California Energy Bond Office
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Pacific Gas and Electric Company works on power lines.
DWR (Wildfire) Charge Fund
After several devastating wildfire seasons, Governor Gavin Newsom convened a strike force and legislation was passed that sought to create a mechanism to address the financial impact of catastrophic wildfires. Part of this legislative package was Assembly Bill 1054 (AB 1054), which was signed into law on July 12, 2019, by Governor Gavin Newsom. AB 1054 made changes to the California Water Code, Public Utilities Code, and Insurance Code with the intent to address the increased risk of catastrophic wildfires in California caused by electric utility equipment, and act as a form of insurance for eligible utilities under certain conditions.
The bill created the Department of Water Resources (DWR) Charge Fund managed by DWR, to collect $902.4 million annually in charges from ratepayers of the State’s three largest Investor-Owned Utilities (IOUs) through January 1, 2036, and issue up to $10.5 billion in bonds to partially fund the California Wildfire Fund. The California Wildfire Fund is administered by the California Earthquake Authority to pay eligible claims arising from wildfires caused by electric utility equipment.
June 2014 to December 2018
- California has experienced a dramatic increase in the number and magnitude of IOU related wildfires.
July 12, 2019
- Assembly Bill 1054 Public Utilities: Wildfires and Employee Protection (AB1054) and Assembly Bill 111 Wildfire Agencies: Safety and Insurance (AB111), was signed into law by Governor Newsom, effective immediately.
- AB1054 added Division 28 to the California Water Code authorizing DWR to issue up to $10.5 billion in bonds.
- Assembly Bill 1054 directed the CPUC to implement and deem as just and reasonable an annual $902.4 million revenue requirement to be collected through the NBCs.
October 24, 2019
- The CPUC issued Decision 19-10-056 implementing the imposition of a Wildfire Non-Bypassable Charge to support a revenue requirement of $902,400,000 annually remitted to DWR.
November 6, 2019
- Executed a Rate Agreement by and between the State of California Department of Water Resources and the State of California Public Utilities Commission.
July 16, 2020
- The CPUC issued Decision 20-07-014 approving Servicing Orders between DWR and each of the Large Electrical Corporations in California (PG&E, SCE, and SDG&E).
September 24, 2020
- The CPUC issued Decision 20-09-023 adopting timing and amount of the 2020 Wildfire Fund Non-Bypassable Charge.
October 1, 2020
- Per CPUC Decision 20-09-023, the IOUs commenced billing non-exempt electrical customers the Wildfire Non-Bypassable Charge.
December 17, 2020
- The CPUC issued Decision 20-12-024 adopting timing and amount of the 2021 Wildfire Fund Non-Bypassable Charge.
Electric Power Fund
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The Victor Valley has developed into a suburban community within the Mojave Desert region of San Bernardino County. Photo taken October 19, 2013. The Electric Power Fund (EPF) program, formerly the California Energy Resources Scheduling (CERS) program, was established January 17, 2001, when then-Governor Gray Davis issued an Emergency Proclamation in response to California’s 2000-2001 energy crisis. DWR was authorized to purchase power on behalf of the State’s three largest Investor-Owned Utilities’ (IOUs) customers to prevent rolling blackouts in the IOUs’ service territories.
DWR immediately began purchasing power to meet the needs of the IOUs’ (PG&E, SCE and SDG&E) customers.
February 1, 2001
- Assembly Bill 1X added Division 27 to the California Water Code, authorizing CERS to enter into long-term power contracts for IOU customers through December 31, 2002.
- 58 long-term power contracts were entered into at an estimated total cost of over $40 billion.
- The amount of energy requirements that were not provided by the Investor Owned Utilities were provided by CERS on behalf of the IOU's customers through long-term power contracts and the purchase of the residual net short amount of electricity needed.
Late 2002
- Issued bonds totaling $11.2 billion to pay for the power it previously purchased and to establish operating and bond reserves to support the ongoing program.
- Annual revenue requirements for allocation to the IOU's customers, with bond and power charges, were put in place to pay for bond and power costs.
2003
- Stopped buying the residual net short power on behalf of the IOU customers on January 1, 2003.
- The cost and energy from the long-term power contracts were allocated among the IOUs.
- The IOUs acted as CERS' limited agents for scheduling, dispatch, and other administrative functions for long-term power contracts.
- CERS retained the financial and legal responsibility for the power contracts.
2012
- The majority of the power contracts expired.
2015
- The final power contract ended.
2020
- The remaining bonds were legally defeased
Present
- The EPF is in the final wind-down with the focus on collecting amounts through litigation related to the 2000-2001 power crisis and returning excess cash to the IOU’s ratepayers
- Assembly Bill 1X
- California Water Code, Division 27
- 12/21/2021: DWR Memo to CPUC re: Rulemaking 15-02-012 Excess Amounts
- 12/6/2021: CPUC Rulemaking 15-02-012 - Decision 21-12-001
- 10/4/2021: CPUC Rulemaking 15-02-012 - Scoping Memo
- 9/24/2020: Memo Confirming Defeasance of Outstanding Power Supply Revenue Bonds
- 7/3/2020: Defeasing the Power Supply Revenue Bonds and Initiation of the Wildfire Nonbypassable Charge 90-day Notice
Resources
Contact CEBO
California Energy Bond Office (CEBO)
P.O. Box 219001
Sacramento, CA
95821-9001
Phone: (916) 557-4631