1. 2008 Legislative Wrap Up With Governor’s Actions Pamela C. Loomis Director, Office of Governmental Affairs October 2, 2008 C ALIFORNIA P UBLIC U TILITIES C OMMISSION

2. 2008 Legislative Wrap Up CPUC Legislative Batting Average CPUC Legislative Batting Average Of the 47 bills on which the Commission took a formal position, 25 made it to the Governor’s desk. Of the 47 bills on which the Commission took a formal position, 25 made it to the Governor’s desk. The Commission supported 21 of the 25: The Commission supported 21 of the 25: Of those, the Governor signed 19 and vetoed 2. Of those, the Governor signed 19 and vetoed 2. The Commission opposed 4 of the 25: The Commission opposed 4 of the 25: Of those, the Governor signed 2 and vetoed 2. Of those, the Governor signed 2 and vetoed 2. And the Governor signed both of the Commission’s sponsored bills. And the Governor signed both of the Commission’s sponsored bills.

3. 2008 Legislative Wrap Up CPUC Sponsored Legislation CPUC Sponsored Legislation Assembly Bill 2578 (Lieu) – Collections process – SIGNED Assembly Bill 2578 (Lieu) – Collections process – SIGNED Gives Commission judgment creditor status until 2014 Gives Commission judgment creditor status until 2014 Allows the Commission to use the Fraudulent Transfer Act to recover unpaid penalties and fines until 2014 Allows the Commission to use the Fraudulent Transfer Act to recover unpaid penalties and fines until 2014 Requires the Commission to report to the Legislature on whether these legal tools improved the collections process prior to 2014 Requires the Commission to report to the Legislature on whether these legal tools improved the collections process prior to 2014 Senate Bill 1193 (Padilla) – CA Advanced Services Fund – SIGNED Senate Bill 1193 (Padilla) – CA Advanced Services Fund – SIGNED Creates the CASF in the State Treasury and requires progress reports to the Legislature Creates the CASF in the State Treasury and requires progress reports to the Legislature Will allow 40% infrastructure grants to bring broadband service to unserved and underserved areas Will allow 40% infrastructure grants to bring broadband service to unserved and underserved areas

4. 2008 Legislative Wrap Up ENERGY BILLS Senate Bill 380 (Kehoe) – Feed-in Tariffs – SIGNED Senate Bill 380 (Kehoe) – Feed-in Tariffs – SIGNED Small renewables Feed in Tariff (FiT)--expand and codify CPUC implementation of AB 1969(Yee, 2006) Small renewables Feed in Tariff (FiT)--expand and codify CPUC implementation of AB 1969(Yee, 2006) SB 380 expands and codifies CPUC implementation of the small renewables feed in tariff to ensure that SDGE is required to offer FiT SB 380 expands and codifies CPUC implementation of the small renewables feed in tariff to ensure that SDGE is required to offer FiT Senate Bill 980 (Padilla) – Muni T&D System – VETOED Senate Bill 980 (Padilla) – Muni T&D System – VETOED Would have required the CEC, in consultation with the CPUC, to evaluate the adequacy of the electric distribution system of certain munis. Would have required the CEC, in consultation with the CPUC, to evaluate the adequacy of the electric distribution system of certain munis. This bill was introduced in response to the 2007 summer blackouts in LADWP’s territory. This bill was introduced in response to the 2007 summer blackouts in LADWP’s territory.

5. 2008 Legislative Wrap Up ENERGY BILLS Assembly Bill 1763 (Blakeslee) - SIGNED Energy billing information Energy billing information Requires each electrical corporation and gas corporation to disclose information on usage and cost on the residential customer’s billing statement Requires each electrical corporation and gas corporation to disclose information on usage and cost on the residential customer’s billing statement Authorizes the Commission to adjust, modify or add to the requirements if merited Authorizes the Commission to adjust, modify or add to the requirements if merited Assembly Bill 2267 (Fuentes) - SIGNED Additional incentive for CA based entities in SGIP Additional incentive for CA based entities in SGIP Requires CPUC to provide an additional incentive of 20% for the installation of eligible technologies from a California supplier Requires CPUC to provide an additional incentive of 20% for the installation of eligible technologies from a California supplier Assembly Bill 2269 (Fuentes) - VETOED Would have allowed CSI funds to be used for muni-owned solar generation Would have allowed CSI funds to be used for muni-owned solar generation LADWP was seeking to use CSI funds for utility owned solar generation LADWP was seeking to use CSI funds for utility owned solar generation Would have opened the program to other POUs and the IOUs seeking the same treatment Would have opened the program to other POUs and the IOUs seeking the same treatment

6. 2008 Legislative Wrap Up ENERGY BILLS Assembly Bill 2309 (DeSaulnier) - VETOED Energy Efficiency Audits Energy Efficiency Audits AB 2309 would have required the PUC to determine whether or not to require IOUs to hold in-home owner-requested EE audits; and then determine which EE audit measures were taken and to report the EE savings to the legislature AB 2309 would have required the PUC to determine whether or not to require IOUs to hold in-home owner-requested EE audits; and then determine which EE audit measures were taken and to report the EE savings to the legislature Assembly Bill 2466 (Laird) - SIGNED Local government renewable energy self-generation program Local government renewable energy self-generation program Authorizes a local government to receive a bill credit to a designated benefitting account for electricity exported to the grid by an eligible renewable generating facility Authorizes a local government to receive a bill credit to a designated benefitting account for electricity exported to the grid by an eligible renewable generating facility Requires the commission to adopt a rate tariff for the benefitting account Requires the commission to adopt a rate tariff for the benefitting account

