Article 2. Oversight Board of California Public Utilities Code >> Division 1. >> Part 1. >> Chapter 2.3. >> Article 2.
The Legislature finds and declares that in order to ensure the
success of electric industry restructuring, in the transition to a
new market structure it is important to ensure a reliable supply of
electricity. Reliable electric service is of paramount importance to
the safety, health, and comfort of the people of California.
Transmission connections between electric utilities allow them to
share generation resources and reduce the number of powerplants
necessary to maintain a reliable system. The connections between
utilities also create exposure to events that can cause widespread
and extended transmission and service outages that reach far beyond
the originating utility service area. California utilities and those
in the western United States voluntarily adhere to reliability
standards developed by the Western Electricity Coordinating Council.
The economic cost of extended electricity outages, such as those that
occurred in California and throughout the Western Electricity
Coordinating Council on July 2, 1996, and August 10, 1996, to
California's residential, commercial, agricultural, and industrial
customers is significant. The proposed restructuring of the
electricity industry would transfer responsibility for ensuring
short- and long-term reliability away from electric utilities and
regulatory bodies to the Independent System Operator and various
market-based mechanisms. The Legislature has an interest in ensuring
that the change in the locus of responsibility for reliability does
not expose California citizens to undue economic risk in connection
with system reliability.
In order to ensure that the interests of the people of
California are served, a five-member Electricity Oversight Board is
hereby created as provided in Section 336. For purposes of this
chapter, any reference to the Oversight Board shall mean the
Electricity Oversight Board. Its functions shall be all of the
(a) To oversee the Independent System Operator and the Power
(b) To determine the composition and terms of service and to
exercise the exclusive right to decline to confirm the appointments
of specific members of the governing board of the Power Exchange.
(c) To serve as an appeal board for majority decisions of the
Independent System Operator governing board, as they relate to
matters subject to exclusive state jurisdiction, as specified in
(d) Those members of the Power Exchange governing board whose
appointments the Oversight Board has the exclusive right to decline
to confirm include proposed governing board members representing
agricultural end users, industrial end users, commercial end users,
residential end users, end users at large, nonmarket participants,
and public interest groups.
(e) To investigate any matter related to the wholesale market for
electricity to ensure that the interests of California's citizens and
consumers are served, protected, and represented in relation to the
availability of electric transmission and generation and related
costs, during periods of peak demand.
(a) The five-member Oversight Board shall be comprised as
(1) Three members, who are California residents and electricity
ratepayers, appointed by the Governor from a list jointly provided by
the California Energy Resources Conservation and Development
Commission and the Public Utilities Commission, and subject to
confirmation by the Senate.
(2) One member of the Assembly appointed by the Speaker of the
(3) One member of the Senate appointed by the Senate Committee on
(b) Legislative members shall be nonvoting members, however, they
are otherwise full members of the board with all rights and
privileges pertaining thereto.
(c) Oversight Board members shall serve three-year terms with no
limit on reappointment. For purposes of the initial appointments set
forth in paragraph (1), the Governor shall appoint one member to a
one-year term, one to a two-year term, and one to a three-year term.
(d) The Governor shall designate one of the voting members as the
chairperson of the Oversight Board who shall preside over meetings
and direct the executive director in the routine administration of
the Oversight Board's business. The chairperson may designate one of
the other voting members to preside over meetings in the absence of
(e) Two voting members shall constitute a quorum. Any decision or
action of the Oversight Board shall be by majority vote of the voting
(f) The members of the Oversight Board shall serve without
compensation, but shall be reimbursed for all necessary expenses
incurred in the performance of their duties.
(a) The Independent System Operator governing board shall be
composed of a five-member independent governing board of directors
appointed by the Governor and subject to confirmation by the Senate.
Any reference in this chapter or in any other provision of law to the
Independent System Operator governing board means the independent
governing board appointed under this subdivision.
(b) A member of the independent governing board appointed under
subdivision (a) may not be affiliated with any actual or potential
participant in any market administered by the Independent System
(c) (1) All appointments shall be for three-year terms.
(2) There is no limit on the number of terms that may be served by
(d) The Oversight Board shall require the articles of
incorporation and bylaws of the Independent System Operator to be
revised in accordance with this section, and shall make filings with
the Federal Energy Regulatory Commission as the Oversight Board
determines to be necessary.
