Public Retirement
System (CalPERS), 37 Act System, or a city-based retirement systems file suit against all local or state
agencies that have ever been a member of a terminated JPA for all retirement related obligations. It also
prohibits any retirement system from approving a new JPA without a contract containing express joint
and several liability provisions.
The provisions set forth in AB 1912 create constitutional, fiscal, and operational challenges, which would
effectively eliminate the ability for local and state agencies to create or maintain the use of most JPA’s.
AB 1912 conflicts with the California Constitution:
o Debt Issuance without voter approval: The California constitutional debt limit prohibits
an agency from incurring indebtedness beyond the agency’s ability to pay the debt back
from revenues received in the same fiscal year without the approval of two-thirds of its
voters (Cal Const. art XVI, §18).
o Gift of Public Funds: Retroactively incurring debts of another agency violates article XVI,
§6 of the California Constitution which prohibits an agency from giving or lending public
funds to any person, public or private entity
The measure would hold all agencies of a JPA accountable for the investment shortfalls, future
discount rate reductions, and other assumptions changes made by the retirement agencies
even if the agencies are able to pay the lump sum amount of the current unfunded liability from
the JPA
AB 1912 gives exclusive authority to a retirement agency to unilaterally assign liabilities to all
current and former agencies of a JPA. This vague and ambiguous direction demonstrates a
fundamental misunderstanding of the formation, management and purpose of a JPA which will
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inevitability lead to a perpetual cycle of protracted and costly litigation contesting the
retirement agency’s discretion of proportional liability
ACTION:
AB 1912 (Rodriguez) has not been officially set but will likely be heard on April 18 in the Assembly
Public Employees, Retirement & Social Security Committee. Please send your CITY LETTERS of
OPPOSITION to AB 1912 as soon as possible. Although it would be helpful for all Assembly Members
to hear from their cities, it is critical for Assembly Members on the committee (roster below) to
receive letters from their cities. Sample opposition letter is attached and online through the League’s
Action Center.
ASSEMBLY PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL SECURITY
Member District Party Room Phone Fax
Allen, Travis (Vice-Chair) 72 R 4208 916 319 2072 916 319 2172
Brough, William 73 R 3141 916 319 2073 916 319 2173
Cervantes, Sabrina 60 D 5164 916 319 2060 916 319 2160
Cooley, Ken 8 D 3013 916 319 2008 916 319 2108
Cooper, Jim 9 D 6025 916 319 2009 916 319 2109
O'Donnell, Patrick 70 D 2196 916 319 2070 916 319 2170
Rodriguez, Freddie (Chair) 52 D 2188 916 319 2052 916 319 2152
You can also find your Legislator’s contact information here: http://findyourrep.legislature.ca.gov/.
Talking Points:
JPA’s play a vital role in addressing public needs that cannot be effectively achieved by a local
agency acting on its own
City/Town of __________ are deeply concerned that JPAs will no longer be a viable tool should
AB 1912 become law.
AB 1912 places substantial burdens and new unworkable requirements on cities by applying
retroactive as well as prospective joint and several liability for all retirement related
obligations to any current or former member of a JPA throughout its existence.
Liabilities include all retirement and healthcare costs associated with all current and former JPA
employees
The measure would mandate that a public retirement agency file suit against all agencies that
have ever been a member of a terminated JPA for all retirement related obligations including
attorney’s fees
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AMENDED IN ASSEMBLY MARCH 19, 2018
california legislature—2017–18 regular session
ASSEMBLY BILL No. 1912
Introduced by Assembly Member Rodriguez
January 23, 2018
An act to amend Section 20831 of the Government Code, relating to
retirement. 6508.1 of, to add Sections 6508.2, 20461.1, 20574.1, and
20575.1 to, and to repeal and add Section 20577.5 of, the Government
Code, and to amend Section 366.2 of the Public Utilities Code, relating
to public agencies, and making an appropriation therefor.
legislative counsel’s digest
AB 1912, as amended, Rodriguez. Public employees’ retirement.
retirement: joint powers agreements: liability.
(1) Existing law establishes various public agency retirement systems,
including, among others, the Public Employees’ Retirement System,
the State Teachers’ Retirement System, the Judges’ Retirement System
II, and various county retirement systems pursuant to the County
Employees Retirement Law of 1937. These systems provide defined
pension benefits to public employees based on age, service credit, and
amount of final compensation.
The Joint Exercise of Powers Act generally authorizes 2 or more
public agencies, by agreement, to jointly exercise any common power.
Under the act, if the agency is not one or more of the parties to the
agreement but is a public entity, commission, or board constituted
pursuant to the agreement, the debts, liabilities, and obligations of the
agency are the debts, liabilities, and obligations of the parties to the
agreement, unless the agreement specifies otherwise. Existing law also
permits a party to an agreement to separately contract for, or assume
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responsibilities for, specific debts, liabilities, or obligations of the
agency. Existing law, with respect to electrical loads, permits entities
authorized to be community choice aggregators to participate as a
group through a joint powers agency and to also specify in their joint
powers agreement that the debts, liabilities, and obligations of the
agency shall not be those of the members of the agency.
This bill would eliminate the above provisions within the Joint
Exercise of Powers Act and those related provisions for community
choice aggregators that permit an agreement between one or more
parties to specify otherwise as to their debts, liabilities, and obligations
and that permit a party to separately contract for those debts, liabilities,
or obligations.
The bill would additionally specify that if an agency to a joint powers
agreement participates in a public retirement system, all parties, both
current and former to the agreement, would be jointly and severally
liable for all obligations to the retirement system. The bill would also
provide that if a judgment is rendered against an agency or a party to
the agreement for a breach of its obligations to the retirement system,
the time within which a claim for injury may be presented or an action
commenced against the other party that is subject to the liability
determined by the judgment begins to run when the judgment is
rendered. The bill would specify that those provisions apply retroactively
to all parties, both current and former, to the joint powers agreement.
(2) The Public Employees’ Retirement Law (PERL) creates the Public
Employees’ Retirement System (PERS), which provides a defined benefit
to members of the system, based on final compensation, credited service,
and age at retirement, subject to certain variations. PERL vests
management and control of PERS in its Board of Administration. Under
PERL, the board may refuse to contract with, or to agree to an
amendment proposed by, any public agency for any benefit provisions
that are not specifically authorized by that law and that the board
determines would adversely affect the administration of the retirement
system.
This bill would prohibit the board from contracting with any public
agency formed under the Joint Exercise of Powers Act unless all the
parties to that agreement are jointly and severally liable for all of the
public agency’s obligation to the system. The bill would specify that
those provisions apply retroactively to all parties, both current and
former, to the agreement. The bill would also require any current
agreement that does not meet these requirements to be reopened to
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include a provision holding all member agencies party to the agreement
jointly and severally liable for all of the public agency’s obligations to
the system.
(3) Existing law authorizes the governing board of a contracting
agency to terminate its membership with PERS, subject to specified
criteria. Existing law requires the PERS board to enter into a specified
agreement with the governing body of a terminating agency, upon
request of that agency, to ensure that final compensation is calculated
in the same manner as benefits of nonterminating agencies, and that
related necessary adjustments in the employer’s contribution rate are
made and benefits adequately funded, including a lump-sum payment
at termination, if agreed to by the terminating agency and the board.
Existing law requires a terminating agency to notify the PERS board
of its intention to enter into this agreement within a specified period of
time. Existing law authorizes the PERS board to choose not to enter
into an agreement to terminate if the board determines that it is not in
the best interests of PERS. Existing law requires all plan assets and
liabilities of a terminating agency to be deposited in a single pooled
account, the terminated agency pool subaccount within the Public
Employees’ Retirement Fund, a continuously appropriated fund.
This bill would also require the PERS board to enter into the
above-described agreement upon request of a member agency of a
terminating agency formed under the Joint Exercise of Powers Act, and
would require a member agency to notify the PERS board of its intention
to enter into this agreement within a specified period of time. The bill
would authorize the board, if it determines that it is not in the best
interests of the retirement system, to choose not to enter into that
agreement. To the extent that the bill would increase any lump-sum
payments made by a terminating agency and deposited into a subaccount
within the Public Employees’ Retirement Fund, the bill would make an
appropriation. The bill would also provide that if the governing body
of a terminating agency or the governing bodies of its member agencies
do not enter into an agreement, the member agencies would then assume
the retirement obligations for their retirement systems, which the board
would be required to apportion equitably among the member agencies.
(4) Existing law makes a terminated agency liable to the system for
any deficit in funding for earned benefits, interest, and for reasonable
and necessary costs of collection, including attorney’s fees. Existing
law provides that the board has a lien on the assets of a terminated
contracting agency, as specified, and that assets shall also be available
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to pay actual costs, including attorney’s fees necessarily expended for
collection on the lien.
This bill would extend that liability and lien to all of the parties of a
terminating agency that was formed under the Joint Exercise of Powers
Act. The bill would specify that the liability of those parties is joint and
several. To the extent that these changes would increase deposits in the
Public Employees’ Retirement Fund, the bill would make an
appropriation.
(5) Existing law authorizes the board of PERS to elect not to impose
a reduction, or to impose a lesser reduction, on a terminated plan if
the board has made all reasonable efforts to collect the amount
necessary to fully fund the liabilities of the plan and the board finds
that not reducing the benefits, or imposing a lesser reduction, will not
impact the actuarial soundness of the terminated agency pool.
This bill would eliminate that provision. The bill would require the
board to bring a civil action against any member agencies to a
terminated agency formed by an agreement under the Joint Exercise
of Powers Act to compel payment of the terminated public agency’s
pension obligations. The bill would also specify that the board is entitled
to reasonable attorney’s fees in addition to other costs. The bill would
also set forth related legislative findings.
The Public Employees’ Retirement Law (PERL) establishes the Public
Employees’ Retirement System (PERS), which provides pension and
other benefits to members of PERS. Under PERL, certain public
employers and employees are required to contribute moneys to PERS.
Existing law prohibits the state, school employers, and contracting
agencies, as defined, from refusing to pay the employers’ contribution
as required by PERL.
This bill would make nonsubstantive changes to that provision.
Vote: majority. Appropriation: no yes. Fiscal committee: no
yes. State-mandated local program: no.
The people of the State of California do enact as follows:
line 1 SECTION 1. The Legislature finds and declares as follows:
line 2 (a) Retirement security is important to families, workers, and
line 3 communities, as well as to the local, regional, and statewide
line 4 economies, and provides financial security and dignity to those
line 5 who retire.
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line 1 (b) A defined benefit plan offers, among other types of retirement
line 2 plans, a guarantee of financial security in retirement.
line 3 (c) A Joint Power Authority (JPA) created pursuant to the Joint
line 4 Exercise of Powers Act (Chapter 5 (commencing with Section
line 5 6500) of Division 7 of Title 1 of the Government Code) provides
line 6 important services and benefits to its geographical areas and
line 7 communities.
line 8 (d) A JPA may offer a defined benefit plan to attract, recruit,
line 9 and retain highly skilled employees toward providing services and
line 10 fulfilling its purpose.
line 11 (e) Employees who have been promised a retirement allowance
line 12 and the other benefits of a defined benefit plan by their employer
line 13 should be provided those benefits after reaching the requisite age,
line 14 based on years of service and an established benefit formula, as
line 15 promised by that employer.
line 16 (f) Further, an employee who accepts employment with a JPA
line 17 employer that promises a defined benefit plan may detrimentally
line 18 rely on the retirement benefit, as committed by the employer, during
line 19 his or her employment and retirement from that employer.
line 20 (g) Moreover, a JPA might have limited sources of revenue,
line 21 and an inability to increase, or secure additional sources of
line 22 revenue, that may lead to financial distress or insolvency of the
line 23 JPA, absent the financial surety of its member agencies and for
line 24 the retirement benefits of the JPA’s employees.
line 25 (h) Additionally, employees who rely on a promise by a JPA
line 26 employer to provide retirement benefits by accepting and
line 27 maintaining employment with the employer based partly on the
line 28 employer’s promise may do so to their own retirement detriment.
line 29 (i) Thus, member agencies of a JPA should not be permitted to
line 30 absolve themselves of financial liability, in whole or in part, of the
line 31 financial distress or insolvency of a JPA that results in reductions
line 32 in a defined benefit plan retirement allowance of a retired JPA
line 33 employee, of which the agencies are members.
line 34 (j) Therefore, in order to ensure that the Board of Administration
line 35 of the Public Employees’ Retirement System is meeting its fiduciary
line 36 duties and responsibilities to its members and the system, the board
line 37 should be permitted to seek legal redress on behalf of its members
line 38 as a result of the financial insolvency of a JPA that contracts with
line 39 the retirement system if the financial distress or insolvency of the
line 40 JPA may result in a reduction of retirement benefits to its members.
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line 1 (k) Further, to ensure that the board is meeting its fiduciary
line 2 duties and responsibilities, both current and future contracts with
line 3 the retirement system by a JPA must include joint and several
line 4 liability provisions that apply to all agencies under the agreement
line 5 in order to protect the members of the retirement system against
line 6 financial insolvency.
line 7 SEC. 2. Section 6508.1 of the Government Code is amended
line 8 to read:
line 9 6508.1. If the agency is not one or more of the parties to the
line 10 agreement but is a public entity, commission, or board constituted
line 11 pursuant to the agreement, the debts, liabilities, and obligations of
line 12 the agency shall be debts, liabilities, and obligations of the parties
line 13 to the agreement, unless the agreement specifies otherwise.
line 14 agreement.
line 15 A party to the agreement may separately contract for, or assume
line 16 responsibility for, specific debts, liabilities, or obligations of the
line 17 agency.
line 18 SEC. 3. Section 6508.2 is added to the Government Code, to
line 19 read:
line 20 6508.2. (a) Notwithstanding Section 6508.1, if the agency
line 21 participates in a public retirement system, all parties, both current
line 22 and former, to the agreement, including all amendments thereto,
line 23 shall be jointly and severally liable for all obligations to the
line 24 retirement system.
line 25 (b) Notwithstanding any other law, if a judgment is rendered
line 26 against an agency or a party to the agreement for a breach to its
line 27 obligations to the public retirement system, the time within which
line 28 a claim for injury may be presented or an action commenced
line 29 against any other party that is subject to the liability determined
line 30 by the judgment begins to run when the judgment is rendered.
line 31 (c) This section shall apply retroactively to all parties, both
line 32 current and former, to the agreement.
line 33 SEC. 4. Section 20461.1 is added to the Government Code, to
line 34 read:
line 35 20461.1. (a) The board shall not contract with any public
line 36 agency formed by an agreement under Chapter 5 (commencing
line 37 with Section 6500) of Division 7 of Title 1 unless all the parties to
line 38 that agreement, including all amendments thereto, are jointly and
line 39 severally liable for all of the public agency’s obligations to this
line 40 system.
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line 1 (b) This section shall apply retroactively to all parties, both
line 2 current and former, to the agreement. Any current agreement
line 3 forming a public agency under Chapter 5 (commencing with
line 4 Section 6500) of Division 7 of Title 1 that does not meet the
line 5 requirements set forth in this section shall be reopened to include
line 6 a provision holding all member agencies party to the agreement
line 7 jointly and severally liable for all of the public agency’s obligations
line 8 to this system.
line 9 SEC. 5. Section 20574.1 is added to the Government Code, to
line 10 read:
line 11 20574.1. In lieu of the procedure set forth in Section 20574,
line 12 all parties to a terminating agency that was formed by an
line 13 agreement under Chapter 5 (commencing with Section 6500) of
line 14 Division 7 of Title 1 shall be jointly and severally liable to the
line 15 system for any deficit in funding for earned benefits, as determined
line 16 pursuant to Section 20577, interest at the actuarial rate from the
line 17 date of termination to the date the agency pays the system, and
line 18 reasonable and necessary costs of collection, including attorneys’
line 19 fees. The board shall have a lien on the assets of a terminated
line 20 contracting agency and on the assets of all parties to the
line 21 terminating contracting agency, subject only to a prior lien for
line 22 wages, in an amount equal to the actuarially determined deficit
line 23 in funding for earned benefits of the employee members of the
line 24 agency, interest, and collection costs. The assets shall also be
line 25 available to pay actual costs, including attorney’s fees, necessarily
line 26 expended for collection of the lien.
line 27 SEC. 6. Section 20575.1 is added to the Government Code, to
line 28 read:
line 29 20575.1. (a) Notwithstanding any other provision of this part
line 30 to the contrary, upon request of a terminating agency formed by
line 31 an agreement under Chapter 5 (commencing with Section 6500)
line 32 of Division 7 of Title 1 or of any member agency to the agreement,
line 33 the board shall enter into an agreement with the governing body
line 34 of a terminating agency or the governing body of the member
line 35 agency in order to ensure that (1) the final compensation used in
line 36 the calculation of benefits of its employees shall be calculated in
line 37 the same manner as the benefits of employees of agencies that are
line 38 not terminating, regardless of whether they retire directly from
line 39 employment with the terminating agency or continue in other public
line 40 service; and (2) related necessary adjustments in the employer’s
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line 1 contribution rate are made, from time to time, by the board prior
line 2 to the date of termination to ensure that benefits are adequately
line 3 funded or any other actuarially sound payment technique, including
line 4 a lump-sum payment at termination, is agreed to by the governing
line 5 body of the terminating agency and the board.
line 6 (b) A terminating agency formed by an agreement under Chapter
line 7 5 (commencing with Section 6500) of Division 7 of Title 1 that will
line 8 cease to exist or its member agency shall notify the board not
line 9 sooner than three years nor later than one year prior to the
line 10 terminating agency’s termination date of its intention to enter into
line 11 agreement pursuant to this section. The terms of the agreement
line 12 shall be reflected in an amendment to the agency’s contract with
line 13 the board.
line 14 (c) If the board, itself, determines that it is not in the best
line 15 interests of the system, it may choose not to enter into an agreement
line 16 pursuant to this section.
line 17 (d) If the governing body of a terminating agency formed by an
line 18 agreement under Chapter 5 (commencing with Section 6500) of
line 19 Division 7 of Title 1 or the governing bodies of its member agencies
line 20 do not enter into an agreement pursuant to this section, the member
line 21 agencies shall assume the retirement obligations on their
line 22 retirement systems. The board shall apportion the obligations
line 23 among the member agencies in an equitable manner.
line 24 SEC. 7. Section 20577.5 of the Government Code is repealed.
line 25 20577.5. Notwithstanding Section 20577, the board may elect
line 26 not to impose a reduction, or to impose a lesser reduction, on a
line 27 plan that has been terminated pursuant to Section 20572 if (a) the
line 28 board has made all reasonable efforts to collect the amount
line 29 necessary to fully fund the liabilities of the plan and (b) the board
line 30 finds that not reducing the benefits, or imposing a lesser reduction,
line 31 will not impact the actuarial soundness of the terminated agency
line 32 pool.
line 33 SEC. 8. Section 20577.5 is added to the Government Code, to
line 34 read:
line 35 20577.5. The board shall bring a civil action against any and
line 36 all of the member agencies that are parties to a terminated agency
line 37 formed by an agreement under Chapter 5 (commencing with
line 38 Section 6500) of Division 7 of Title 1 to compel payment of the
line 39 terminated agency’s pension obligations, and shall be entitled to
line 40 reasonable attorneys’ fees in addition to other costs.
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line 1 SEC. 9. Section 366.2 of the Public Utilities Code is amended
line 2 to read:
line 3 366.2. (a) (1) Customers shall be entitled to aggregate their
line 4 electric loads as members of their local community with
line 5 community choice aggregators.
line 6 (2) Customers may aggregate their loads through a public
line 7 process with community choice aggregators, if each customer is
line 8 given an opportunity to opt out of his or her community’s
line 9 aggregation program.
line 10 (3) If a customer opts out of a community choice aggregator’s
line 11 program, or has no community choice aggregation program
line 12 available, that customer shall have the right to continue to be served
line 13 by the existing electrical corporation or its successor in interest.
line 14 (4) The implementation of a community choice aggregation
line 15 program shall not result in a shifting of costs between the customers
line 16 of the community choice aggregator and the bundled service
line 17 customers of an electrical corporation.
line 18 (5) A community choice aggregator shall be solely responsible
line 19 for all generation procurement activities on behalf of the
line 20 community choice aggregator’s customers, except where other
line 21 generation procurement arrangements are expressly authorized by
line 22 statute.
line 23 (b) If a public agency seeks to serve as a community choice
line 24 aggregator, it shall offer the opportunity to purchase electricity to
line 25 all residential customers within its jurisdiction.
line 26 (c) (1) Notwithstanding Section 366, a community choice
line 27 aggregator is hereby authorized to aggregate the electrical load of
line 28 interested electricity consumers within its boundaries to reduce
line 29 transaction costs to consumers, provide consumer protections, and
line 30 leverage the negotiation of contracts. However, the community
line 31 choice aggregator may not aggregate electrical load if that load is
line 32 served by a local publicly owned electric utility. A community
line 33 choice aggregator may group retail electricity customers to solicit
line 34 bids, broker, and contract for electricity and energy services for
line 35 those customers. The community choice aggregator may enter into
line 36 agreements for services to facilitate the sale and purchase of
line 37 electricity and other related services. Those service agreements
line 38 may be entered into by an entity authorized to be a community
line 39 choice aggregator, as defined in Section 331.1.
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line 1 (2) Under community choice aggregation, customer participation
line 2 may not require a positive written declaration, but each customer
line 3 shall be informed of his or her right to opt out of the community
line 4 choice aggregation program. If no negative declaration is made
line 5 by a customer, that customer shall be served through the
line 6 community choice aggregation program. If an existing customer
line 7 moves the location of his or her electric service within the
line 8 jurisdiction of the community choice aggregator, the customer
line 9 shall retain the same subscriber status as prior to the move, unless
line 10 the customer affirmatively changes his or her subscriber status. If
line 11 the customer is moving from outside to inside the jurisdiction of
line 12 the community choice aggregator, customer participation shall not
line 13 require a positive written declaration, but the customer shall be
line 14 informed of his or her right to elect not to receive service through
line 15 the community choice aggregator.
line 16 (3) A community choice aggregator establishing electrical load
line 17 aggregation pursuant to this section shall develop an
line 18 implementation plan detailing the process and consequences of
line 19 aggregation. The implementation plan, and any subsequent changes
line 20 to it, shall be considered and adopted at a duly noticed public
line 21 hearing. The implementation plan shall contain all of the following:
line 22 (A) An organizational structure of the program, its operations,
line 23 and its funding.
line 24 (B) Ratesetting and other costs to participants.
line 25 (C) Provisions for disclosure and due process in setting rates
line 26 and allocating costs among participants.
line 27 (D) The methods for entering and terminating agreements with
line 28 other entities.
line 29 (E) The rights and responsibilities of program participants,
line 30 including, but not limited to, consumer protection procedures,
line 31 credit issues, and shutoff procedures.
line 32 (F) Termination of the program.
line 33 (G) A description of the third parties that will be supplying
line 34 electricity under the program, including, but not limited to,
line 35 information about financial, technical, and operational capabilities.
line 36 (4) A community choice aggregator establishing electrical load
line 37 aggregation shall prepare a statement of intent with the
line 38 implementation plan. Any community choice load aggregation
line 39 established pursuant to this section shall provide for the following:
line 40 (A) Universal access.
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line 1 (B) Reliability.
line 2 (C) Equitable treatment of all classes of customers.
line 3 (D) Any requirements established by state law or by the
line 4 commission concerning aggregated service, including those rules
line 5 adopted by the commission pursuant to paragraph (3) of
line 6 subdivision (b) of Section 8341 for the application of the
line 7 greenhouse gases emission performance standard to community
line 8 choice aggregators.
line 9 (5) In order to determine the cost-recovery mechanism to be
line 10 imposed on the community choice aggregator pursuant to
line 11 subdivisions (d), (e), and (f) that shall be paid by the customers of
line 12 the community choice aggregator to prevent shifting of costs, the
line 13 community choice aggregator shall file the implementation plan
line 14 with the commission, and any other information requested by the
line 15 commission that the commission determines is necessary to develop
line 16 the cost-recovery mechanism in subdivisions (d), (e), and (f).
line 17 (6) The commission shall notify any electrical corporation
line 18 serving the customers proposed for aggregation that an
line 19 implementation plan initiating community choice aggregation has
line 20 been filed, within 10 days of the filing.
line 21 (7) Within 90 days after the community choice aggregator
line 22 establishing load aggregation files its implementation plan, the
line 23 commission shall certify that it has received the implementation
line 24 plan, including any additional information necessary to determine
line 25 a cost-recovery mechanism. After certification of receipt of the
line 26 implementation plan and any additional information requested,
line 27 the commission shall then provide the community choice
line 28 aggregator with its findings regarding any cost recovery that must
line 29 be paid by customers of the community choice aggregator to
line 30 prevent a shifting of costs as provided for in subdivisions (d), (e),
line 31 and (f).
line 32 (8) No entity proposing community choice aggregation shall
line 33 act to furnish electricity to electricity consumers within its
line 34 boundaries until the commission determines the cost recovery that
line 35 must be paid by the customers of that proposed community choice
line 36 aggregation program, as provided for in subdivisions (d), (e), and
line 37 (f). The commission shall designate the earliest possible effective
line 38 date for implementation of a community choice aggregation
line 39 program, taking into consideration the impact on any annual
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line 1 procurement plan of the electrical corporation that has been
line 2 approved by the commission.
line 3 (9) All electrical corporations shall cooperate fully with any
line 4 community choice aggregators that investigate, pursue, or
line 5 implement community choice aggregation programs. Cooperation
line 6 shall include providing the entities with appropriate billing and
line 7 electrical load data, including, but not limited to, electrical
line 8 consumption data as defined in Section 8380 and other data
line 9 detailing electricity needs and patterns of usage, as determined by
line 10 the commission, and in accordance with procedures established
line 11 by the commission. The commission shall exercise its authority
line 12 pursuant to Chapter 11 (commencing with Section 2100) to enforce
line 13 the requirements of this paragraph when it finds that the
line 14 requirements of this paragraph have been violated. Electrical
line 15 corporations shall continue to provide all metering, billing,
line 16 collection, and customer service to retail customers that participate
line 17 in community choice aggregation programs. Bills sent by the
line 18 electrical corporation to retail customers shall identify the
line 19 community choice aggregator as providing the electrical energy
line 20 component of the bill. The commission shall determine the terms
line 21 and conditions under which the electrical corporation provides
line 22 services to community choice aggregators and retail customers.
line 23 (10) If the commission finds that an electrical corporation has
line 24 violated this section, the commission shall consider the impact of
line 25 the violation upon community choice aggregators.
line 26 (11) The commission shall proactively expedite the complaint
line 27 process for disputes regarding an electrical corporation’s violation
line 28 of its obligations pursuant to this section in order to provide for
line 29 timely resolution of complaints made by community choice
line 30 aggregation programs, so that all complaints are resolved in no
line 31 more than 180 days following the filing of a complaint by a
line 32 community choice aggregation program concerning the actions of
line 33 the incumbent electrical corporation. This deadline may only be
line 34 extended under either of the following circumstances:
line 35 (A) Upon agreement of all of the parties to the complaint.
line 36 (B) The commission makes a written determination that the
line 37 deadline cannot be met, including findings for the reason for this
line 38 determination, and issues an order extending the deadline. A single
line 39 order pursuant to this subparagraph shall not extend the deadline
line 40 for more than 60 days.
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line 1 (12) (A) An entity authorized to be a community choice
line 2 aggregator, as defined in Section 331.1, that elects to implement
line 3 a community choice aggregation program within its jurisdiction
line 4 pursuant to this chapter, shall do so by ordinance. A city, county,
line 5 or city and county may request, by affirmative resolution of its
line 6 governing council or board, that another entity authorized to be a
line 7 community choice aggregator act as the community choice
line 8 aggregator on its behalf. If a city, county, or city and county, by
line 9 resolution, requests another authorized entity be the community
line 10 choice aggregator for the city, county, or city and county, that
line 11 authorized entity shall be responsible for adopting the ordinance
line 12 to implement the community choice aggregation program on behalf
line 13 of the city, county, or city and county.
line 14 (B) Two or more entities authorized to be a community choice
line 15 aggregator, as defined in Section 331.1, may participate as a group
line 16 in a community choice aggregation program pursuant to this
line 17 chapter, through a joint powers agency established pursuant to
line 18 Chapter 5 (commencing with Section 6500) of Division 7 of Title
line 19 1 of the Government Code, if each entity adopts an ordinance
line 20 pursuant to subparagraph (A). Pursuant to Section 6508.1 of the
line 21 Government Code, members of a joint powers agency that is a
line 22 community choice aggregator may specify in their joint powers
line 23 agreement that, unless otherwise agreed by the members of the
line 24 agency, the debts, liabilities, and obligations of the agency shall
line 25 not be the debts, liabilities, and obligations, either jointly or
line 26 severally, of the members of the agency. The commission shall
line 27 not, as a condition of registration or otherwise, require an agency’s
line 28 members to voluntarily assume the debts, liabilities, and obligations
line 29 of the agency to the electrical corporation unless the commission
line 30 finds that the agreement by the agency’s members is the only
line 31 reasonable means by which the agency may establish its
line 32 creditworthiness under the electrical corporation’s tariff to pay
line 33 charges to the electrical corporation under the tariff.
line 34 (13) Following adoption of aggregation through the ordinance
line 35 described in paragraph (12), the program shall allow any retail
line 36 customer to opt out and to continue to be served as a bundled
line 37 service customer by the existing electrical corporation, or its
line 38 successor in interest. Delivery services shall be provided at the
line 39 same rates, terms, and conditions, as approved by the commission,
line 40 for community choice aggregation customers and customers that
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line 1 have entered into a direct transaction where applicable, as
line 2 determined by the commission. Once enrolled in the aggregated
line 3 entity, any ratepayer that chooses to opt out within 60 days or two
line 4 billing cycles of the date of enrollment may do so without penalty
line 5 and shall be entitled to receive default service pursuant to paragraph
line 6 (3) of subdivision (a). Customers that return to the electrical
line 7 corporation for procurement services shall be subject to the same
line 8 terms and conditions as are applicable to other returning direct
line 9 access customers from the same class, as determined by the
line 10 commission, as authorized by the commission pursuant to this
line 11 code or any other provision of law, except that those customers
line 12 shall be subject to no more than a 12-month stay requirement with
line 13 the electrical corporation. Any reentry fees to be imposed after the
line 14 opt-out period specified in this paragraph, shall be approved by
line 15 the commission and shall reflect the cost of reentry. The
line 16 commission shall exclude any amounts previously determined and
line 17 paid pursuant to subdivisions (d), (e), and (f) from the cost of
line 18 reentry.
line 19 (14) Nothing in this section shall be construed as authorizing
line 20 any city or any community choice retail load aggregator to restrict
line 21 the ability of retail electricity customers to obtain or receive service
line 22 from any authorized electric service provider in a manner consistent
line 23 with law.
line 24 (15) (A) The community choice aggregator shall fully inform
line 25 participating customers at least twice within two calendar months,
line 26 or 60 days, in advance of the date of commencing automatic
line 27 enrollment. Notifications may occur concurrently with billing
line 28 cycles. Following enrollment, the aggregated entity shall fully
line 29 inform participating customers for not less than two consecutive
line 30 billing cycles. Notification may include, but is not limited to, direct
line 31 mailings to customers, or inserts in water, sewer, or other utility
line 32 bills. Any notification shall inform customers of both of the
line 33 following:
line 34 (i) That they are to be automatically enrolled and that the
line 35 customer has the right to opt out of the community choice
line 36 aggregator without penalty.
line 37 (ii) The terms and conditions of the services offered.
line 38 (B) The community choice aggregator may request the
line 39 commission to approve and order the electrical corporation to
line 40 provide the notification required in subparagraph (A). If the
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line 1 commission orders the electrical corporation to send one or more
line 2 of the notifications required pursuant to subparagraph (A) in the
line 3 electrical corporation’s normally scheduled monthly billing
line 4 process, the electrical corporation shall be entitled to recover from
line 5 the community choice aggregator all reasonable incremental costs
line 6 it incurs related to the notification or notifications. The electrical
line 7 corporation shall fully cooperate with the community choice
line 8 aggregator in determining the feasibility and costs associated with
line 9 using the electrical corporation’s normally scheduled monthly
line 10 billing process to provide one or more of the notifications required
line 11 pursuant to subparagraph (A).
line 12 (C) Each notification shall also include a mechanism by which
line 13 a ratepayer may opt out of community choice aggregated service.
line 14 The opt out may take the form of a self-addressed return postcard
line 15 indicating the customer’s election to remain with, or return to,
line 16 electrical energy service provided by the electrical corporation, or
line 17 another straightforward means by which the customer may elect
line 18 to derive electrical energy service through the electrical corporation
line 19 providing service in the area.
line 20 (16) A community choice aggregator shall have an operating
line 21 service agreement with the electrical corporation prior to furnishing
line 22 electric service to consumers within its jurisdiction. The service
line 23 agreement shall include performance standards that govern the
line 24 business and operational relationship between the community
line 25 choice aggregator and the electrical corporation. The commission
line 26 shall ensure that any service agreement between the community
line 27 choice aggregator and the electrical corporation includes equitable
line 28 responsibilities and remedies for all parties. The parties may
line 29 negotiate specific terms of the service agreement, provided that
line 30 the service agreement is consistent with this chapter.
line 31 (17) The community choice aggregator shall register with the
line 32 commission, which may require additional information to ensure
line 33 compliance with basic consumer protection rules and other
line 34 procedural matters.
line 35 (18) Once the community choice aggregator’s contract is signed,
line 36 the community choice aggregator shall notify the applicable
line 37 electrical corporation that community choice service will
line 38 commence within 30 days.
line 39 (19) Once notified of a community choice aggregator program,
line 40 the electrical corporation shall transfer all applicable accounts to
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line 1 the new supplier within a 30-day period from the date of the close
line 2 of the electrical corporation’s normally scheduled monthly
line 3 metering and billing process.
line 4 (20) An electrical corporation shall recover from the community
line 5 choice aggregator any costs reasonably attributable to the
line 6 community choice aggregator, as determined by the commission,
line 7 of implementing this section, including, but not limited to, all
line 8 business and information system changes, except for
line 9 transaction-based costs as described in this paragraph. Any costs
line 10 not reasonably attributable to a community choice aggregator shall
line 11 be recovered from ratepayers, as determined by the commission.
line 12 All reasonable transaction-based costs of notices, billing, metering,
line 13 collections, and customer communications or other services
line 14 provided to an aggregator or its customers shall be recovered from
line 15 the aggregator or its customers on terms and at rates to be approved
line 16 by the commission.
line 17 (21) At the request and expense of any community choice
line 18 aggregator, electrical corporations shall install, maintain, and
line 19 calibrate metering devices at mutually agreeable locations within
line 20 or adjacent to the community choice aggregator’s political
line 21 boundaries. The electrical corporation shall read the metering
line 22 devices and provide the data collected to the community choice
line 23 aggregator at the aggregator’s expense. To the extent that the
line 24 community choice aggregator requests a metering location that
line 25 would require alteration or modification of a circuit, the electrical
line 26 corporation shall only be required to alter or modify a circuit if
line 27 such alteration or modification does not compromise the safety,
line 28 reliability, or operational flexibility of the electrical corporation’s
line 29 facilities. All costs incurred to modify circuits pursuant to this
line 30 paragraph, shall be borne by the community choice aggregator.
line 31 (d) (1) It is the intent of the Legislature that each retail end-use
line 32 customer that has purchased power from an electrical corporation
line 33 on or after February 1, 2001, should bear a fair share of the
line 34 Department of Water Resources’ electricity purchase costs, as well
line 35 as electricity purchase contract obligations incurred as of the
line 36 effective date of the act adding this section, that are recoverable
line 37 from electrical corporation customers in commission-approved
line 38 rates. It is further the intent of the Legislature to prevent any
line 39 shifting of recoverable costs between customers.
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line 1 (2) The Legislature finds and declares that this subdivision is
line 2 consistent with the requirements of Division 27 (commencing with
line 3 Section 80000) of the Water Code and Section 360.5 of this code,
line 4 and is therefore declaratory of existing law.
line 5 (e) A retail end-use customer that purchases electricity from a
line 6 community choice aggregator pursuant to this section shall pay
line 7 both of the following:
line 8 (1) A charge equivalent to the charges that would otherwise be
line 9 imposed on the customer by the commission to recover
line 10 bond-related costs pursuant to any agreement between the
line 11 commission and the Department of Water Resources pursuant to
line 12 Section 80110 of the Water Code, which charge shall be payable
line 13 until any obligations of the Department of Water Resources
line 14 pursuant to Division 27 (commencing with Section 80000) of the
line 15 Water Code are fully paid or otherwise discharged.
line 16 (2) Any additional costs of the Department of Water Resources,
line 17 equal to the customer’s proportionate share of the Department of
line 18 Water Resources’ estimated net unavoidable electricity purchase
line 19 contract costs as determined by the commission, for the period
line 20 commencing with the customer’s purchases of electricity from the
line 21 community choice aggregator, through the expiration of all then
line 22 existing electricity purchase contracts entered into by the
line 23 Department of Water Resources.
line 24 (f) A retail end-use customer purchasing electricity from a
line 25 community choice aggregator pursuant to this section shall
line 26 reimburse the electrical corporation that previously served the
line 27 customer for all of the following:
line 28 (1) The electrical corporation’s unrecovered past
line 29 undercollections for electricity purchases, including any financing
line 30 costs, attributable to that customer, that the commission lawfully
line 31 determines may be recovered in rates.
line 32 (2) Any additional costs of the electrical corporation recoverable
line 33 in commission-approved rates, equal to the share of the electrical
line 34 corporation’s estimated net unavoidable electricity purchase
line 35 contract costs attributable to the customer, as determined by the
line 36 commission, for the period commencing with the customer’s
line 37 purchases of electricity from the community choice aggregator,
line 38 through the expiration of all then existing electricity purchase
line 39 contracts entered into by the electrical corporation.
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line 1 (g) Estimated net unavoidable electricity costs paid by the
line 2 customers of a community choice aggregator shall be reduced by
line 3 the value of any benefits that remain with bundled service
line 4 customers, unless the customers of the community choice
line 5 aggregator are allocated a fair and equitable share of those benefits.
line 6 (h) (1) Any charges imposed pursuant to subdivision (e) shall
line 7 be the property of the Department of Water Resources. Any charges
line 8 imposed pursuant to subdivision (f) shall be the property of the
line 9 electrical corporation. The commission shall establish mechanisms,
line 10 including agreements with, or orders with respect to, electrical
line 11 corporations necessary to ensure that charges payable pursuant to
line 12 this section shall be promptly remitted to the party entitled to
line 13 payment.
line 14 (2) Charges imposed pursuant to subdivisions (d), (e), and (f)
line 15 shall be nonbypassable.
line 16 (i) The commission shall authorize community choice
line 17 aggregation only if the commission imposes a cost-recovery
line 18 mechanism pursuant to subdivisions (d), (e), (f), and (h). Except
line 19 as provided by this subdivision, this section shall not alter the
line 20 suspension by the commission of direct purchases of electricity
line 21 from alternate providers other than by community choice
line 22 aggregators, pursuant to Section 365.1.
line 23 (j) (1) The commission shall not authorize community choice
line 24 aggregation until it implements a cost-recovery mechanism,
line 25 consistent with subdivisions (d), (e), and (f), that is applicable to
line 26 customers that elected to purchase electricity from an alternate
line 27 provider between February 1, 2001, and January 1, 2003.
line 28 (2) The commission shall not authorize community choice
line 29 aggregation until it has adopted rules for implementing community
line 30 choice aggregation.
line 31 (k) (1) Except for nonbypassable charges imposed by the
line 32 commission pursuant to subdivisions (d), (e), (f), and (h), and
line 33 programs authorized by the commission to provide broader
line 34 statewide or regional benefits to all customers, electric service
line 35 customers of a community choice aggregator shall not be required
line 36 to pay nonbypassable charges for goods, services, or programs
line 37 that do not benefit either, or where applicable, both, the customer
line 38 and the community choice aggregator serving the customer.
line 39 (2) The commission, Energy Commission, electrical corporation,
line 40 or third-party administrator shall administer any program funded
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line 1 through a nonbypassable charge on a nondiscriminatory basis so
line 2 that the electric service customers of a community choice
line 3 aggregator may participate in the program on an equal basis with
line 4 the customers of an electrical corporation.
line 5 (3) Nothing in this subdivision is intended to modify, or prohibit
line 6 the use of, charges funding programs for the benefit of low-income
line 7 customers.
line 8 (l) (1) An electrical corporation shall not terminate the services
line 9 of a community choice aggregator unless authorized by a vote of
line 10 the full commission. The commission shall ensure that prior to
line 11 authorizing a termination of service, that the community choice
line 12 aggregator has been provided adequate notice and a reasonable
line 13 opportunity to be heard regarding any electrical corporation
line 14 contentions in support of termination. If the contentions made by
line 15 the electrical corporation in favor of termination include factual
line 16 claims, the community choice aggregator shall be afforded an
line 17 opportunity to address those claims in an evidentiary hearing.
line 18 (2) Notwithstanding paragraph (1), if the Independent System
line 19 Operator has transferred the community choice aggregator’s
line 20 scheduling coordination responsibilities to the incumbent electrical
line 21 corporation, an administrative law judge or assigned commissioner,
line 22 after providing the aggregator with notice and an opportunity to
line 23 respond, may suspend the aggregator’s service to customers
line 24 pending a full vote of the commission.
line 25 (m) Any meeting of an entity authorized to be a community
line 26 choice aggregator, as defined in Section 331.1, for the purpose of
line 27 developing, implementing, or administering a program of
line 28 community choice aggregation shall be conducted in the manner
line 29 prescribed by the Ralph M. Brown Act (Chapter 9 (commencing
line 30 with Section 54950) of Part 1 of Division 2 of Title 5 of the
line 31 Government Code).
line 32 SECTION 1. Section 20831 of the Government Code is
line 33 amended to read:
line 34 20831. Notwithstanding any other provision of law, neither
line 35 the state, a school employer, nor a contracting agency shall fail or
line 36 refuse to pay the employers’ contribution required by this chapter
line 37 or to pay the employers’ contributions required by this chapter
line 38 within the applicable time limitations.
O
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