7. 2008 Legislative Wrap up ENERGY BILLS Assembly Bill 2863 (Leno) - SIGNED Third party solar generators Third party solar generators Exempts independent solar energy producers (PPA or third party generators) from the definition of “electrical corporation” Exempts independent solar energy producers (PPA or third party generators) from the definition of “electrical corporation” Requires independent solar energy producers to provide certain disclosures at the sale or lease to a residential customer; requires all contracts for residential systems be made available at the request of the CPUC; imposes civil liabilities for violation of such contracts Requires independent solar energy producers to provide certain disclosures at the sale or lease to a residential customer; requires all contracts for residential systems be made available at the request of the CPUC; imposes civil liabilities for violation of such contracts Assembly Bill 3058 (Asm U&C) - SIGNED DWR electricity contracts DWR electricity contracts Requires DWR to provide the Commission a written report justifying proposed modifications to existing contracts; the Commission has to review the report and recommend for or against the modification within 60 days Requires DWR to provide the Commission a written report justifying proposed modifications to existing contracts; the Commission has to review the report and recommend for or against the modification within 60 days DWR is not be allowed to modify the contract if the Commission recommends against it DWR is not be allowed to modify the contract if the Commission recommends against it

8. 2008 Legislative Wrap up TELCO BILLS Senate Bill 780 (Wiggins) - SIGNED High Cost Funds A and B High Cost Funds A and B Extends the sunset dates for both HCF A and B Extends the sunset dates for both HCF A and B Requires the Commission to conduct an affordability study of basic phone service in the areas subsidized by HCF B and report to the Legislature by July 1, 2010 Requires the Commission to conduct an affordability study of basic phone service in the areas subsidized by HCF B and report to the Legislature by July 1, 2010 Senate Bill 1149 (Wiggins) - SIGNED Rural Telco Infrastructure Grants Rural Telco Infrastructure Grants Extends the program’s sunset date until January 1, 2013 Extends the program’s sunset date until January 1, 2013 Provides that no more than $40 million be encumbered from the fund during the four year period ending on December 31, 2012 Provides that no more than $40 million be encumbered from the fund during the four year period ending on December 31, 2012 Increases single grants from $2.5 million max to $5 million max Increases single grants from $2.5 million max to $5 million max

9. 2008 Legislative Wrap up RAIL BILLS Senate Bill 53 (Ducheny) - SIGNED Department of Railroads Department of Railroads Would have stripped the Commission and Caltrans of their railroad oversight authority and transferred it to a newly created Department of Railroads Would have stripped the Commission and Caltrans of their railroad oversight authority and transferred it to a newly created Department of Railroads Instead, requires the CA Research Bureau to study the feasibility and desirability of taking such action, and report its findings to the Legislature by May 1, 2009 Instead, requires the CA Research Bureau to study the feasibility and desirability of taking such action, and report its findings to the Legislature by May 1, 2009 Assembly Bill 660 (Galgiani) - SIGNED Railroad-highway grade separation program Railroad-highway grade separation program Streamlines the current grade separation program by removing obsolete code sections and rarely used allocation categories Streamlines the current grade separation program by removing obsolete code sections and rarely used allocation categories

10. 2008 Legislative Wrap up MISC BILLS Senate Bill 1762 (Perata) - VETOED CA Climate Change Institute CA Climate Change Institute Would have created the Institute within the UC system, with legislative oversight through annual budget appropriations, and specifies a leadership council of which the President of the PUC is a member Would have created the Institute within the UC system, with legislative oversight through annual budget appropriations, and specifies a leadership council of which the President of the PUC is a member Funding for the Institute would have been $49 million annually - $30M through a CPUC-imposed surcharge, $7M from muni ratepayers, and $12M from the natural gas PIER funds Funding for the Institute would have been $49 million annually - $30M through a CPUC-imposed surcharge, $7M from muni ratepayers, and $12M from the natural gas PIER funds Assembly Bill 1338 (Asm Budget) - SIGNED Resources budget trailer bill Resources budget trailer bill Prohibits the Commission from implementing the California Institute for Climate Solutions or any similar order or decision without express legislative authorization Prohibits the Commission from implementing the California Institute for Climate Solutions or any similar order or decision without express legislative authorization

11. 2008 Legislative Wrap up MISC BILLS Senate Bill 1772 (Senate Rules) - SIGNED Behested Payments Behested Payments Requires CPUC commissioners to report payments made at their behest for $5,000 or more in the aggregate from the same source in the same calendar year to the Fair Political Practices Commission Requires CPUC commissioners to report payments made at their behest for $5,000 or more in the aggregate from the same source in the same calendar year to the Fair Political Practices Commission The amount or frequency of behested payments, or a Commissioner’s ability to solicit them, is not limited The amount or frequency of behested payments, or a Commissioner’s ability to solicit them, is not limited Assembly Bill 2885 (De La Torre) - SIGNED Prepaid calling cards Prepaid calling cards Authorizes the Commission to enforce the standards and requirements of the Business & Professions Code for consumer disclosure and services applicable to sellers of prepaid calling cards and services Authorizes the Commission to enforce the standards and requirements of the Business & Professions Code for consumer disclosure and services applicable to sellers of prepaid calling cards and services