(e) For the purposes of the initial appointments to the
Independent System Operator governing board, as provided in
subdivision (a), the Governor shall appoint one member to a one-year
term, two members to a two-year term, and two members to a three-year
(f) This section becomes inoperative on the date on which the
governance modifications set forth in Section 359.5 become effective
and is repealed on January 1 of the following year.
The Oversight Board shall have the exclusive right to approve
procedures and the qualifications for Power Exchange governing board
members specified in subdivision (d) of Section 335, all of whom
shall be required to be electricity customers in the area served by
the Power Exchange. The Power Exchange governing board shall include,
but not be limited to, representatives of investor-owned electric
distribution companies, publicly owned electric distribution
companies, nonutility generators, public buyers and sellers, private
buyers and sellers, industrial end-users, commercial end-users,
residential end-users, agricultural end-users, public interest
groups, and nonmarket participant representatives. The structural
composition of the Power Exchange governing board existing on July 1,
1999, shall remain in effect until an agreement with a participating
state is legally in effect. However, prior to such an agreement,
California shall retain the right to change the Power Exchange
governing board into a nonstakeholder board. In the event of such a
legislative change, revised bylaws shall be filed with the Federal
Energy Regulatory Commission under Section 205 of the Federal Power
Act (16 U.S.C.A. Sec. 824d).
(a) The Oversight Board is the appeal board for majority
decisions of the Independent System Operator governing board relating
to matters that are identified in subdivision (b) as they pertain to
the Independent System Operator.
(b) The following matters are subject to California's exclusive
(1) Selections by California of governing board members, as
described in Sections 335, 337, and 338.
(2) Matters pertaining to retail electric service or retail sales
of electric energy.
(3) Ensuring that the purposes and functions of the Independent
System Operator and Power Exchange are consistent with the purposes
and functions of California nonprofit public benefit corporations,
including duties of care and conflict of interest standards for
directors of the corporations.
(4) State functions assigned to the Independent System Operator
and Power Exchange under state law.
(5) Open meeting standards and meeting notice requirements.
(6) Appointment of advisory representatives representing state
(7) Public access to corporate records.
(8) The amendment of bylaws relevant to these matters.
(c) Only members of the Independent System Operator governing
board may appeal a majority decision of the Independent System
Operator related to any of the matters specified in subdivision (b)
to the Oversight Board.
The Oversight Board shall take the steps that are necessary to
ensure the earliest possible incorporation of the Independent System
Operator and the Power Exchange as separately incorporated public
benefit, nonprofit corporations under the Corporations Code.
The Oversight Board may do all of the following:
(a) Meet at the times and places it may deem proper.
(b) Accept appropriations, grants, or contributions from any
public source, private foundation, or individual.
(c) Sue and be sued.
(d) Contract with state, local, or federal agencies for services
or work required by the Oversight Board.
(e) Contract for or employ any services or work required by the
Oversight Board that in its opinion cannot satisfactorily be
performed by its staff or by other state agencies.
(f) Appoint advisory committees from members of other public
agencies and private groups or individuals.
(g) As a body, or on the authorization of the Oversight Board, as
a subcommittee composed of one or more members, hold hearings at the
times and places it may deem proper.
(h) Issue subpoenas to compel the production of books, records,
papers, accounts, reports, and documents and the attendance of
(i) Administer oaths.
(j) Adopt or amend rules and regulations to carry out the purposes
and provisions of this chapter, and to govern the procedures of the
(k) Exercise any authority consistent with this chapter delegated
to it by a federal agency or authorized to it by federal law.
(l) Make recommendations to the Governor and the Legislature at
the time or times the Oversight Board deems necessary.
(m) Participate in proceedings relevant to the purposes of this
chapter or to the purposes of Division 4.9 (commencing with Section
9600) or, as part of any coordinated effort by the state, participate
in activities to promote the formation of interstate agreements to
enhance the reliability and function of the electricity system and
the electricity market.
(n) Do any and all other things necessary to carry out the
purposes of this chapter.
Regulations adopted within 120 days of the effective date of
this section may be adopted as emergency regulations in accordance
with Chapter 3.5 (commencing with Section 11340) of the Government
Code, and for the purposes of that chapter, including Section 11349.6
of the Government Code, the adoption of the regulations shall be
considered by the Office of Administrative Law to be necessary for
the immediate preservation of the public peace, health, safety, and
The Bagley-Keene Open Meeting Act (Article 9 (commencing
with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2
of the Government Code) applies to meetings of the Oversight Board.
In addition to the allowances of that act, the Oversight Board may
hold a closed session to consider the appointment of one or more
candidates to the governing board of the Power Exchange, deliberate
on matters involving the removal of a member of the governing board
of the Power Exchange, or to consider a matter based on information
that has received a grant of confidential status pursuant to
regulations of the Oversight Board, provided that any action taken on
such a matter shall be taken by vote in an open session.
Voting members of the Oversight Board shall be required to
file financial disclosure statements with the Fair Political
Practices Commission. The appointing authority for voting members
shall avoid appointing persons with conflicts of interest.
The Oversight Board shall appoint, and fix the salary of, an
executive director who shall have charge of administering the
affairs of the Oversight Board, including entering into contracts,
subject to the direction and policies of the Oversight Board.
Notwithstanding Sections 11042 and 11043 of the Government Code, the
Oversight Board shall appoint an attorney who shall advise the
Oversight Board and each member and represent the Oversight Board as
a party in any state or federal action or proceeding related to the
purposes of this chapter or to an action of the Oversight Board and
who shall perform generally all the duties of attorney to the
Oversight Board. For purposes of this section, the Oversight Board
may appoint a person exempt pursuant to subdivision (e) of Section 4
of Article VII of the California Constitution. The executive director
shall, in accordance with Article VII of the California Constitution
and subject to the approval of the Oversight Board, appoint
employees as may be necessary to carry out the Oversight Board's
duties and responsibilities.
(a) The Independent System Operator and Power Exchange
bylaws shall contain provisions that identify those matters specified
in subdivision (b) of Section 339 as matters within state
jurisdiction. The bylaws shall also contain provisions which state
that California's bylaws approval function with respect to the
matters specified in subdivision (b) of Section 339 shall not
preclude the Federal Energy Regulatory Commission from taking any
action necessary to address undue discrimination or other violations
of the Federal Power Act (16 U.S.C.A. Sec. 791a et seq.) or to
exercise any other commission responsibility under the Federal Power
Act. In taking any such action, the Federal Energy Regulatory
Commission shall give due respect to California's jurisdictional
interests in the functions of the Independent System Operator and
Power Exchange and to attempt to accommodate state interests to the
extent those interests are not inconsistent with the Federal Energy
Regulatory Commission's statutory responsibilities. The bylaws shall
state that any future agreement regarding the apportionment of the
Independent System Operator and Power Exchange board appointment
function among participating states associated with the expansion of
the Independent System Operator and Power Exchange into multistate
entities shall be filed with the Federal Energy Regulatory Commission
pursuant to Section 205 of the Federal Power Act (16 U.S.C.A. Sec.
(b) Any necessary bylaw changes to implement the provisions of
Section 335, 337, 338, 339, or subdivision (a) of this section, or
changes required pursuant to an agreement as contemplated by
subdivision (a) of this section with a participating state for a
regional organization, shall be effective upon approval of the
respective governing boards and the Oversight Board and acceptance
for filing by the Federal Energy Regulatory Commission.
(a) The Attorney General shall represent the Department of
Finance and shall succeed to, and may exercise, all rights, claims,
powers, and entitlements of the Electricity Oversight Board in any
litigation or settlement to obtain ratepayer recovery for the effects
of the 2000-02 energy crisis. This section does not require the
Attorney General to litigate any claim, or take any other action, as
successor to the Electricity Oversight Board.
(b) The Attorney General shall not distribute or expend the
proceeds of any settlements of claims described in subdivision (a),
except in accordance with Article 9.5 (commencing with Section
16428.1) of Chapter 2 of Part 2 of Division 4 of Title 2 of the
Government Code and Division 27 (commencing with Section 80000) of
the Water Code.
(c) The Attorney General shall not distribute or expend the
proceeds of any settlements of claims allocated to the Electricity
(d) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends